Cosmetic chains generate about 80% of segment sales in Poland FREE ARTICLE.

Transcription

1 FREE ARTICLE Cosmetic chains generate about 80% of segment sales in Poland Source: report Retail market of cosmetics in Poland 2011.Market analysis and development forecasts for Patrycja Nalepa, Senior Retail Analyst July 2011

2 The aggressive expansion of Rossman and other cosmetic chains coupled with the development of supermarket and discount chains throughout the country has led to the waning of traditional stores that are unable to compete with such strong players. In order to improve the odds of market survival, some independent retailers have began to join together into chains. In 2010 the market saw many such initiatives, one after the other. Between 2006 an 2010 more than 1,200 cosmetics stores disappeared off the Polish streets, replaced by nearly the same number of chain outlets, which means that around 2,500 traditional cosmetics shops were closed down in the period. According to our estimates, in 2010 sales of chains increased 17% while independent retailers' sales shrunk by around 18%. As a result, chains, which account for 30% of all cosmetics stores in Poland, generated 80% of segment turnover. Amidst unfriendly economic conditions and growing competition from modern chains, small stores have recently commenced to join together into networks, to have greater buying leverage and thus to be able to negotiate better terms and conditions for purchasing goods for resale, to then offer their clients better prices. The year 2010 saw the establishment of such chains one after the other. Some were the initiative of cosmetics and chemicals wholesalers who, concerned with the declining number of traditional cosmetics stores, would like to somehow ensure they have a long-term market that they can supply in goods. In addition, wholesalers themselves are also consolidating; by taking over other wholesalers they are enlarging their area of business, and thus are also assuring themselves better positions in negotiations with manufacturers. Number of cosmetics shops and drugstores in Poland, independent and chain outlets, ,068 8,945 8,361 8,099 7,799 7,539 7,299 8,007 7,700 6,913 6,472 5,494 4,632 3,792 1,061 1,245 1,448 1,627 2,305 2,907 3, e 2011f 2012f e estimate f forecast Chain outlets Independent outlets Source: report "Retail market of cosmetics in Poland Market analysis and development forecasts for ", PMR Publications, 2011

3 Among networks established by traditional shops last year are: Drogerie Polskie established by the distributor Błysk, Drogerie Jasmin established by Polska Grupa Drogeryjna from Grupa Eko Holding upon the earlier-acquired Drogerie Aster franchise chain and Bravo purchasing group (managed by the cosmetics distributor Adistor), Drogerie Laboo established by Navo main partner of Procter&Gamble on the traditional market, Kosmeteria Eksperci Urody established through the initiative of Brodr. Jorgensen, distributor of Gosh brand, which is highly focused on professional customer service, Drogerie Sekret Urody established by the wholesalers Sonia of Rzeszow and T&T of Bydgoszcz; both members of Delko distribution group. In all, the abovementioned chains held approximately 600 outlets last year. As a consequence, the overall number of stores that are part of a chain surged last year according to our estimates increased by close to 680 outlets, while a year earlier the chain storecount grew by 180 shops. Based on plans and announcements made by the individual players, in 2011 the segment will grow by another 600 shops which in addition to being the result of growth of the market leaders will also be brought on by subsequent independent retailers joining franchise networks and establishing similar groups. Thus, we forecast that in 2011 turnover generated via chains will increase by another 18% while the entire segment will expand by 11%. In later years, cosmetics chains will continue to strengthen their market clout at the expense of independent retailers. According to our estimates, the percentage share of chain outlets in total storecount will grow from the present-day 30% to 48% in Change in sales of cosmetics in cosmetics shops and drugstores in Poland, chain and independent outlets (%), % 17% 3% 28% 13% 21% 11% 17% 18% 8% 11% e 2011f -8% -10% -18% -16% Chain outlets Independent outlets Total cosmetics shops and drugstores e estimate f forecast Source: report "Retail market of cosmetics in Poland Market analysis and development forecasts for ", PMR Publications, 2011

4 Feeling threatened on part of large chains, small retailers may soon not have a choice but to join one of the franchise chains. The greater buying power of such organisations, joint marketing campaigns, well planned sales, consistent visual identity and training for owners and personnel are the advantages of chain membership; these may prove indispensible for surviving on the cosmetics market. Though, according to some distributors, owners of individual stores are not always keen to integrate, as despite the many benefits they fear loss of independence. On the other hand, the changes will be demanded by the clients themselves who will increasingly prefer to shop in a recognisable branded store operating under a common banner, with a unique market persona, exceptional offering or customer service among other traditional outlets. For more information about the cosmetics distribution market see PMR s newest report Retail market of cosmetics in Poland Market analysis and development forecasts for

5 About PMR PMR Publications () provides reliable market intelligence for business professionals interested in Central and Eastern European countries as well as other emerging markets. Publications by PMR analyse the business climate in the region, in particular in the construction, retail, IT, telecommunications and pharmaceutical sectors. PMR Publications offers both free and paid subscription newsletters, internet news portals and in-depth reports. To find out more about Poland and Central and Eastern European countries please visit and as well as regional and national sector portals dedicated to construction ( ceeconstruction.com), IT and telecom ( retail (, and pharma ( PMR Research ( is the specialised custom research unit of PMR. It offers a full array of qualitative and quantitative research methodologies, providing services such as customer satisfaction studies, brand awareness and brand image research, distribution and competition studies, segmentation analyses, fieldwork, online surveys and customised analyses of selected branches of the economy. PMR Research s services are available in over 20 countries of Central and Eastern Europe. PMR Consulting ( provides a wide range of services in 20 countries of Central and Eastern Europe, including market entry feasibility studies, sourcing, CI (competitive intelligence), strategic advisory, FDI assistance (M&A and greenfield projects), quick consulting as well as any other services and support a company might require to enter a market, find a business partner or gain reliable information. Our services are always tailored to the specific requirements of our clients, many of which are Fortune 500 companies. Contact PMR Customer service tel.: /48/ fax: /48/ moreinfo@pmrcorporate.com Marketing tel.: /48/ marketing@pmrcorporate.com