Study on Colour Cosmetics Market- Case Study on Body Shop
Competitive landscape of Colour Cosmetics Market- Case Study on Body Shop
Pushing growth through new
high-performance range
·
The Body Shop launched its new
high-performance, high-glamour colour cosmetics line in mid-2006, proving that
it is serious about this sector. The Make Me Fabulous range features lines
called Red Carpet and Hot Date, with 70% recyclable metallised plastic packaging.
As well as the new additions, repackaged and reformulated old favourites also
feature, including Lip & Cheek stain and Lightening Touch.
·
Marketed as “three years in
development”, Make Me Fabulous would seem to be a Body Shop range through and
through, but in fact its glamour positioning is closer to L'Oréal’s domain than
The Body Shop’s eco-friendly image; not to mention that including a line called
Jet Set could be seen as encouraging non-carbon-neutral practices seemingly
incompatible with the company’s environmental positioning.
·
Until the launch, with
relatively limited resources, the company had been heavily reliant on its
natural positioning to fight for position in this innovation-driven sector, led
by major players such as L’Oréal, Estée Lauder and Procter & Gamble. While
the company has outperformed the global market by four percentage points over
the 2001-2005 period, it was too soon to see any longer-term impact of the new
product range in 2005 and The Body Shop performed in line with the global market
(7%). This enabled the company to retain its near 1% share and 24th position in
the global cosmetics and toiletries sector, held since 2003.
·
Western Europe, The Body Shop’s
largest market, contributed over 65% of total colour cosmetics sales in 2005,
of which nearly half was generated in the UK. Its performance was mixed over
the review period, and by 2005 The Body Shop commanded only a 3% value share of
the UK market, placing it far behind market leaders Boots and L’Oréal (each
with 16%). The company recorded better performances in the smaller markets of
Belgium, Finland and Greece.
Strong growth in Asia-Pacific
·
Benefiting from increased
consumer interest in colour cosmetics as well as opening of new stores,
Asia-Pacific was the company’s most dynamic region in 2005 with sales growing
by 12%, five percentage points ahead of the regional market. Despite this
performance, which was strongly influenced by a 40% sales increase in the
Philippines (albeit from a small base), the company fell two places in the
rankings as Unilever and Beauty China Holdings overtook it, both slightly
closing the gap to the leading Japanese trio Shiseido, Kanebo and Kosé.
Weak sales in North America and Africa
and the Middle East
·
The positive developments in
Asia-Pacific partly offset continued negative growth in North America. Unable
to meet the increasing demands for innovation provided by major cosmetics
providers such as L’Oréal, Estée Lauder and Revlon, the company fell further
behind in the competition and recorded a review period low sales figure in
2005. Sales of the company’s eye make-up products were particularly weak,
suffering from intense product innovation and high advertising budgets from the
main competitors.
·
After two years of solid
growth, the company once again suffered in Africa and the Middle East,
recording negative growth of 8% in 2005. Relying entirely on the Saudi Arabian
market, which is one of the slowest-growing markets in the region, the company
missed out on the strong sales developments characterising other parts of
Africa and the Middle East, which many of its main competitors with wider
geographical presence were able to benefit from. All the company’s colour
cosmetics products were affected including facial make-up, eye make-up and lip
products.
Prospects
·
With its new colour cosmetics
range, marketed around more glamorous products and renewable packaging, The
Body Shop is clearly aiming to take advantage of the dynamic nature of this
market. With a strong performance recorded in Asia-Pacific over the 2001-2005
period, the company has created a small but solid platform from which to take
advantage of the 5% CAGR, which is forecast to bring an impressive US$2.5
billion to the sector over the 2005-2010 period. However, while Japan (+US$1.1
billion) and China (+US$0.7 billion) will provide most of this growth, the
Indian market is likely to be of more interest for The Body Shop as it is
currently in the process of opening new stores in this country. With a CAGR of
21% (2005-2010), India is forecast to be the most dynamic colour cosmetics
market in the region, bringing an additional US$0.2 billion to the sector. In
addition, the company should increase its focus in its existing markets,
especially the Philippines and Thailand, both predicted to enjoy CAGRs of 6%.
·
Eastern Europe is another
interesting market for colour cosmetics with a forecast CAGR of 7% (+US$1
billion). The company’s increased focus on the Russian market with a number of
new stores being opened in the near future will be particularly interesting in
light of Russian consumers’ high regard for the use of natural ingredients.
This should provide the company with a strong selling point, enabling it to
benefit from the CAGR of 5% forecast for this market over the 2005-2010 period,
equalling a value of over US$0.2 billion.
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