Cosmetic products and salon services market India by AjayKathuria1

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									             RETAIL IN INDIA
                               Ajay Kathuria



                                               2012
COSMETIC AND SALON SERVICES




                                                           A detailed study of the cosmetic products, buying behavior
                                                           and salon services purchase market in India. A deep-dive
                                                           into the Delhi-NCR market




                                           Ajay Kathuria
                                        New Delhi, India
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               Management Research Report (MRR)

COSMETICS PRODUCTS AND SALON SERVICES RETAIL IN INDIA

     [A detailed analysis of market in New Delhi, India]
                             BY

                      AJAY KATHURIA

                         Aug’ 2012
                             COSMETIC PRODUCTS AND SALON SERVICES RETAIL IN NEW DELHI, INDIA

                             Ajay Kathuria
                             MBA, AIM, Manila, Philippines
                             B.Engineering, Pune Institute of Computer Technology, Maharashtra, India
                             Visting Professor- Manipal Executive MBA Education, India
                             Visting Professor- Birla Institute of Management Technology (BIMTECH), India
                             ajay.kath@gmail.com, ajay_kathuria@rediffmail.com




Ajay specialises in corporate strategy, planning and marketing. His over 4 years of market research and strategy experience spans a
breadth of corporate communication, go-to market planning, business development and knowledge management. He is a MBA from the
reputed Asian Institute of Management, Manila , Philippines and a Bachelor in Engineer from Pune Institute of Computer Technology ,
India.

As an Assistant Manager, Alliances and BD Strategy, He conceptualized, strategized and co-led the development of a Pan-European
bidding community of practice and was responsible for the automation of a centralized bid repository, used by over 2000 bid personnel
saving over £500000 for the organisation annually. Ajay's assignment in India and UK for Serco helped bridge the gap between the
solution, sales support and the business development units, helping foreclosures of critical business deals.

At Mahindra Satyam, Ajay was awarded the Champion of the quarter Q1 ‘09 towards his initiatives responsible for streamlining sales &
marketing efforts in the Asia Pacific region. He helped engage market using online & off-line channels, nurtured ‘hand raisers’, provided
the sales team with an engine that delivers leads as well as handled account development to maximise B2B client portfolios, resulting
in USD 5 Mn addition to company’s bottom-line during peak years of global recession.

While at his MBA school, Asian Institute of Management (AIM), often referred to as the Harvard of
Asia, Ajay also participated at various case competitions & his recent victory at the Shanghai
regionals of ‘Clinton Hult global case challenge competition’ has put the school on the global charts.

Ajay has travelled extensively to more than 10 countries in the Asia Pacific understanding
businesses . He has education and work experience in UK, India, Philippines and Korea

This report was completed by Ajay Kathuria during his MBA program under the guidance of a panel
of esteemed professors.




This research report is licensed for your personal use only. This ebook may not be re-sold or given away to other people. If you would
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                                                            First Published 2012
Contents
CHAPTER 1 - INTRODUCTION .................................................................................................................. 4
   Objective of the MRR .......................................................................................................................... 4
   Scope and limitations of the MRR....................................................................................................... 4
   Methodology....................................................................................................................................... 5
   Sources of Data ................................................................................................................................... 5
CHAPTER 2 – GLOBAL COSMETICS AND BEAUTY PRODUCTS INDUSTRY ................................................ 5
   Introduction to global retail market ................................................................................................... 5
CHAPTER 3 - INDIAN COSMETICS INDUSTRY .......................................................................................... 8
   Wellness industry in India ................................................................................................................... 8
   Trends in wellness industry................................................................................................................. 9
   Indian beauty care market ................................................................................................................ 10
   Indian cosmetic retail industry ......................................................................................................... 11
   Indian beauty services market .......................................................................................................... 18
   Key success factors ........................................................................................................................... 23
   PESTEL analysis ................................................................................................................................. 23
   Nine force analysis of the Indian Retail Sector: ................................................................................ 29
CHAPTER 4 - MARKET ANALYSIS OF NATIONAL CAPITAL REGION, INDIA............................................. 30
   NCR Market overview ....................................................................................................................... 30
   Most attractive and upcoming shopping destinations ..................................................................... 33
   Major retailers of cosmetics & beauty products in Delhi ................................................................. 35
   Major beauty salon chains in Delhi ................................................................................................... 37
   Demographic, psychographic and social analysis ............................................................................. 38
CHAPTER 5 – RESEARCH ANALYSIS ....................................................................................................... 39
   Secondary analysis of consumer expectations and behavioural analysis of cosmetic and beauty
   services purchase .............................................................................................................................. 39
Summary and Conclusion ..................................................................................................................... 72
APPENDIX .............................................................................................................................................. 74
CHAPTER 1 - INTRODUCTION

Objective of the MRR
The overall objective is to study and analyse the current climate of beauty industry globally and in
India and identify opportunities for the existing retail enterprise to participate in this growing
business.

The specific objectives include -
 To conduct market research about the beauty industry in India and specifically in Delhi
 To identify gap in the Indian cosmetics and salon services market
 To determine an innovative entry strategy


Scope and limitations of the MRR
The Project is intended to give an overview of the global beauty products retail and beauty salon
industry in particular to identify the gaps in the market that can be successfully filled or performed
by the Venture. The study amongst other things will cover the following areas:
 Analysis of the Value Chain in global beauty sector
 Analysis of the Indian beauty retail sector and beauty salon sector projecting the future trends
 Analysis of beauty sector in Delhi in particular
 Competitive Landscape, the Logic of the Business and Key Success Factors
 Identification of the Market Gaps and Emerging Opportunities

The limitations of the study will be following:
   Given the specialised nature of the industry and the fact that the players are not public
    companies, no previous study or public information is available in this area. A lot of the available
    data are largely perceptions of industry experts and market players
   The study will be based on the current environmental settings and doesn’t consider fortuitous
    and unforeseen events
   Random sampling will be implemented and therefore not all geographic areas will be duly
    represented
   The study is limited to the current time frame. The trends and size calculations are relevant only
    in the present scenario.
   The study will cover the Indian beauty industry and our ventured business.


Methodology
This report studies the global beauty market and the Indian beauty market. Then it explores the
beauty sector in the capital city of India where the existing enterprise has its base. Analysis of the
enterprise’s current operations and the environment leads to identification of gaps in the existing
environment which will further help in the formulation of a strategy that the enterprise may adopt.


Sources of Data
The sources of data and information for the study are as follows:
1. Structured interviews conducted by the author with existing customers of the enterprise. The
    objective of the interviews was to access the perceptions and needs of the customers. In
    addition the interviews helped to compare the services offered by the competitors and devise a
    strategy to meet their direct needs.
2. Structured interviews conducted by the author with the industry experts. The data collected was
    useful to assess industry trends, future outlook and market positions, strengths and weaknesses
    of different industry players.
3. Usage, Attitude and Image study through a questionnaire was conducted which was filled by the
    target segment. The respondents were chosen through random sampling. The UAI findings have
    been used to assess brand awareness levels and consumer needs and complaints.
4. Statistical data from the Census of India, Delhi and South Delhi was extensively used to perform
    the financial analysis and forecasting.
5. Apart from this secondary data research was conducted and various industry statistics were
    obtained from websites of major players in beauty retail and services industry, journals, news
    articles, etc.


CHAPTER 2 – GLOBAL COSMETICS AND BEAUTY PRODUCTS INDUSTRY

Introduction to global retail market
The worldwide cosmetics market represents 153 billion euros or 198 billion dollars, and in 2011 it
grew by an estimated +4.4 %.The cosmetics consumer’s behaviour has not changed since the
beginning of the crisis and it is a very solid market. On the contrary, consumers’ aspirations for
quality are higher than ever, with a special interest for technology and new ideas. The cosmetics
market remains a supply-led market, driven by innovation, and consumers are always looking for
quality, performance and perceived results.
                                                     4.90% 5.00%
          5.00%   4.60%                                                        Annual Growth %
                                                                                         4.40%
                                                                                  4.20%
                           4.00%
                                            3.80%
          4.00%
                                   3.40%
                                                                    2.90%
          3.00%


          2.00%
                                                                            1.00%
          1.00%


          0.00%
                    2002   2003    2004      2005     2006   2007   2008    2009    2010     2011


         Figure 1: Worldwide Cosmetics Market from 2002 -2011; Source: L’oreal
      For the worldwide cosmetics market, 2011 was the year of luxury, returning to the proportion of the
      market it had in 2007. The worldwide cosmetic industry sales reached about $170 Billion dollars a
      year. It’s distributed pretty uniformly around the world with ~$40 billion in the Americas, ~$60
      billion in Europe, ~$60 billion in Australia & Asia, and another $10 billion in Africa. The Western
      world spends a bit more per person but India and Asia are quickly catching up. From a geographic
      viewpoint, the New Markets continue to attain increasing levels of growth: excluding Japan, that
      represented 87% of worldwide market growth in 2011 .
           Source


                    By Geographic Zone                                                       By Product


         9%    3%                          Asia Pacific                       12% 1%                      SkinCare
13%                                        Western Europe        14%                       31%            Haircare
                       31%
                                           North America                                                  Make - up
       20%                                                              17%
                     24%                   Latin America                               25%                Perfumes
                                           Eastern Europe                                                 Toileteries, dedarants
                                           Africa - MiddleEast                                            Oral Cosmetics


                                    Breakdown of Worldwide Cosmetics Market as a %
                                   Source: L’oreal estimates of worldwide cosmetics market

      With the acceleration of globalisation, the number of potential consumers of modern cosmetics
      products is rapidly spiralling upwards. Markets everywhere are opening up, redrawing the frontiers
      of tomorrow’s world. Today, a consumer in France or the United States spends between 80 and 100
      euros on cosmetics products a year, compared with 11 euros on average for a consumer in the New
      Markets excluding Japan. This shift in the world market towards the emerging nations is a historic
      opportunity.

      5 Primary Cosmetic Segments

      The cosmetic industry aka beauty or personal care industry can be broken down into 5 segments.
      Sales are distributed roughly by the following percentages:-
                     Beauty and personal care consumtion globally by category



                                            Other
                                            13%
                     Color Cosmetics                Hair Care
                           17%                        31%


                                                 Skin Care
                                                   25%
                              Fragrance
                                 14%




Hair Care Market: About 31% of all cosmetic products sold are for the hair. Shampoos make up the
vast majority of this market since almost everyone uses shampoo. Other significant market segments
include conditioners, styling products, hair color, and relaxers. Currently, the biggest players in this
category are Procter & Gamble (Pantene) and L’Oreal.

Skin Care Market: The ranges of products that are offered for the skin care market are much more
diverse than the hair care market. Skin care makes up about 25% of the total cosmetic industry and
includes skin moisturizers, cleansers, facial products, anti-acne, and anti-aging products. Of all the
cosmetics, skin care products can be some of the most expensive with 2 ounces of product routinely
selling for >$200. Women do not mind spending big bucks to keep their skin looking young. The
biggest companies in this market include Procter & Gamble (Olay) and Unilever (Vaseline).

Colour cosmetics Market: The colour cosmetic market represents about 15-17% of the cosmetic
industry and includes anything from lipstick to nail polish. Included are things like blush, eye shadow,
foundation, etc. The array of products is vast and the number of colour variations is practically
infinite. You can spend a lot of time as a cosmetic chemist working on new shades of familiar
products. The market is highly segmented so there isn’t really one dominant player. Maybelline an
Clinique are just a couple of significant brands.

Other: The “other” category represents 13% of the cosmetic industry and is made up of things like
toothpaste, deodorants, sunscreens, depilatories, and other personal care products not yet
mentioned. Actually, many of these products could fall under one of the categories already
mentioned but the industry likes to keep them separated.

The cosmetic industry is considered a pretty reliable industry. No matter what, people want to smell
and look good so even when the economy hits a recession people will still buy soap. The recent
economic conditions demonstrate, they do buy less, but they do keep buying.

Global players
               WORLWIDE PLAYERS                         Market Share ( Bn$)

  30       25.98
                         19.57
  20                                  16.98

                                                     8.25          7.74
  10

   0
           Loreal        P&G         Unilever    Estee Lauder    Shiseido


Despite the presence of several manufacturers, nearly 50% of the global cosmetic chemicals industry
is dominated by a handful of 20 players. A recent study by Euromonitor International on “Asia
beauty trends – 2011 and beyond” showed that skin care dominated the purchase category for
cosmetics in Asia followed by hair care and color cosmetics. In Asia, Japan is the highest consumer
of cosmetics followed by China and India.




CHAPTER 3 - INDIAN COSMETICS INDUSTRY

Wellness industry in India
The overall wellness market in India is estimated at INR 490 bn and wellness services alone comprise
40% of this market. According to PWC FICCI report September 2011, during the next three years it is
estimated that the Indian wellness industry will grow at a CAGR of 20% to reach INR 875 billion.
Wellness comprises the following five segments:
The size of each of these segments and their growth patterns in India can be illustrated through the
following diagram:




Trends in wellness industry
The growing wellness industry has attracted a large number of domestic entrants and international
players. Established players are pursuing revenue maximisation through product and service
diversification and are exploring new global and domestic markets. Franchising is emerging as a
popular option for scaling up. Companies are actively seeking public and private equity investments
to fuel their growth. .. The path traversed by Indian wellness industry is shown in the diagram below:
The Indian wellness industry is estimated to grow at a CAGR of 20% to reach INR 875 BN in 2013. The
growing segments in the Indian wellness industry are slimming & beauty services segment.




Indian beauty care market
The size of Indian beauty care market which comprised of beauty services, cosmetics products &
cosmetic treatments was estimated to be INR 190-200 Billion in 2010 according to a PWC report.
The overall size of the market expected in 2013-2014 is around 10.10 Billion$:

Segments                          Products                           Services
Beauty Services and Cosmetic      Cosmetic Products(Skincare,        Salons and Beauty Centres as
Products                          Haircare, color cosmetics and      well as cosmetic treatments
$4 Bn                             fragrances)                        $2 Bn
                                  $2 Bn
Fitness and cosmetic products     Fitness equipment and              Fitness centres and slimming
$800 Mn                           slimming products                  centres
                                  300 Mn$                            520 Mn$
Nutrition                         Health and wellness
                                  Food, Beverage & dietary
$2.60 Bn                          supplements
                                  $2.60 Bn
Alternate Therapy                 Ayurveda, Homeopathy, unani        Treatment canters for
$2.60 Bn                          etc.                               Ayurveda, homeopathy, unani
                                                                     and naturopathy
                                                                     $2.60 Bn
Rejuvenation                                                         Spas
100 Mn                                                               100 Mn


Indian cosmetic retail industry
   I.   Introduction
Bearing a long glowing heritage of cosmetic and beauty, aesthetic makeup products is being used
since olden days and nowadays it appear like a booming economy in India which would be the
largest cosmetic consuming country in a next few decades. While the demand of beautifying
substances are growing day by day, a large number of local as well as international manufacturers
gradually extend their ranges and products in different provinces of India.
Since 1991 with the liberalization along with the crowning of many Indian women at international
beauty pageants, the cosmetic industry has come into the limelight in a bigger way. Subsequently
there has been a change in the cosmetic consumption and this trend is fuelling growth in the
cosmetic sector. Indian cosmetic Industry had rapid growth in the last couple of years. While this is
due to the improving purchasing power and increasing fashion consciousness, the industry is
expected to maintain the growth momentum during the period 2012-2014. In the Indian Cosmetic
Industry both electronic as well as print media are playing an important role in spreading awareness
about the cosmetic products and developing fashion consciousness among the Indian consumers.

The Indian Cosmetics Industry is defined as skin care, hair care, colour cosmetics, fragrances and oral
care segments. Today herbal cosmetics industry is also driving growth in the beauty business in India
and is expected to grow at a rate of 7% as more people shun chemical products in favour of organic
ones. Today the industry holds promising growth prospects for both existing and new players. The
companies have started going for rural expansion and are offering specialized products to generate
revenues from all the corners of the country. Improvement and strengthening of the Indian
economy in the coming years will also pave the way for the Indian cosmetics market over the
forecast period and develop the Cosmetic Industry. The Indian Cosmetic market which traditionally
had a stronghold of a few major Indian players like Lakme, and Ponds has seen a lot of foreign
entrants to the market within the last decade. India is a very price sensitive market and the
cosmetics and personal care product companies, especially the new entrants have had to work out
new innovative strategies to suit Indian preferences and budgets to establish a hold on the market
and establish a niche market for them.

  II.    Size of the Industry
The size of Indian Cosmetics Industry globally is $ 274 billion, while that of the Indian cosmetic
industry is $ 4.6 billion. Among these fastest growing segment is color cosmetics, accounting for
around US$ 60 million of the market. Industry sources estimate a rapid growth rate of 20% per
annum across different segments of the cosmetics industry reflecting with an increasing demand for
all kinds of beauty and personal care product. Growth in the Indian Cosmetic Industry has come
mainly from the low and medium-priced categories that account for 90 % of the cosmetics market in
terms of volume. According to analysis and figures given by th
								
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