Although by the end of 2009 figures from Euromonitor International put the Swedish C&T market at a market value of €1.39bn, which represented a decline of 1.8% on the previous year, there seems to have been a certain resilience shown when it came to tackling this slight decline.
Explains Pasi Hannonen, research analyst for Euromonitor International, who specialises in this region: “Our estimations now suggest that the situation might not have been that bad, because we now know that by comparison, Swedish GDP declined by 5% in that same year, and as we near the end of this year it has increased by that same amount which shows real determination. We have weathered the recession very well when compared to a number of other countries in this region and are definitely on the up again.”
Cost considerations
Hannonen explains that Swedes were unlikely to have been deterred by an increase in prices as a result of the recent financial woes, as it is a country known for its steep prices and taxes.
“C&T products in general are expensive here but this is because the unit prices are higher – this is also the case in Norway and Finland. Last year the economy was also affected slightly by fluctuations in the Swedish Krona which was weak but by and large customers were not deterred by this and did not stop spending.”
He continues: “People have a perception that Sweden is a very expensive country and to a large degree that is true and it is certainly the case that taxes are much higher than in most of Europe.”
However, the reason for the increased cost of FMCG items, says Hannonen, is that Sweden is a sparsely populated country compared to its size and transport has to travel far greater distances to reach the major retailing cities of Stockholm, Gothenburg and Malmo, so items do end up costing more once they hits the shelves. He adds that people are used to this and it is counteracted through higher wages and a better standard of living for everyone. (Sweden is often rated as one of the top European countries for schooling, health care and life expectancy.)
Swedish exports
In terms of C&T companies, Sweden is best known for its direct seller Oriflame, now operating in 62 countries, and for Isadora cosmetics, owned by Invima, which can now be found in 40 different markets worldwide.Oriflame started life in 1967, founded in Stockholm by two brothers, Robert and Jonas af Jochnick, and now has over 3.3m sales consultants. The company turned over t1.3bn in sales last year and employs 7,500 employees at its production facilities in Sweden, Poland, China, Russia and India. Meanwhile the first Isadora cosmetics line debuted in 1983 and formed part of Invima’s first foray into cosmetics – it also specialises in pharmaceuticals and chemicals.
Another brand that launched 30 years ago and is still going strong is Face Stockholm, founded by Gun Nowak, which she still operates in collaboration with her daughter Martina Arfwidson today.
Nowak was born in a small village in the Swedish countryside and went on to own three of the hippest fashion boutiques in Sweden by the late 1970s. Her inspiration to launch a cosmetics line stemmed, she says, from never being able to find colourful enough cosmetics to match her outlandish fashion collections. “I didn't set out to create a make-up business per se,” says Nowak, “But then I couldn't find colours anywhere and I was into crazy make-up! I saw the opportunity and I wanted all the colours!”
Her enterprise started with her first Stockholm store opening its doors in 1980. It was an immediate success but Novak wanted overseas recognition too. Soon after that she teamed up with her daughter, who was by then based in New York, to progress the concept in the US. By 1990 the first Face Stockholm store had opened on New York’s Upper West Side.Every Face Stockholm store is staffed by professional make-up artists, many of whom are also involved with the company’s Make-up Schools. These training facilities for both professionals and customers can be found in Sweden, Norway and the US. Teaching a variety of make-up techniques, the schools were founded to further the company’s passion for education in the field of cosmetics.
A newer kid on the Swedish retail block, but one that is promising to be just as successful is Make-up Store, which was launched by Swedish entrepreneur, Mika Liias, in 1996. With outlets in countries such as Vietnam, Lithuania, the US and Australia, Make-up Store has also recently opened outlets in Berlin and on London’s Carnaby Street, quite an achievement in just 14 years. Charlotte Erdos is the international business development manager for Make-up Store. She explains that the company wants to make every customer visit a new experience. “The Swedish customer is very curious and trend aware and so we have to keep every visit to our store fresh and exciting to keep them interested as old concepts quickly become yesterday’s news. “Our Nordic heritage influences the way we design our stores – in a classic, simple and yet modern way – making them the blank canvas for us to display our colourful products and various themes which are our big point of interest. Recent store themes have included vampires, air stewardesses and extreme make-up looks. We work hard to achieve each new look, re-dressing the stores entirely for each themed campaign, highlighting new products and trying to instill a sense of fun, innovation and creativity each time.” Make-up Store’s fresh and funky ethos would seem to be what Swedish consumers now want. Although old stalwarts still perform well, there seems to be a real trend for young, fresh brands emerging. And while it still relies heavily on international brands for many new product launches, Swedish companies seem to be in the ascendant and are holding their own well. Hopefully the sales figures for 2011 will also proceed in that direction.style='background:#ddd;padding-left:20px;padding-right:20px;padding-top:20px;padding-bottom:20px;'>
Schwarzkopf – Solid distribution is key to Swedish success
Ingar Hessel is the marketing manager for Schwarzkopf Retail for Henkel Norden, which encompasses Sweden, Denmark, Norway and Finland. She tells ECM why the big challenge for manufacturers is getting distribution right
“The difference between Schwarzkopf and other companies is that during the recent recession, we continued to roll out new products and continued to invest in our brands in Sweden – and this paid off handsomely for us as we saw an increase in sales.
“I can’t deny that having the backing of a parent company such as Henkel is not advantageous but it also depends on how you fit into an individual market. We take time and care to tailor each of our product launches and marketing campaigns to the individual country because while my remit is to cover all of the Scandinavian countries, each one is unique in its own right and should be treated as such.
“In Sweden’s case consumers are very open to trying new brands from different countries but they still like the appeal of a Swedish angle. So for example, in August we saw the massive debut of our Soyance hair colourant line which is currently going very well for us. As an extra draw we enlisted the Swedish supermodel, Mini Andén, to be the spokesperson and face of the campaign. So while you have a German company rolling out a new range, it has distinctly Swedish flavour in terms of how it is promoted in the country.
“I would say the key to success here is to get the distribution channels correct as to be visible and accessible is all important. For us personally the grocery channel is extremely important and we have very strong and well established links here. Another channel which will probably become of increasing prominence for us is the pharmacy channel. Since it was deregulated recently there has been a definite shift towards greater C&T purchasing so we are keeping a close eye on this channel.”