Olga Murogova, Research Analyst at Euromonitor International
The main trend of Russian beauty market today is definitely tradedown. The 2015 crisis dropped the country’s real GDP growth by more than 4% down without signs of recovery in the short-term future. Though you may argue that there is always trading down in crisis times. However current economy slowdown has different nature in comparison with the crisis of 2008. Back then the real GDP dropped steeper by 8%, but recovered already the following year to confident growth. Now it is more gradual, but at the same time – longer-lasting.
This caused the transformation of consumer behavior of course. And getting back to the tradedown trend, today it is much smarter than it was earlier and there are 5 major signs/features of such smart consumption:
1. First of all it is – 1 item per 1 transaction
With the development of beauty specialists and drugstores channels in Russia over the last 5 years (with 3% and 19% of outlets number growth respectively), consumers got used to frequent shopping of beauty products. As such even with cut incomes, the desire to check beauty stores regularly remained. That is why consumers were forced to buy less per one store visit and at the same time they started more thoroughly checking the price fluctuations and opting for better price offers between channels.
2. Multifunctional beauty products are on demand
Arrived from consumers’ aspiration to save, but to get as much use as possible in one bottle. Good example here can be newly launched shampoo Advanced Techniques 10 in 1 by Avon. The gradual growth of BB creams in Russia, offering sun filter, moisturizing effect and covering skin imperfections is also supporting this trend.
3. Another smart feature is consumers’ engagement in promotions
As the companies were competing for the attention of price sensitive consumers in 2015, they introduced a great amount of promotions. As such, consumers were choosing between the best promo offers, ignoring initially cheaper goods, that is naturally seems to be more beneficial.
4. In 2015 cosmetic sets were back to track
Ready packed cosmetic sets appealed to consumers as a fast and affordable option of a present. However, they were also purchased for personal use, as a way to treat yourself (as sets are perceived as gifts, essentially) and also due to better price than purchasing each single item.
5. Consumers are carefully turning to direct sellers
Unlike the massive movement towards direct selling channel in 2008, in 2015 consumers were opting for direct selling mainly because of its attractive price-quality ratio and tempting promotions rather than additional source of income.
So, as far as these trends are likely to remain and even strengthen in 2016 due to still vulnerable economic state the companies who aiming to keep their positions are to continue adaptation to these modifications in consumer purchasing patterns.