Giant Killers?

By Imogen Matthews, In-Cosmetics | November 3, 2010

Consumers' appetite for and expectations of newness have opened the door for smaller beauty brands, especially those that are able to offer a genuine point of difference in markets dominated by multinationals.

The worst of the recession appears to be over, but the road to a full recovery for the beauty industry is proving to be slow. Retailers are taking a hard look at the brands they stock and have no hesitation in weeding out the weaker ones. In such an environment, niche brands might expect to be the losers, but often it is those that do things differently that are able to stay the course.

The British Bulldog Approach
Simon Duffy is co-founder of natural men’s toiletries brand Bulldog, which claims to be the first natural mass market line for men. Since its launch in 2008 in UK supermarkets, it has more than held its own against the behemoths Gillette and Nivea for Men. Bulldog is now sold in Japan, Sweden and from July 2010, the U.S., where it launched in Whole Foods Markets.

“Bulldog does things differently from the branding through to the communication. The idea of being different is in our DNA,” stated Duffy. “We were the first men’s brand with natural formulations in the UK and our packaging is also designed to stand out on shelf against products which are mostly blacks, blues and silvers.”

A men’s line with some bite. British Bulldog is building awareness in the U.S.
As a new brand, Duffy found the biggest barrier to growth was building awareness.

“Once men have tried the product, they prefer it,” he explained. “Then retailers are prepared to give you more space.”

Traditional advertising on TV and in the press was ruled out as too costly, so Duffy took a different route, exploiting social media as a way of getting to its target audience directly.

“We developed the David Mitchell Soapbox online, which reached a large number of men. It is currently the No. 1 property on the web and No. 1 on iTunes,” revealed Duffy, who also pointed out, “big companies tend to be behind the curve. Yet a good idea executed well rises to the top.”

Smashbox Has a Leg Up
Many niche brands dream of being snapped up by a multinational and becoming an international sensation. But for every M.A.C and Bobbi Brown, there are dozens that have failed to make the grade. Niche brand acquisitions tend to be the exception these days, reflecting a far more austere climate. The recent acquisition of makeup brand Smashbox by Estée Lauder may signify a change in attitude toward niche, but the brand must fit the right criteria.

“One of the key benefits of the acquisition for Estée Lauder is greater coverage in alternative channels,” pointed out Oru Mohiuddin, home and personal care analyst at Euromonitor International. “Estée Lauder derives most of its sales from department stores, but consumers are gradually shifting away from such outlets to other channels, thus threatening the company’s revenues.”

Recently, Estée Lauder has made its website transactional and has started selling Bobbi Brown, Origins, Clinique and Ojon on QVC in the U.S.

“It is in this area of alternative channels where Smashbox offers the greatest benefit,” stated Mohiuddin. “Smashbox has made good progress in digital and social media and Estée Lauder expects to benefit from this expertise.”

The brand sells in specialist retail stores as well as QVC, where it is ranked as one of the top 10 brands. Smashbox stands to gain from greater global coverage with its new parent’s extensive distribution network.

A Natural Niche
Euromonitor has observed that from early on in 2009, natural brands were riding out the economic storm better than others at the top of the price scale.

“The reason for this discrepancy largely seems to be that the prime motive for buying standard premium products is aspirational and therefore easier for consumers to ditch,” explained Carrie Lennard, industry analyst, beauty and personal care, Euromonitor International, who noted that more retailers and manufacturers have jumped on the natural bandwagon. Burt’s Bees is a brand that sat comfortably on the shelves of the drugstore Duane Reade for a while in the U.S., but ventured abroad into the high street retailer Boots.

“As the big players in natural beauty like Lavera and Burt’s Bees are moving from niche to mainstream, smaller players are now adopting innovative strategies to compete with bigger names,” stated Lennard.

Natural Australian skin care brand Bellaboo is an example. With a product line targeting teens, it initially launched in its native Australia in approximately 1,000 outlets and has recently moved into the U.S.

“Drugstore chain Rite Aid and supermarket Giant Eagle both began stocking the line in 2009 in a bid to attract the lucrative, but hard to reach, teen and tween market,” she added.

Finding an angle other brands have yet to recognize is key to building a successful niche brand. For example, the market for Halal beauty and personal care products is relatively new, but the development of a global standard by the International Halal Intergrity Alliance (IHI Alliance) should help to open up the market for new halal brands.

“There are currently some local Halal cosmetics standards already in existence. However, a globally recognized standard should help to instill more confidence when buying halal products,” explained Lennard.

Lennard said that the concept of the niche beauty brand fits well with the new zeitgeist of a shift away from the excessive consumption that was prevalent during the boom years.

“There will still be a sizeable proportion of consumers, who are willing to fork out more for niche brands which they feel are worthwhile paying extra for. Niche players need to be clear, concise and convincing about their unique selling proposition (USP) in order to persuade shoppers to do so.”

Bulldog and Euromonitor will participate at next year’s In-Cosmetics marketing trends presentations, taking place in Milan on March 29-31, 2011.
More info: www.in-cosmetics.com

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