The Russian cosmetics and personal care market is gradually recovering from the 2008-2009 recession. The Russian beauty market grew to an estimated USD 13.9 billion (EUR 10.75 billion) in 2012, compared to 13.5 billions (EUR 10.43 billion) in 2011 and is forecasted to reach USD 15.6 billion (EUR 12.06 billion) in 2015.

The country’s new economic wealth is associated with rising incomes and increasing consumer expectations. The main segments of the market are perfumed products (23%), skin care products (22.6%), hair care (19.2%) and make-up (15.4%).

New retail challenges

In parallel to the development of the market, the distribution was highly restructured in Russia. Open markets, with their amounts of goods of questionable origin, which had become emblematic of the post-communist era now account for only a fraction of the overall distribution of perfumes and cosmetics (7.2%). Similarly, direct sales (internet excluded) carried on declining. On the contrary, health and beauty retail chains and grocery retail channels saw continuous consolidation, with the largest retail players increasing their market presence. In October 2012, the number of beauty retail outlets increased by +24.2% (compared to the previous year). The city of Moscow is the leader in specialized retail with some 800 point of sales and their number is expected to continue growing in the nearest future.

This is accompanied, however, by a significant concentration of retailers. In the selective distribution, the three major retail networks (L’Etoile, Ile de Beauté and Rive Gauche) are dominating the market, in particular in Moscow and Saint Petersburg, and are extending their network nationally.

Besides national retail chains some 25 regional specialized retailers operate in the market. The biggest are Seven days (Voronezh), Novex (Siberia), Podruzhka (Moscow), Alpari (Tatarstan).

In parallel, the “Drogerie” format has been developing actively. In October 2012, the number of “drogeries” increased by +25% (compared to the previous year). Among the biggest market players are Magnit Kosmetik, Podruzhka, Ol!Good, Yuzhny Dvor, etc. This retail format is expected to be one of the most dynamic over the next years.

Consumer trends

As their familiarity with cosmetic products is increasing, Russian consumers are becoming increasingly sophisticated in their product choices and tend to spend money more rationally. The marketing strategies of specialized retail chains, based on discounts, have also simulated changes in consumption patterns. This trend, which is forecasted to continue, is prompting retailers and manufacturers to explore new ways to communicate with their targets.

To date, manufacturers are continuing to exploit natural claims that continue to be highly attractive for consumers.