A consumer insight and market analysis approach

It’s no secret that the nail polish sector has been experiencing a global decline over the past four years. In such a context, leveraging consumer insight and market analysis to understand the expectations of end users and to tailor product development is a key axis of Luxembourg-based group IL Cosmetics’ strategy.

Jean François Harpes, President of IL Cosmetics

Jean François Harpes, President of IL Cosmetics

The group recently commissioned a market research company to conduct a study on its most important European markets; namely Germany, France, the United Kingdom and Italy, across the nail polish and nail cosmetics spectrum.

The aim was to find out “why the nail polish market, which used to be around 6 billion units, has dropped to under three,” Harpes explains. “We believe it’s absolutely critical to take into account the complete change in consumer habits over the past few years.

Semi-permanent, natural and hybrid formulas

Users are moving beyond traditional nail polish, and semi-permanent is one area that is seeing significant growth. “Semi-permanent, which about four years ago had a market share in the U.S. and Europe of about five to ten percent, gained very large market shares,” Harpes explains. "It is between 25 and 40 percent depending on the market, and has an even stronger penetration rate of about 40 percent in some markets such as Ukraine and Russia.” With more nail polish users looking to semi-permanent formulas, this sub-segment is predicted to grow further still in the future.

Natural formulas are a small but growing trend. While consumers are looking for eco-friendly formulas, the market has been slow to respond to consumer demand, mainly due to technical constraints. “It is big in the idea but small in the sales, except in China where alternative water-based formulas account already for at least 1/3 of the market,” Harpes says. “This is because brands haven’t found suitable formulas that pushed them to move away from normal nail polish.” While such formulas don’t necessarily have to be water-based, says Harpes, they need to be more natural, safer and chemical free.

Hybrid formulas, which currently only claim a three to five percent market share, could have a real future, says Harpes, provided that the category brings something more than what is already on the market. “Hybrid will have a future if it is really a category in between [conventional] nail polish and semi-permanent,” he states. He explains: “That means, if you can apply with the brush, if it dries reasonably fast, if the performance is better than nail polish, if it’s long-lasting and if you can remove it easily.” Harpes claims that, with nothing on the market that currently fits this bill, hybrid polishes are ripe for innovation.

Tackling a tough market

IL Cosmetics seems well-positioned to tackle the tough market, having made significant investments since the second quarter of 2017 to allow it to offer products across the entire nail cosmetics spectrum: conventional nail polishes and alternative formulas (water-based, odour-free, naturally sourced ingredient formulas), as well as hybrid and semi-permanent.

The company now has independent teams working across the different segments (more than 20% of its employees work in R&D and innovation), which enables multiple, parallel product innovations - said to be key to the group’s flexibility.

In the middle of last year, for example, IL Cosmetics began looking to the growing segment of soak-off gel polish, and will present its formulations in this area at the upcoming MakeUp in Paris trade show, which will take place on 21 and 22 June at the Carrousel du Louvre in the French capital.

While conventional nail polish remains the group’s core business, Harpes says that understanding the technicalities of the semi-permanent category will help guide further developments in the intermediate hybrid category.

Given the difficult market, IL Cosmetics is not one to rest on its laurels. The group says it continually strives to outsmart its own developments by improving and updating formulas, with all of its new launches validated upstream by consumer panels.

Makeup moves

Beyond the nail category, the company is also looking to develop by entering new categories through its lips and eye makeup division Luxcos.

Luxcos currently manufactures mascaras, liquid eyeliners and lip glosses. “We’re looking to other lip products and we’re looking to foundations… this is probably still six months to a year ahead,” reveals Harpes. “We believe that the basis for this diversification is setting up the internal structures which allow us to be active in many new segments. All these diversification plans are supported and will be followed by a reinforcement of the marketing teams.

To this end, an acquisition could be on the cards. “As well as internal growth, we are also still looking into possibilities of external growth,” said Harpes, adding that this is likely to be for other makeup products in the lip area, or perhaps foundations. Watch this space.