Drugstores push Russian beauty
The Russian cosmetics market may grow by more than 30 per cent by 2015, say analysts.
The Russian cosmetics market may grow by more than 30 per cent by 2015, say analysts. Such growth is forecast due to the ever growing expansion of pharmacy and drugstore chains, which in recent years have significantly increased their cosmetics sales.
The biggest success in this field has been Magnet, Russia's largest food retailer, which started to develop its drugstore concept under the Magnet Cosmetics brand in December 2010, and by the end of 2011 had opened about 200 of such stores. This year the company plans to open another 550 stores.
According to Michael Burmistrov, head of the «INFOLine-Analytics" agency, the drugstore format is of interest for large retail chains, due to the possibility of development in small areas that are not suitable for the sale of food, yet still using the consumer traffic, generated by a grocery store.
The same opinion is shared by Anna Sinyavskaya, a leading analyst of the Russian RBC analyst agency. She maintains that drugstores are the fastest growing segment in the Russian beauty retail, both in terms of value and the number of stores in Russia.
At present the total number of drugstores in Russia is estimated at around 2,500, with a potential market capacity of 15,000-20,000 stores.
In addition to Magnet, X5 Retail Group, another of Russia's major retailers, is considering adopting cosmetics sales by following the drugstore format. The company has made forays into the area before, most notably through the signing of an agreement with Swiss perfume network ,Perfumes Planet Switzerland, several years ago. Under the terms of the agreement, X5 planned to create specialized trading zones in its supermarkets with the area of 15-30m2, specially designed for the sales of perfumes and cosmetics, however the project was never implemented.
In addition to the rise in popularity of the drugstore format, sales of cosmetics by pharmacy chains is also on the increase and is fast becoming one of the most promising segments of Russian beauty retail, according to local analysts,
They say, amid strict state regulation of drug sales in the country, sales of cosmetics have become an attractive option for pharmacy chains in recent years. One of their major advantages is their high level of consumer confidence, a very important factor for Russia, given the large number of counterfeit products on the Russian market.
RBC believes that over the next few years, drugstores and pharmacy chains will become strong competition for traditional, specialist cosmetics retailers, estimating a share currently of 30 and 27 per cent respectively.
According to analysts' predictions, in 2013 the market will continue to be dominated by cosmetics manufacturers, which position their production for the middle and mass markets, among which are such companies as Coty, Puig Beauty & Fashion Group, Oriflame and Mary Kay. At the same time among the major domestic manufacturers will be such companies as Novaya zarya and Faberlic.