|There is a wealth of opportunityin today’s beauty market, accordingto L’Oréal.|
Basically, L’Oréal’s CEO argued that he was going to achieve the billion new consumers via two routes. Firstly, he was going to continue L’Oréal’s push into Developing & Emerging Markets (DEM)—which L’Oréal calls New Markets—and secondly, he was going to go for the so-called whitespace of categories where L’Oréal was under-represented or not represented at all.
We think this has particular implications for some of L’Oréal’s major international competitors.
Although L’Oréal has been making big strides into DEM since Agon took over as CEO, it is still under-represented relative to, say, Unilever in nearly all DEM countries, P&G in China, and Colgate in Latin America. So it follows that if L’Oréal starts working its magic successfully in these markets, some of its competitors will have to give ground, not least because in every corporate presentation you read these days, the No.1 target inevitably turns out to be Developing & Emerging Markets. And it’s not difficult to see why, as the following table indicates:
So what other categories may represent whitespace for L’Oréal? Personal wash, for example, which, coincidentally is another category where Unilever is strong, albeit one in which it is notoriously difficult to add value. Unilever has succeeded in doing so to an extent in the bar soap segment, adding syndets (synthetic detergents) with Dove and Lever 2000, etc., although is has found it hard going to achieve a premium over traditional tallow-based products in developing markets.
Oral care could represent more whitespace for L’Oréal, but unless management has some particularly clever tricks up their sleeve, it will be difficult to catch up with the combined R&D pipelines of Colgate, P&G and GSK, not to mention Unilever again. But, never say never.
On a smaller scale there is baby care, which is dominated globally by J&J and usually followed by some strong local brands. Although L’Oréal certainly has experience in this category in its domestic market of France, with the curiously named MixaBebe, it would have to start from scratch to create a global competitor to J&J. This would be particularly difficult because, while the J&J franchise itself successfully covers both babies and young mothers (“Are you a Johnson’s baby?” etc.), research shows that the more new brands try to persuade buyers that they are primarily “baby specialists,” the less usage they pick up from young women and so the smaller brands they become. Conversely, the more they try and play the Johnson’s baby card; i.e., for grown-up women, too; the more it seems young mothers will not trust the products on their real babies…a dilemma indeed!
Then there is the depilatories category, much smaller again, but nevertheless whitespace for L’Oréal. If they have some truly“accessible innovation” here, L’Oréal execs could certainly muscle their way in against Reckitt Benckiser, which is more at home with functional products than beauty ones, and against Church & Dwight, which is not known for its creative skills. But depilatories rely on consumers’ trust that they will not break out in unsightly rashes when products are applied, so new entrants would have to spend relatively big bucks to get in to a small category—a difficult call.
Roget & Gallet Expand
When L’Oréal acquired YSL, it also picked up the “local jewel” that is Roget & Gallet, just about the only traditional, tallow-based brand of bath soap able to command a significant premium. The line includes a raft of multi-fragranced, multi-SKU’d bath products, including soaps, body splashes, etc., and up until now has primarily been sold through European perfumeries and some department stores.
Plenty of competitive insulation.
The strategic point is that Roget & Gallet has already demonstrated plenty of competitive insulation with its unique design, packaging and fragrances, so L’Oréal can have confidence in risking a global rollout.
Hairdresser Movie Hits Germany
It seems consumers have always been fascinated with hairdressers, ever since Warren Beatty starred in “Shampoo,” the original chick-flick. Years later, his sister, Shirley MacLaine, had a hairdresser movie, too, with “Steel Magnolias.” More recently there has been Bravo TV’s reality show “Blow Out” with American hairdresser Jonathan Antin, which has yet to cross the Atlantic to Europe.
Now a somewhat different hairdresser movie is showing in cinemas across Germany, called simply“The Hairdresser”(Die Friseuse). It’s a comedy about an impoverished, middle-aged woman from unfashionable East Berlin, who is a hairdresser but hugely overweight. She can’t get a job because as one potential employer tells her “This profession is very aesthetic, and you are not at all aesthetic!” So for the next 90 minutes she attempts to go it alone and open her own hairdressing salon, in a sequence of cameo adventures.
Shades of hairdresser movies to come?
If the movie works, maybe Hollywood will take note and produce more of the same…in which case, you can bet your boots that L’Oréal and Procter & Gamble will want to be involved.
Europe’s largest drugstore chain, Schlecker, headquartered in Germany, is continuing its retrenchment by ending its presence in The Netherlands by the end of this year. The chain runs more than 10,000 small, sparsely manned outlets in Germany which are visited by some 16 million customers every week, and in recent years has expanded into a number of other European countries, adding a further 2,000 outlets beyond Germany. Although the chain is thought to be one of the most solidly financed private companies in Europe, its expansion has seemingly been at the expense of local profitability and owner, Anton Schlecker, has ordered a pullback and a pause.
The implication for major brand owners must surely be to stiffen their resolve and resist being strong-armed any more when negotiating with this notoriously uncompromising retailer. But smaller suppliers will probably still have to keep their lips buttoned.
Finally, the financial press has been full of changes at the top of Unilever’s international management structure, following the appointment of a new CEO. But we were curious to see this giant company advertising recently for managers much further down the pecking order, namely senior brand managers for the UK, because traditionally Unilever has always grown its own…seems times are a-changing.