According to data by market research firm Euromonitor, mass beauty brands grew by 4.4% in 2016 in Brazil whereas luxury products rose 9.1%. The figures follow last year’s trend, when sales of luxury beauty products increased by 16.6%, compared to a drop of 1.3% in mass cosmetic sales.
There are some reasons behind this category’s positive performance despite the challenging scenario. Most luxury product purchases were previously made overseas, but with the dollar on the rise and the drop in international travel, consumers have shifted to local stores. Customer loyalty and an improved perception of value for money are also key factors.
“Most consumers of luxury beauty products are from a social-economic demographic that is less affected by economic cycles. We have also seen several new brands entering the market and the expansion of prestigious beauty retailers,” says Andrea Olim, Manager of the Brazilian branch of Japanese-based cosmetic company Shiseido, which has been operating locally for over 20 years.
A marathon rather that a 100-meter sprint
A good example of this market’s boom in Brazil is French cosmetics chain Sephora. The beauty retail giant landed in Brazil in 2012 and today has 30 stores in 11 different states. Sephora began to feel the effects of the recession in mid-2016, with the trend towards declining mall foot traffic. However, General Manager at Sephora Brasil, Flavia Bittencourt, says “the crisis has not affected us in the same way as other sectors. I often say that Sephora was not impacted because it does not only sell beauty products, but rather a unique experience for our customers.” With around 90% of its products coming from overseas, the beauty chain was able to maintain its growth plan in Brazil. “We did not come for a 100-meter sprint, but for a marathon. By the time the crisis was knocking on our door, we were ready to face it,” says Bittencourt.
The strategy of expanding the business model with the launch of beauty kiosks has given Sephora the ability to reach new areas of interest yet also serve as a trial. “If the kiosks are successful, it is a sign that we can go head with a full store,” says Bittencourt. She also attributes Sephora’s success to the number of exclusive brands sold through the chain, consistent new product launches and its attractive pricing policy. “We have items to suit all tastes and budgets. There are face masks available in store for only R$ 10. We need to create a perception that premium cosmetics do not necessarily have to be expensive.”
Offering less affordable prices (a 100ml fragrance can exceed R$ 600), Jo Malone is another beauty chain that recently settled in Brazil. The UK-based fragrance brand opened its first store in the luxury shopping destination Iguatemi Shopping in early 2016 and has already opened its second store in São Paulo and another one in Rio.
However, even customers who are willing to pay more for quality products and are loyal to a particular brand may adjust their buying habits in times of recession. “We noticed changes in the behaviour of the Shiseido customer, including a shift towards lines with more attractive pricing, as well as an increased demand for offers,” says Olim. She reveals that a number of strategies and product launches, such as the new LiftDynamic instant lifting effect moisturizers, have been sustaining the company’s double-digit growth.
Revlon has also reviewed its price point in Brazil. To become more competitive in the face of the crisis, the US beauty giant has cut prices for its products in Brazil. Revlon’s creamy lipstick now sells for R$ 30 and the ColorStay liquid foundation, which has released new shades for darker skin and higher FPS, was reduced from R$ 89.90 to R$ 69.90.