Ways and means of beating the consumer crunch

Skincare and cosmetic markets have dropped slightly during the first half of this year, although consumers still want to look good. Many of them tend to switch to cheaper brands when economic times are tough.

The luxury market for facial skincare and cosmetics looks like continuing its first-half slide for the rest of the year while the middle market stays vibrant, industry leaders said last week.

"Many people have started switching from buying premium brands to cheaper ones," said Nathavadee Prabhananda, marketing director for Mille Fleurs, the importer and distributor of the upmarket Talika skincare brand from France.

The high-end business has already dropped 5 per cent, she said.

Claude Rumpler, managing director of L'Oréal Thailand Ltd, said consumers in the middle market also now tended to think twice about every purchase.

Consumption last month dropped slightly after showing steady growth during the first five months, he said, when the facial-care category grew 8 per cent and make-up 18 per cent.

To survive when inflation is taking a bite out of disposable incomes and consumers are tightening their belts, companies must work harder on technology and effectiveness.

Innovation drives market growth, especially in difficult times, Rumpler said.

For example, L'Oréal Paris this year launched Mineral Foundation True Match, and Maybelline New York rolled out Volum Express Hyper Curl mascara, which boosted the make-up market 18 per cent in the modern-trade channel, he said.

Mille Fleurs, which had concentrated on eye products, recently brought out Light 590 Collagen Booster, featuring a small apparatus that releases photo-energetic rays to stimulate the production of collagen by facial skin to keep a youthful look.

The equipment, stuffed with technology that allows consumers to use it everywhere, received good feedback from its targeted customers aged 30 and up. Priced at Bt13,500, 500 units are expected to be sold this year.

"Consumers still want to keep looking good, and this innovative product has the selling point of one that stays in between technology and beauty," she said.

The focus on selling innovative products has ensured that both Mille Fleurs and L'Oréal continue to see no obvious change in purchasing frequency and payment per bill, although the market in general experienced a slight downturn.

Nathavadee said Mille Fleurs customers spend Bt1,500-Bt3,000 per visit while Rumpler said L'Oréal's performance was still on track.

L'Oréal still aims to expand at least three times faster than the market, while Mille Fleurs expects its sales this year to increase to Bt30 million from last year's Bt20 million, excluding expected sales from the new product.

Competition is expected to become more intense. Marketers are busy trying to keep stimulating consumers to buy their products instead of postponing purchases or switching to mass-market brands amid the possibility that consumer confidence will sink further as the political and economic outlooks remain unclear.

Mille Fleurs is trying this year to once again aggressively strengthen brand awareness for Talika, after keeping a low profile the past two years. It has allocated Bt5 million for events and promotions. It also plans to add a skincare line to its portfolio here by year-end.