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Cosmetics Retailing in India: Obvious Excitement

By: Priyanka Bhattacharya
Posted: February 20, 2007, from the February 2007 issue of GCI Magazine.

page 5 of 6

With several malls coming up in Hyderabad, Chennai and Kolkata, as well as in Delhi and Mumbai, sales of luxury cosmetic brands are expected to double in the next year. Currently 10% of total retail sales are from the luxury cosmetics brands here.

Focus on New Markets
Until now the major luxury brands have focused on Delhi and Mumbai since these two cities have the maximum purchasing power. But of late, Bangalore, Chennai and Kolkata also have emerged as potential markets with economic growth in these areas. Interestingly, 2006 also saw the emergence of what are called the tier II cities as launch destinations of some luxury brands.

While Chanel opened its first boutique in Delhi and Ralph Lauren came to Mumbai, skin care brand Lancaster Cosmetics and Christian Breton launched their products first in Hyderabad and Ahmedabad respectively. Christian Breton, founder of the eponymous brand, said that Ahmedabad was selected for the India launch because of the city’s emerging status as a metropolitan city with people having purchasing power and a desire to improve their lifestyle. Other cities that hold great potential for the global brands are Chandigarh, which has a growing cosmopolitan population, and Jaipur, where the purchasing power is growing rapidly, according to recent market studies.

Poised for Growth
The influx of the many global cosmetic brands in India throughout the past year shows that the cosmetic retail market is ready to leap into the next phase of growth. The brands now have started investing heavily on promotions and advertising, and they are willing to wait a while to get their return.

Nevertheless, the high rate of import duty is also encouraging the illegal distribution channel here. While there is an increased awareness and willingness to buy, many consumers are still very price-conscious, which means extra efforts on the part of these global luxury brands to promote their products is necessary. Seeing this, some premium brands such as Estée Lauder, Clinique and Lancôme are taking their time to study the situation.