After a rather buoyant 2011 year, 2012 is likely to be more complicated for perfume and cosmetic retailers in France, partly because of economic uncertainties and the predictable Increase in burdens of households.

Gloomy outlook in the short term

In a recent study on the challenges of the distribution of perfumes and cosmetics in France [1], Xerfi expects a slowdown in global demand in the short term, despite structural growth factors, particularly the increasing population of seniors, large consumers of skincare products, and the growing emphasis on appearance and well-being in society.

But for 2012, some moroseness is to be expected. Sales in the first half of 2012 were rather disappointing for selective distribution (-1.1% in value and -4.1% in volume). For the year as a whole, the beauty industry could suffer from changes in consumer behaviour from French people, even if explains Xerfi, perfumes and make-up should be relatively spared.

Additional difficulty, the undeniable source of growth represented by natural and organic cosmetics, personal care products for men and so-called "ethnoscosmetic" products may not, despite their dynamism, suffice to boost the short-term market.

Especially since, according to Xerfi, traditional operators are struggling to optimize their development strategies vis-à-vis these new segments. For Anne Césard, author of the study, brands are having trouble to communicate with new potential targets. " They have still not developed specific communication strategies for men, and the sales universes are still very much women-oriented, especially in selective distribution," she explained. Observations are the same on the side of natural and organic cosmetics. "If laboratories are increasing the number of launches, distributors for their part are not too offensive and concepts dedicated to organic cosmetics are scarce," with few exceptions, like Aphibio, a selective perfumery of organic perfumes and cosmetics present in 5 cities in France.

Increased competition between circuits

Given this expected slowdown in sales, Xerfi believes that the volume strategies of selective perfumeries, leading retailers of perfumes and cosmetics, have reached their limits and are "now forced to play the card of differentiation," to try and "retain consumers increasingly seduced by competitors (pharmacies, drugstores and pure players of the web)." The research institute notes however that "in this quest for differentiation, truly innovative concepts have trouble to emerge, brands most often preferring the easy way with imitation, " by extending their private label range - such as Sephora, Marionnaud and Nocibé - by increasing the number of exclusivity agreements or by expanding their service offerings to beauty salons (Yves Rocher) or through nail, brow and smile bars (Sephora with its Brow Bars Benefit Cosmetics).

Marionnaud claims its place in the men’s market

Six months after its launch in November 2011, Marionnaud’s men range represents 1.7% of market share in the men’s skincare segment, according to the distributor, who announced the sale of nearly 30,000 pieces and the recruitment of younger customers: 25% of buyers are men aged between 21 and 40.

Marionnaud is present on the private label skincare segment since 2008. The brand was a trailblazer when it launched a full line of 44 organic products in 2010.

For their part, pharmacies are relying on their image of experts to increase their venture in the beauty market (about 15% of perfume and cosmetic sales). Hence some economic interest group have launched their private brand (like Welcoop with Marque Verte), seeking to grow particularly in the segment of dermo-cosmetics, with a low price policy, while others, like Top Pharma, are setting foot on the web.

As for drugstores, whose market share in this segment is for the time being limited (6% according Xerfi), they are steadily gaining ground on the cosmetic market. They also have their private brands and have managed like Parashop to revamp their image by revisiting their sales concepts and by expanding their offer.

Finally, distance selling leaders must also cope with emerging new actors.

In a few years, beauty boxes or subscription based e-commerce websites have proven their attractiveness. While the market is still in its infancy, half a dozen operators (GlossyBox, JolieBox, My Little Box, etc..) have already invested this market niche. Other innovations in the segment, such as private sales and de stocking (beauteprivee.fr) or low-cost operators (Eyes Lips Face - e.l.f.) are also trying to challenge the leadership of chain stores network (Sephora, Marionnaud and Nocibé) on the web.