Specialized distributors still dominate the Russian perfume and cosmetics market (63.2% of sales). In 2018, the country counted 450 perfume, cosmetics, and drugstore chains, i.e. 16,000 points of sale . The number of stores owned by the ten main players rose by about 20% over the past two years – a sign that the sector has recovered. New leader Magnit Cosmetics recorded the most spectacular growth, ahead of L’Etoile.
A fast-changing market
Sales in physical stores have grown again, with a 16% increase, compared to 2014 . As for online sales, they are booming, with a bigger average basket online than in physical stores. E-shops benefit from their ability to deliver products everywhere, across a territory characterized by its immensity and low density. Consumers also enjoy the wealth of information and tips available on the web.
Still, the crisis that followed the fall of the rouble did change the game. Within a context of contraction of purchases, specialized chains strengthened their positions with large-scale promotional offers and loyalty programmes. Many of them banked on the development of their private labels to offer more affordable ranges, and opened their counters to local brands that managed to take advantage of this revived competitiveness after the rouble was devaluated.
To maintain this sales level, major chains like L’Etoile, Rive Gauche, or Ile de Beauté, started to launch a series of promotional offers, in particular as part of their loyalty programmes, and asked their suppliers to make efforts. This trend significantly affected the premium segment, whose turnover stagnated in 2017.
Several middle-range brands suffered a lot from these years of crisis: some of them disappeared from regional distribution channels, where European brands face the competition of Asia. By contrast, the luxury segment was relatively little affected by the crisis. Less present in points of sale owned by major chains, these products are usually distributed by department stores, like Tsum in Moscow, niche brands, or stores owned by the brands themselves.
Perfumes: an expert, enthusiastic public
Perfumery remains a flagship category on the Russian market. The 2014 crisis was also overcome in this sector, but it did restructure the market. Today, Russian consumers prefer small sizes (30 ml and 50 ml), and the dividing line between men and women tends to become less marked, as women aspire to other olfactory worlds and are seduced by very trendy mixed perfumes – this trend mainly comes from niche brands. Layering is also on a roll. If consumers mostly shop in physical stores to be able to test products (64%), have an exchange (38%), or because they are used to it (24%), the Internet is attractive because it offers low prices (57%). 
The public is better and better-informed and shows a real curiosity for the niche segment, a promise of exceptional products. If the niche perfume clientele is rather wealthy, this segment tends to open itself to middle class customers, who do not hesitate to save to be able to buy something qualitative. Consumers are very fond of rarity and novelty, but they mainly search for olfactory diversity. Beyond floral and fruity, and/or gourmand fragrances, very popular in Russia, customers have been opening to other olfactory territories. Fresh and Hesperidia notes remain timeless, but more heady perfumes, like Chypre, woody, and oriental scents have been more and more successful. The public is expecting a more complex perfume offering.
To meet these demanding expectations, professionals are also getting more and more technical and rigorous. Again, local brands have managed to seize opportunities. Given the boom of niche stores, chains have been diversifying their offerings. They adapt by creating affordable, but qualitative perfumes, and they do not hesitate to collaborate with renowned perfumers, like Bertrand Duchaufour. Russian assessors, but also perfumers, more and more of whom have been launching their own independent brand, are ready to come study in France, at the GIP in Grasse, or for a two-day training in Paris, to improve and develop know-how.
“There is this will to offer the best quality possible from all perspectives. There is still freedom and curiosity in Russia,” explains Bertrand Duchaufour.
As for niche brands, they had to create alliances to withstand big chain competition, as explains the Director of label SuperCosmetics, which distributes brands like État Libre d’Orange, Olfactive Studio, and Histoires de Parfum, in particular via the Cosmotheca store network. The La Niche project works in a similar way: every year, at the InterCHARM show, it gathers a selection of brands, like Miller Harris, Micaleff, Urban Scents, The Harmonist, Profumi Del Forte, Neemah, Comptoir Sud Pacifique, Mauboussin, and, starting from this year, small Russian perfume houses, to offer them better visibility among distributors.
The crisis effects are gradually fading, losing ground to an enthusiastic market which tends to follow Europe in terms of tastes and practices, and where the niche segment has a bright future ahead.