In-cosmetics panel gets under the skin of the recession

By Guy Montague-Jones

- Last updated on GMT

Related tags Cosmetics

A panel of beauty experts gathered at in-cosmetics in Munich last week to examine the latest data on the cosmetics industry and diagnose its financial health.

Led by Heide Hildebrand, head of health and beauty at InStyle Germany, the panel explored the impact of the recession on the industry from different angles.

Beauty stagnation

Nicole Stollenwerk, partner, audit, KPMG began the discussion with a look at the latest data on the cosmetics market in Germany.

Stollenwerk said growth is quite flat at around 2 per cent and the overall picture is one of stagnation similar to the food and fashion industries.

In such an environment, she predicted a market share battle accompanied by falling prices.

Counter intuitively, the financial expert said discount brands could suffer from this recessionary effect. Brands are likely to cut prices to gain market share and retain custom from budget conscious consumers. The price gap between discount and branded goods will therefore narrow making cheap, low quality goods less attractive.

Despite the weakness of the overall data, Stollenwerk said good financial news stories were to be found amid the general gloom. In line with the much-debated lipstick theory, decorative cosmetics are showing healthy growth figures in Germany and word from the street is that most consumers intend to spend the same or more on beauty products.

Richard Hesk, exhibition director, in-cosmetics Group, latched on to this optimistism and said he expected growth to pick up again towards the end of the year.

He said ingredients innovation is carrying on apace and more new ingredients were on show this year than ever before at in-cosmetics.

Strategy advice

Meanwhile, Sian Sutherland, founder, Mama Mio, said the way products are sold will be all important during the recession.

Sutherland said “big brands are feeling the fear” while smaller brands are adapting more quickly to the new environment and the opportunities it presents.

She said bricks and mortar retail will suffer in the recession while beauty companies are most likely to succeed if they are open and active on the internet and eager to communicate simply and transparently.

Her predications were supported by the data that Stollenwerk presented. She said the internet is the fastest growing retail market at the moment while retailers in expensive locations are suffering the most.

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