Description
This is presentation describes about cosmetic retailing study.
Overview of the Industry:
BEAUTY related products have been around from times immemorial albeit in various forms. Some of the oldest beauty products date back as far as 4000 B.C in Egypt. The term ‘moisturizing milk’ actually originated from Cleopatra’s legendary donkey milk baths. Today the meaning of beauty care has taken a whole new definition what with a host of products, brands, companies and experts operating in an industry dedicated to it. The word "Cosmetics" is a rather broad term targeted towards many market sectors, its dictionary definition is; 1. A powder, lotion, lipstick, rouge, or other preparation for beautifying the face, skin, hair, nails, etc. 2. Cosmetics, superficial measures to make something appear better, more attractive, or more impressive. A sub category of "Cosmetics" is "Makeup" this encompasses most modern day beauty products and is targeted to Facial cosmetics such as Eye Shadow, Lipstick, Mascara etc. Today's Cosmetic market place is a huge global economy worth approximately $40 billion, mostly generated in the western countries but it is ever expanding into other global markets and these develop. One of the best known and oldest cosmetic providers is L'Oreal. L'Oreal first started in 1909 specializing in hair coloring products in France, this grew rather rapidly and eventually caught the eye of some now established cosmetics companies in the USA. The year 1910 was when the likes of Max Factor, Elizabeth Arden and Helena Rubinstein began their global domination of this now lucrative market. These companies were not joined by any others till Revlon joined in shortly before WWII and Estee Lauder just after WWII. The cosmetics industry has developed rather rapidly since these early days of limited products as the quest for beauty has become ever more important. Brands are now represented by key celebrities around the world in a bid to increase the market share of this $40 billion industry. The
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modern Cosmetics range includes: Skincare, Lotions, Powders, Perfumes, Lip Colour, Nail polishes, Eye Makeup, Face Makeup, Hair Colour, Hair Care, Baby products, Bath Products, Party Makeup, Special FX makeup.
Indian Scenario India, with a population of nearly a billion people, is a country of contrasts. India's urban population is the main engine that fuels the demand for various cosmetic products. Although Indians are strongly attached and committed to their traditions, and culture, the advent of television and the awareness of the western world is changing the tastes and customs of India. The ‘morphing’ of India is subtle and the changes are not visible for the first time visitor. However, the market liberalization process that began in 1991, along with the crowning of three Indians as Miss World and Miss Universe during the preceding four years, have made Indian women conscious of their appearance. Consequently, the cosmetic consumption patterns of Indian women have changed, and this trend is fuelling growth in the cosmetic sector. The Indian economy is on a high growth drive, which means that purchasing power and willingness to spend are on the rise. It also means big changes are coming to retail there. According to a recent Merrill Lynch and Capgemini’s Asia-Pacific Wealth Report, there are more millionaires coming from the emerging markets than from the developed nations. The country’s population of high-net-worth individuals (HNI) is increasing, and the report shows an increase of nearly 20% in 2005 over the previous year. India reportedly has the youngest HNI population in the Asia-Pacific region. In fact, more Indian women in age group 25 to 45 are also in the HNI category. With increasing globalization, the young Indian woman has realized the importance of always looking good. All this has translated into a demand for high-quality and high-end skin care and color cosmetics. This awareness has been developing throughout the past five to six years, and industry experts believe that 2006 was the year when the Indian skin care and cosmetics market attained a certain level of maturity.
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Both skin care and color cosmetics have seen steady growth throughout the past five years. Color cosmetics have been growing at a steady rate of more than 30% annually during this time. According to the latest Euromonitor report on the Indian cosmetics and toiletries market, the color cosmetics market stands at $113.4 million and skin care at $346.9 million. In India today, the increasing number of women in age group 22 to 45 are becoming independent, have disposable income and the decision-making power to buy what they want. This emerging category has caught the attention of leading global luxury brands, with most in the process of either setting up or expanding their presence in the market. The Indian cosmetic Industry has witnessed rapid growth in the last couple of years, growing at a CAGR of around 7.5% between 2006 and 2008. With improving purchasing power and increasing fashion consciousness, the industry is expected to maintain the growth momentum (with marginal slowdown due to economic slowdown) during forecast period (2009-2012). It is projected to grow at a CAGR of around 7% during the forecast period, says "Indian Cosmetic Sector Analysis (2009-2012)", a recent research report by RNCOS, Both electronic as well as print media are playing an important role in spreading awareness about cosmetic products and developing fashion consciousness among the Indian consumers. With the introduction of satellite television and a number of television channels as well as the Internet, the Indian consumers are constantly being updated about new cosmetic products, translating into the desire to purchase them. Additionally, the flourishing Indian fashion/film industry is fueling growth in the industry by making Indians to realize the importance of having good looks and appearances. Despite the massive surge in the popularity of cosmetic products, the report finds that the average consumer spending on cosmetic products in India is much lesser than any other part of the world. This implies that the Indian cosmetic industry has an even greater potential for growth in future than present. At present, most of cosmetics manufacturers in India cater to the domestic market but they are gradually establishing their footholds in overseas markets. In recent years, the Indian cosmetic
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manufactures have received orders from overseas markets; for example - Indian herbal cosmetic products have a tremendous demand in the international market. However, manufactures should not forget that the Indian domestic market is price sensitive and they need to work out innovative strategies to establish a foothold here. Thus the Indian color cosmetics and skin care market throughout the past two years has seen increased activity, fueling a growth of 20% last year, according to a recent study by the Confederation of Indian Industry. The market saw the entry of several brands, including MAC Cosmetics, Chanel, Givenchy, Versace, Red Earth, Body Shop, Christian Breton, ArtDeco and MAX Factor. In the premium segment, Chanel was a prime mover, entering the market in 2005 directly through a subsidiary instead of a distributor. Similarly, Estée Lauder set up its India office and brought in MAC Cosmetics for the professional and serious makeup users. Brands such as Givenchy and Versace set their sights on the Indian market through distributors. L’Oréal Luxury Division was launched in the country in January 2006. The company has started marketing Ralph Lauren and Cacharel brands. Since market liberalization, several multinational companies, such as Revlon, Coty, Oriflame, Chambor, Avon, Yardley, Nina Ricci, Garnier Laboratories, and L'oreal, have entered the Indian market. These companies initially cashed in on their international brand image; however, repeat purchases were not forthcoming because the products were not priced competitively. Consequently, these companies became price-sensitive and most of the international brands are now priced competitively in the Indian market. The color cosmetic segment which has Indian players such as Lakme Lever, Tips & Toes and Shenaz Hussain and multinational company players such as J. L. Morrison, Ponds, Unilever and Colgate Palmolive, offers the highest competition. Domestic players like Lakme, Tips & Toes and My Fair Lady, mainly dominate this market. Revlon has a market share of 80% in the premium market. Lakme is the overall market leader in the color cosmetic segment (lip care and nail enamel) with a wide range of products and prices,
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both. The organised colour cosmetics market is estimated at Rs 340 crore currently. Revlon's sales account for Rs 60 crore of that. Lakme leads the market with sales of Rs 100 crore. Lakme, has recently joined forces with Hindustan Lever Limited (HLL) and calls itself Lakme-Lever. Other international brands in the sector include L'Oreal, Revlon, Maybelline, Benckiser and Avon with a major part of the rest, some of them engaged in the multi-level-marketing model for their products. The most important global players are already in India (except perhaps Estee Lauder, Mary Ann Kay, Kao and Body Shop) and are in an advanced stage of market development. They are already exploiting prospects based on imports of active ingredients, packaging and completely built products. In that regard, new entrants have to contend with serious competition in India from local as well as global players. Multinationals feel that Indian companies - Lakme, Pond's, Nivea-makers J. L.Morrison and Tips & Toes makers Paramount Cosmetics - have not identified the changing needs of the new Indian woman. It is therefore that Switzerland's Torstone's Chambor, Sweden's Oriflame, USA's Avon Cosmetics, Revlon, Benckiser (Coty Vitacare), Paris-based Escada group and Laboratories Garnier (Synergie) are ambitiously fishing in the Indian waters. It is not coincidence that many of these MNCs entered the Indian market in the mid-Nineties. Fired with the zeal of changing the complexion of the cosmetics market, they are fuelling the change using satellite television, women's magazines and beauty pageants. Maybelline competes with Revlon and Lakme in the colour cosmetics market in India. Revlon too has grown 65 per cent to strengthen its share to 13 per cent during the period. As per the data, Lakme's share stands at 34 per cent, and that of Elle 18 is 25 per cent - both of which have suffered a de-growth over the previous period. The lip and nail colour market, at Rs 107 crore, has registered a growth of 11 per cent. Mass market products account for a major share, around 70 per cent, while the premium segment accounts only for a mere 9 per cent in lipsticks and 5 per cent in nail enamels.
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Manufacturing and SCM : After recent globalization and change in policies the opportunities for manufacturers & exporters have widen. Today we can say that the producers are coming-off their age from traditional methods. The developments are becoming trend setting. The Manufacturers are versatile to cope up with the vibrant consumer behavior. The globalization in terms of foreign trends & acceptability has penetrated finely into the Indian buying market and so is the Local manufacturer’s struggle to captivate the opportunities by matching the same trends & international qualities. The practice of quality control & organizational management has improved drastically by emergence of New generation working as a Team work. All this things has together gained importance for a Foreign Buyer seeking his eyes to create a valuable outsourcing partner in India. What’s so appealing about Outsourcing a Cosmetic Product for a European Buyer from India? Here some important aspects for this 1. The Research base in India have revolutionalized with exceptional Education. Indian cosmetic companies employs experienced cosmetologist & PHDs for research & product development. 2. Indian Engineering Industry have created State of the Art Process machineries for renowned Pharmaceuticals & Cosmetic Industries worldwide. Its inevitable that the Process engineering today is expertly competed by India. 3. The Skilled & Unskilled Labour even today is a Prime resource for Lower value addition in India. 4. Quality Control, Lab trials & ISO accreditation Practices is a Prime criteria which companies adopt for their creditability.
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5. All kinds of Packaging materials & Raw Materials are easily outsourced from Local access. For a particular Input a Producer have an option of more than 5 vendors in the Indian local competitive thriven market.. 6. New Policies & Sectors such as Special Economic Zones cut outs completely Tax burdens & overheads. 7. Indian Policies for Export is Not subsidized. Country like China wherein the Producers enjoy unreasonable government subsidies are not reliable for long term partnership. As we are not sure when can a product from China crash from global competition. 8. Information Technology as India being pioneer, have made communications made more & more faster & convenient. Designing & Branding Solutions can be provided at highly professional level, at economic costs. 9. Stringent Laws for protection of Brands & Copyrights.
The Business for India is beyond private label supplies for Chain stores & Dollar Shops. We see India in near future as partnering for Giant brands of Europe & American Segments. Amongst the Cosmetics & Toiletries, with a professional outsource job owners produces a wide range of Creams, Lotions, Talcum Powders, Tooth Pastes, Body Oil, Baby Products, Toilet Soaps, Compacts, Shampoos, Conditioners, etc. with constant knowledge & update of New-age Active Ingredients & Packaging.
Global Scenario : According to the Euromonitor survey, the top ten markets worldwide account for 70% of global demand. Leading the chart is the US followed by Japan, Germany, the UK and France. China is in sixth place above Italy, Canada, Spain and Korea. However, when looking at the purchasing power (PP), a different pattern emerges. The two factors that combine to reveal a country's PP, population and income levels, are more favorable to emerging markets. Although the US still takes the number one spot, China tips Japan into third and India ousts Germany into fifth place.
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The UK and France manage sixth and seventh place, while Brazil, Italy and Russia bring up the rear. While on the whole the emerging markets are strong in terms of population yet weak in terms of PP - and the converse is true of developed markets - there are exceptions when volume sales are evaluated for certain goods. For washing machines and televisions, China trumps the US while Indians buy more refrigerators and televisions than Germans.
Cosmetics Specialty store – Ulta a case study : Today, the woman who previously picked up her inexpensive lipstick at the drugstore and her pricier cosmetics at the department stores has discovered one-stop beauty shopping. Romeo, Ill.based Ulta is the store that is unashamed to be everything to everyone, and its success has cost department stores and drugstore chains a chunk of their cosmetics commerce. Women no longer have time to spend hours shuttling from the salon to the department store to the drugstore to take care of their beauty needs. They have so little time to devote to themselves that they want to be able to meet their personal care and beauty needs in one place. Ulta stores makes it as easy as possible for its customers to visit, locating stores in strip centers with easy access and plenty of parking. Product range and accessibility are not its only virtues, however. Ulta has turned cosmetics shopping into a form of entertainment, with its brightly lit stores inviting shoppers to sample makeup, drink coffee and indulge themselves with massage, manicures, pedicures, makeovers and haircuts. Shoppers are even treated to a variety of presentations, some of which — how to decorate a home, for instance — are not directly related to beauty. Little wonder they have become destinations in themselves. The stores are richly appointed, with wide aisles, wooden cabinetry, luxurious bathrooms and soothing music. Cosmetics are not locked behind counters, and Ulta’s shoppers don’t find themselves ambushed and squirted by atomizer-brandishing product promoters. The atmosphere in an Ulta store is one of relaxed elegance and indulgence; we want customers to feel instantly
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that they have escaped. Samples are plentiful and accessible to encourage customers to entertain themselves by sampling different products. Flower displays, bubbling Zen rock garden fountains and the prominently displayed vibrant Ulta private-label color library accentuate the store’s uplifting ambience. In short, the chain provides a “total beauty experience,”. Ulta has done away with its stripped-down format, but not to appease its suppliers. While the spartan look works for factory outlet centers, it didn’t satisfy women looking for some pampering and self-indulgence. In 1999 Ulta began rolling out a new look, with 10,000-squarefoot to 11,000-square-foot stores featuring hardwood floors, sleek fixtures, wide aisles and soft lighting, with everything except the prices designed to evoke the ambience of a fancy store. It also expanded its offerings to include spa services, full-service salons, manicure stations, facial treatment rooms and a pro hair care section. Today, the target Ulta customer is about 40 years old, college educated, enjoys a family income exceeding $75,000 a year, and uses four facial and three hair care products daily. Consequently, anyone answering that description in the parking lot of a center anchored by Marshalls isn’t necessarily lost.
Ulta is not the only company changing the way people shop for cosmetics, of course. Sephora, a division of Moët Hennessy Louis Vuitton, with more than 215 stores in Europe and in excess of 77 in the United States, also sells a range of products, and has altered the face of cosmetics retail since opening its first location in Paris in 1993. Its stores are attractive, offering a mixture of brand-name cosmetics and perfumes, and private-label products. Sephora is opening about 20 stores a year in the United States, in both freestanding and mall locations. Meanwhile, there is a steady exodus of customers from drug chains, according to a survey by WSL. While 19% of women in a 1998 survey listed drugstores as their first choice for cosmetics, only 16% did so in 2008. Increasingly, mass retailers seem to be willing to let go of their traditional merchandising habits in favor of trying to attract more consumers into their beauty aisles by adding sets of imported
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beauty brands. But have these new merchandising tactics worked, and will they become the norm rather than the exception to mass beauty merchandising? Although it may be too early to tell, many beauty experts agree that more worldly exclusive brands could be around to stay. "It certainly is a way that a drug retailer can differentiate itself from its competitors," said Karen Grant, senior beauty industry analyst for The NPD Group, a market research firm. "And the exoticness and cache of these new brands certainly doesn't hurt." In fact, the uniqueness of a European beauty brand exclusive could make mass retailers the place to go for certain products. You can buy things like Tide and contact solution any old place. The idea behind these beauty introductions is to make the customer say, 'I need to go here for this certain brand.' And many retailers are trying to do just that. Target, Duane Reade CVS and, more recently, Walgreens have revamped their beauty strategies to include international players. Earlier in2009, Target unveiled a specialty bath collection with such imported brands as Keen's from South Africa and Baylis & Harding from England. Walgreens, with the assistance of beauty marketing company Excelsior Beauty, is bringing the European Beauty Collection to about 1,000 of its top beauty stores in early October. The collection is comprised of seven exclusive skin care lines from France, Germany, Spain, Switzerland and Greece. Understanding that today's consumers want to be able to try before they buy, the display will feature testers, and there will be millions of product samples that beauty advisors can give to their clients. Gone are the days when grooming was just about a routine trip to the neighborhood parlour for a facial, hair-cut and make-up. It’s now much more than that. Newer products are flooding the market shelves offering grooming, healthcare and even pampering solutions. All said and done it’s increasingly becoming a beauty obsessed world with ‘looks’ assuming paramount significance. Whoever said that ‘beauty lies in the eyes of the beholder’, should take a look around. Beauty lies across shelves of super markets and beauty spas waiting to be picked!
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Significance of Study :
Organized cosmetics retailing is on the growth phase in India. Though there are very few exclusive cosmetic store in India. Consumption is increasing and retailers are finding new ways to attract the consumers. This study, by analyzing the customer movements in a cosmetic retail shop would help in understanding their behavior and buying pattern. It will help the retailers to place their products in a better way which would complement the consumer’s buying behavior. By analyzing the current trends and visual displays that the retailers use it would also suggest a change in their approach. This Project is aimed to observe the cosmetics buying behavior in retail chains. It also analyses the various consumer profile and the variety of products they purchase. This project would also help in analyzing the various retail mix that cosmetic retailers in Ahmedabad implement to enhance their sales.
Study and Analysis:
Two major retail stores in Ahmedabad were studied on various parameters. Consumer purchasing patterns were observed in both the stores. One was Lifestyle –cosmetics section and the second store was “Smruti collection”. Following study shows the comparison between the two stores in terms of : 1) Visual Merchandising/ Store presentations/displays and signage 2) Product offering 3) Store Layout & Locations 4) Store Promotions 5) Consumer Buying Patterns.
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Lifestyle Cosmetics section:
Lifestyle International (P) Ltd is part of the Landmark Group, a Dubai – based retail chain. With over 30 years’ experience in retailing, the Group has become one of the foremost retailers in the Gulf. Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at an exceptional value for money, Lifestyle India began operations in 1999 with its first store in Chennai. Currently there are 15 Lifestyle stores and 8 Home Centre stores across Ahmedabad, Bangalore, Chennai, Hyderabad, Jaipur, Mumbai, Pune, New Delhi, Noida and Gurgaon.
Visual Merchandising/ Store presentations/displays and signage:
The cosmetics section is situated at the ground floor after the immediate entrance from the main door.
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The Grid Layout format of Cosmetics section was arranged in a gondolas format where major brands like Lakme, Loreal, Revlon Occupied Individual gondolas for all types of products while other brands shared the gondolas.
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Most of the new collection was arranged on the eye level along with the high demand products. The older merchandise moves a lower rack according to the date of arrival.
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Each Gondolas has various lifestyle images of various brands and models displaying concerned products.
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There were very less promotional signage in the store for cosmetics. Those present were only at the point of sale or billing counters.
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Category signage were displayed on gondola with major brands. There were freestanding displays around the corners of the cosmetic section displaying major brands and pictures of models endorsing those brands.
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The whole section was lit with a combination of white, pink and yellow colored lights giving a classy and serene atmosphere
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A harmonica instrumental music was being played in the background making the whole atmosphere very pleasant
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Perfumes were kept at the end caps of the cosmetic section aisles but were highly visible as the they were displayed in glass windows with signage above each rack window of the respective perfume brands.
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Different brands sections were lit differently according to the image of perfume brands.
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Product offering • Cosmetics section offered variety of products from lipsticks to beauty lotions to perfumes. • • The products were not placed category wise but they were placed brand wise. Various categories in each brands were placed on separate gondolas. For Example Lakme section included all the lakme products from lipstick to nail polish and various other beauty lotions. • • There were huge collection of national and international brands in the store. Complete perfume’s section was at the end cap of the cosmetic section but still highly visible Brands included : • Color Cosmetics : Loreal, Maybelline, Lakme, Revlon, Chambor, Bourjois, Maxfactor, Diana of London, Color Bar. • Health and Beauty : Kaya, H2O, Ponds, Toni and Guy, Shahnaz Hussain, Biotique, Lotus Herbals • Perfumes/Fragrances : Azzaro, Burberry, Escada, Lacoste, Valentino, Dolce & Gabbana, Gucci, Jean Paul Gaultier, Issey Miyake, Tommy Hilfiger, DKNY, Aramis, Caroline Herrera, Paco Rabbane, Nina Ricci, Thierry Mugler, Cartier, YSL, Elizabeth Arden, Lanvin, Paul Smith, Lolita Lempika, Versace, Moschino, Loewe, Kenzo, Calvin Klein, Davidoff, Givenchy, Christian Dior, Hugo Boss, Boss, Mont Blanc, Dunhill, Baldessarini,
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Ferragamo, Ralph Lauren, Bvlgari, Cacheral, Nautica, Armani, Britney Spears, FCUK, Balenchiaga, Christian Lacroix, Chevignon, Ferrari, Max Mara, Canali, Luciano Soprani, GANT, Ted Lapidus, Mango, S.T. Dupont, UDV, Kenneth Cole, JLO, Joop!, Sarah Jessica Parker, Jilsander , Nike, Police, Van Gils, Adidas, Jovan, Espirit, Pierre Cardin, Miss Sixty, David Beckham
Store Layout and Location: • Lifestyle store in Ahmedabad is located in the Gallops mall situated on the SG highway near ISKON Temple. This is essentially a Central Business District (CBD) area and is home to numerous malls, Shopping centers, multiplexes and restaurants. • Though the complete store has a racetrack layout but the cosmetics section specifically has a grid layout. • The Section is situated on the ground floor and is the immediate section after the main entrance into the store.
Store Promotions • Lifestyle does not generally provide much sales promotions on cosmetics except from those by product company itself. • However some of the older merchandise are sold through bundle offers for example: Valentino Perfumes and Deodorant in a combo pack or Lakme complete makeup kit in discount prices. • Lifestyle however comes up with theme based promotions for promoting its popular brands. For example Colors fest by Lakme. • Discount offers are prevalent during monsoon sales or other end of season sales.
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Lifestyle has lot many media promotions in terms of outdoor banner and hoarding advertizing, print ads and other promotions.
Consumer Buying Patterns: A study of buying behavior of 10 consumers were observed during different time periods for three days. Buying patterns are described below:
1. (Monday, 7:30pm-8:00pm, Single Lady ,apprx age:early 30s) Entered the store, directly went to the cosmetics section. Looked for Lakme lipsticks and other products. Went to Maybelline section. Searched for similar products. Finallly came back to Lakme, picked up 2 lipsticks with different shades. Walked away to women’s clothing and finally to billing counter.
2. (Monday, 8:00-8:10, Single lady ,apprx. age 20-25)
Entered the store, directly went to cosmetics section. Straight way went to Loreal section. Picked up facepack. Moved to Bourjois section. Picked up beauty cream. Walked away to billing counter.
3. (Monday 7:00-7:20, single male ,apprx age 25-30) Entered the store, Went to perfumes section. Checked and tested Valentino, Gucci, Hugo and David Beckham brands. Selected Valentino 50 ml bottle. Went to Loreal section. Picked up color conditioner with some cream pack. Went to billing counter.
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4. (Thursday 3:30-4:50, lady with husband ,aaprx age 35-40) Entered the store. Checked Lakme, Loreal, Maybelline and Ponds products. Checked for prices but did not purchase any. Went to women’s apparel section, bought some kurti then went to men’s section searched for shoes. Didn’t buy any. Came back to cosmetics section. Purchased Pond’s 4 different types of creams. Picked up one Mybelline lipstick and nail polish and went to billing counter.
5. (Thursday 5:00-5:30, 3 ladies ,apprx age 18-23) Entered the store, Went to women’s apparel section. Purchased some clothes. Went to shoes section. Purchased some footwear. One girl came to cosmetics section while other two went back to apparel section. The girl curiously looked and searched products from all the available sections. Then other two girls joined in. they discussed something. Purchased 5 lipsticks from 4 brands : Loreal, Maybelline, Lakme, Revlon. Purchased Lakme Nail polish (2 in number) and went back to billing counter.
6. (Thursday 6:15-7:15, girl and boy ,apprx age 20-24) Entered the store, went to men’s apparel section. Purchased some clothes. Went to women’s section. Purchased some clothes. Came to cosmetics section. Went to perfumes. Tested some. Didn’t buy any. Boy went to billing counter. Girl still searching for lipsticks. Found one from ’Chambor’. Gave it to boy and was added to the bill.
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7. (Sunday 4:30-4:55, 2 ladies ,apprx age 30-35) Entered the store. Went in to roam around complete store. Finally came to cosmetics section. Lokked and compared products from almost all the sections. Left the store without buying any product.
8. (Sunday 4:45-5:15, Husband, wife and little girl apprx age male: mid 30’s ) Went to different sections in the store. Purchased some products. Came to cosmetics section. Husband went to Perfume section while lady and her daughter went to color cosmetics section. Man purchased ‘Hugo’ 100 ml. perfume and his wife purchased 3 different types of creams and one nail polish. They left the sore.
9. (Sunday 5:00-6:00, Boy and a girl apprx ages:23-28) Roamed around complete store. Purchased some apparels, footwear and other accessories. Came to cosmetics section. First went to perfume section. Tested some of them. Bought Moschino 50ml, came to color cosmetics bought 3 different shades of lipsticks and nail polishes, purchased 1 bundle of “complete kit’ by lakme. Left the store.
10. (Sunday 5:45:6:15, 2 males apprx age 28-32) Entered the store. Directly went to perfumes section. Searched for almost all the brands. Seemed conscious about prices. Bought one 50 ml bottle of Azzaro. Went to billing counter. But didn’t bill. Went to apparel section. Came back to billing counter and left the store.
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Smruti Collections:
Smruti collections is a privately owned cosmetics and jewelry store situated on C.G Road area in Ahmedabad. It is a specialty store with two sections namely cosmetics which is their prime and major revenue collector and Jewelry. This is much smaller shop as compared to Lifestyle cosmetic section and is essentially a service shop catering to middle class income groups.
Visual Merchandising/ Store presentations/displays and signage:
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The cosmetics section is situated on the ground floor of the store while Jewelry section is situated on the below ground level.
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The store is essentially a service store where customers needs to ask for the products to the sales personnel on the counter. The sales people would then assist the customers in selecting the products.
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Though small but merchandise is kept according to brand wise. Each section belongs to separate brands (only popular national and international) and each brand section consists of various product categories offered by that brand.
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Backlit visual displays of respective brands are placed above the brand section. All the merchandise is kept only at or above the eye level. Three gondolas are also kept consisting of only lipsticks and nail polishes of various brands.
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No outdoor displays were placed also no freestandings were placed inside the store. The store was moderately lit but no special or effective lights. Also no background music was being played in the store.
Product offering: • Smruti collections offered variety of products. They include color cosmetics, Health and beauty cosmetics such as body lotions and face creams and vary little range of perfumes. • Major Brands which are divided section wise are : Loreal, Maybelline, Lakme, Revlon, Ponds. • Other imported and premium brands (available in Lifestyle) were not available in this store. • Along with the Cosmetics it offers other women and beauty accessories along with jewelry. • Most of the Products available range from medium to high level prices. But no products belong to premium price range
Store Layout and Location:
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Since it’s a service store the layout is essentially a “Boutique layout” where all the merchandising is displayed behind the store counters.
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The store is located at Swastik CHaar rasta on C.G. Road in Ahmedabad which is a Cental Business District (CBD), a famous shopping area in Ahmedabad.
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Billing counter is located near the entrance/exit of the store. There are impulse merchandising displays at the billing counter.
Store Promotions • • Almost all of the company offered promotions are being offered in the store In addition to that store also gives discounts on some out of fashioned products (lipstick shades etc) to sell off the inventory. • Couponing system is being followed regularly to generate repeat visits and purchases by the customers. • In terms of media promotions, only print ads in local newspapers appears.
Consumer Buying Pattern:
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The customer buying pattern was observed on one day and since it is a service centre store an observation of 10 customers were done on Sunday in between 6:30 to 8:30.
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Since it is not a large store hence detailed behavior is not been mentioned in the report whoever some of the findings through observations are :
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Most of the customers were alone while they came to shop for purchase.
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Husband accompanied wife in one case while a friend accompanied another in one case.
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All the customers who came to shop were pre decided as what to buy and asked for the same thing. e.g : Loreal hair color, Lakme sun screen, Maybelline nail polish etc.
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The shopping bill wasn’t much large for individual customer who came to purchase products.
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All of the individuals observed purchased some or the other thing from the shop and none went without shopping anything.
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There was no impulse purchase made by any of the observed shoppers.
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Most of the customers were price sensitive and often compared the prices of different brands for the same category.
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Item purchased were mostly standard products and there was no purchase of premium product in the shop.
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When asked one of the customer, Convenience was the major factor for selecting the shop.
Analysis & suggestions:
1. Mode of Purchase Around 60 per cent of the respondents have purchased cosmetics individually. About a third of the consumers purchased cosmetics with their spouses. And rest with their friends etc. Purchasing cosmetics individually seems to be the prevailing practice among both males
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and females. The practice of purchasing cosmetics with their friends seems to be more prevalent among females compared to their counter parts . Thus high service factors and improving the salesman interaction within the store would be highly beneficial to boost the sales by making customers more comfortable while purchasing.
2. Brand Selection Majority of the respondents selected the specific brands of cosmetics individually by themselves. Around 20 per cent of the respondents entrusted the brand selection to their spouse/friends. The percentage of respondents who selected the brands by themselves is slightly high among females compared to those among the males . Selecting the brand exclusively by the spouses or together by both the spouses seems to be enjoyed by the men compared to women. Majority of the teenagers did their brand selection individually. Thus the through survey about the popularity of brands must be done by stores such as lifestyle to know the current trends in the market and the preferences of the consumers. Also these brands should be highly visible when customer enters the store to create the positive impact.
3. Point of Purchase and Shop Preference There is no specific shop of preference for most of the observers in purchasing cosmetics. However it is found that lower income group preferred Smruti over lifestyle while higher income group preferred Lifestyle. Also the percentage of female consumers is high among those who purchase it from variety shops compared to males. But men preferred to purchase it from a single shop. That means male
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consumers enjoyed purchase of all their cosmetic requirements from a single shop. This may be because the variety and types of cosmetics available for men are less compared to women. Targeting the right customers for both the types of stores is extremely important and thus the promotions and communications should be done in consideration with the selected target customer segment. 4. Brand Preference Among the total, more than 60 per cent of the respondents were very strict about their specific brand. Male respondents purchase some other brands if they do not get the specific brand of cosmetics but the percentage of females doing same is less. Restricting to a single brand has been more prevalent among females compared to male consumers (brand loyalty high among the females compared to males).
5. Criteria for Purchase When Asked to some of the observers around little more than 50 per cent of the respondents considered quality as the most important criteria for selection of purchase of cosmetics. About a quarter each of the respondents considered the factors like price and brand for determining the purchase of cosmetics. About 50 per cent of males and 60 per cent of the female respondents considered quality as the main criterion for purchase of cosmetics. Price seems to be a concern for men for selecting cosmetics compared to their women counterparts . There is no substantial gender difference among the respondents considered brand as the main criterion. Stores such as lifestyle should focus on quality and fashion statement of the product categories while smruti collections should more focus on providing the convenience and utility factor to its customers.
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6. Spending Patterns It has been found that Females tend to spend more on the cosmetics and are more prone to impulse purchasing. While Males are sensitive in terms of price while choosing particular product or brand of cosmetics. Also Males are less prone to impulse purchase and spending amount on impulse purchases is found to be more in females than males. Spending is influenced more by ‘needs’ in case of males while it is influenced by ‘variety’ in case of females. Thus high margin cosmetics/private labels should be placed in strategic locations such as near to billing counters or in between two popular brand collections so that impulse purchase would increase in both the stores especially in Lifestyle. 7. Store Image The store image plays a very important role in preference of store. Lifestyle is a high fashion and premium store and thus it creates a store patronage among the fashion seekers in high income people. Thus the inner and outer store image depicts the elite fashionable and lifestyle like image which certainly goes with the store’s name. However Smruti Collections store tends to give a sober look and though creates an image of specialty store but the ambience and its design essentially gives a standard non premium cosmetic’s store image. The store loyals would generally fall in the category of people needing to buy cosmetics products mainly for utility purpose rather than style statement and fashion orientation. The Smruti Falls into category of “High Involvement- Convenience” store while Lifestyle falls into category of “High Involvement- Experience” store Similar to fashion retailing a pentagon model could be formed to explain the value proposition of lifestyle store so that store image can be improved by making suitable changes.
Pentagon Model :
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Place
Produ ct
Value
Peopl e
Communicati on
Place: The Lifestyle is situated in the Gallops mall which is the central business district of Ahmedabad. It is buzzling with various malls, multiplexes and restaurants. It is a famous shopping area. Product: The Product offering as also mentioned earlier is essentially the lifestyle products for fashion conscious customer. Variety and limited merchandising gives the feeling of lesser product availability which makes customer feel to pick the product immediately which he could have postponed later by the fear of getting out of stock. People: People in terms of customers are upper middle to high class segment with trendy and fashion conscious needs. In terms of sales personnel and employees, they are well trained to the basics of salesmanship, etiquettes, and ability to close the sales. They work on commission basis and understand the importance of customer relationship. Communication: The message that Lifestyle stores want to convey to their customers is that “It is a high class store with latest trends and it positions itself as “Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at an exceptional value for money” Value: In terms of customer it is a premium store offering high priced and high end cosmetics. However the store feels that it offers a greater and exceptional value for the customer’s money.
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References : http://www.foolonahill.com/adcosmo.html http://www.cosmeticsbusiness.com/story.asp?storycode=62 http://www.icsc.org/srch/sct/sct1101/page29.php
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doc_131172419.doc
This is presentation describes about cosmetic retailing study.
Overview of the Industry:
BEAUTY related products have been around from times immemorial albeit in various forms. Some of the oldest beauty products date back as far as 4000 B.C in Egypt. The term ‘moisturizing milk’ actually originated from Cleopatra’s legendary donkey milk baths. Today the meaning of beauty care has taken a whole new definition what with a host of products, brands, companies and experts operating in an industry dedicated to it. The word "Cosmetics" is a rather broad term targeted towards many market sectors, its dictionary definition is; 1. A powder, lotion, lipstick, rouge, or other preparation for beautifying the face, skin, hair, nails, etc. 2. Cosmetics, superficial measures to make something appear better, more attractive, or more impressive. A sub category of "Cosmetics" is "Makeup" this encompasses most modern day beauty products and is targeted to Facial cosmetics such as Eye Shadow, Lipstick, Mascara etc. Today's Cosmetic market place is a huge global economy worth approximately $40 billion, mostly generated in the western countries but it is ever expanding into other global markets and these develop. One of the best known and oldest cosmetic providers is L'Oreal. L'Oreal first started in 1909 specializing in hair coloring products in France, this grew rather rapidly and eventually caught the eye of some now established cosmetics companies in the USA. The year 1910 was when the likes of Max Factor, Elizabeth Arden and Helena Rubinstein began their global domination of this now lucrative market. These companies were not joined by any others till Revlon joined in shortly before WWII and Estee Lauder just after WWII. The cosmetics industry has developed rather rapidly since these early days of limited products as the quest for beauty has become ever more important. Brands are now represented by key celebrities around the world in a bid to increase the market share of this $40 billion industry. The
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modern Cosmetics range includes: Skincare, Lotions, Powders, Perfumes, Lip Colour, Nail polishes, Eye Makeup, Face Makeup, Hair Colour, Hair Care, Baby products, Bath Products, Party Makeup, Special FX makeup.
Indian Scenario India, with a population of nearly a billion people, is a country of contrasts. India's urban population is the main engine that fuels the demand for various cosmetic products. Although Indians are strongly attached and committed to their traditions, and culture, the advent of television and the awareness of the western world is changing the tastes and customs of India. The ‘morphing’ of India is subtle and the changes are not visible for the first time visitor. However, the market liberalization process that began in 1991, along with the crowning of three Indians as Miss World and Miss Universe during the preceding four years, have made Indian women conscious of their appearance. Consequently, the cosmetic consumption patterns of Indian women have changed, and this trend is fuelling growth in the cosmetic sector. The Indian economy is on a high growth drive, which means that purchasing power and willingness to spend are on the rise. It also means big changes are coming to retail there. According to a recent Merrill Lynch and Capgemini’s Asia-Pacific Wealth Report, there are more millionaires coming from the emerging markets than from the developed nations. The country’s population of high-net-worth individuals (HNI) is increasing, and the report shows an increase of nearly 20% in 2005 over the previous year. India reportedly has the youngest HNI population in the Asia-Pacific region. In fact, more Indian women in age group 25 to 45 are also in the HNI category. With increasing globalization, the young Indian woman has realized the importance of always looking good. All this has translated into a demand for high-quality and high-end skin care and color cosmetics. This awareness has been developing throughout the past five to six years, and industry experts believe that 2006 was the year when the Indian skin care and cosmetics market attained a certain level of maturity.
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Both skin care and color cosmetics have seen steady growth throughout the past five years. Color cosmetics have been growing at a steady rate of more than 30% annually during this time. According to the latest Euromonitor report on the Indian cosmetics and toiletries market, the color cosmetics market stands at $113.4 million and skin care at $346.9 million. In India today, the increasing number of women in age group 22 to 45 are becoming independent, have disposable income and the decision-making power to buy what they want. This emerging category has caught the attention of leading global luxury brands, with most in the process of either setting up or expanding their presence in the market. The Indian cosmetic Industry has witnessed rapid growth in the last couple of years, growing at a CAGR of around 7.5% between 2006 and 2008. With improving purchasing power and increasing fashion consciousness, the industry is expected to maintain the growth momentum (with marginal slowdown due to economic slowdown) during forecast period (2009-2012). It is projected to grow at a CAGR of around 7% during the forecast period, says "Indian Cosmetic Sector Analysis (2009-2012)", a recent research report by RNCOS, Both electronic as well as print media are playing an important role in spreading awareness about cosmetic products and developing fashion consciousness among the Indian consumers. With the introduction of satellite television and a number of television channels as well as the Internet, the Indian consumers are constantly being updated about new cosmetic products, translating into the desire to purchase them. Additionally, the flourishing Indian fashion/film industry is fueling growth in the industry by making Indians to realize the importance of having good looks and appearances. Despite the massive surge in the popularity of cosmetic products, the report finds that the average consumer spending on cosmetic products in India is much lesser than any other part of the world. This implies that the Indian cosmetic industry has an even greater potential for growth in future than present. At present, most of cosmetics manufacturers in India cater to the domestic market but they are gradually establishing their footholds in overseas markets. In recent years, the Indian cosmetic
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manufactures have received orders from overseas markets; for example - Indian herbal cosmetic products have a tremendous demand in the international market. However, manufactures should not forget that the Indian domestic market is price sensitive and they need to work out innovative strategies to establish a foothold here. Thus the Indian color cosmetics and skin care market throughout the past two years has seen increased activity, fueling a growth of 20% last year, according to a recent study by the Confederation of Indian Industry. The market saw the entry of several brands, including MAC Cosmetics, Chanel, Givenchy, Versace, Red Earth, Body Shop, Christian Breton, ArtDeco and MAX Factor. In the premium segment, Chanel was a prime mover, entering the market in 2005 directly through a subsidiary instead of a distributor. Similarly, Estée Lauder set up its India office and brought in MAC Cosmetics for the professional and serious makeup users. Brands such as Givenchy and Versace set their sights on the Indian market through distributors. L’Oréal Luxury Division was launched in the country in January 2006. The company has started marketing Ralph Lauren and Cacharel brands. Since market liberalization, several multinational companies, such as Revlon, Coty, Oriflame, Chambor, Avon, Yardley, Nina Ricci, Garnier Laboratories, and L'oreal, have entered the Indian market. These companies initially cashed in on their international brand image; however, repeat purchases were not forthcoming because the products were not priced competitively. Consequently, these companies became price-sensitive and most of the international brands are now priced competitively in the Indian market. The color cosmetic segment which has Indian players such as Lakme Lever, Tips & Toes and Shenaz Hussain and multinational company players such as J. L. Morrison, Ponds, Unilever and Colgate Palmolive, offers the highest competition. Domestic players like Lakme, Tips & Toes and My Fair Lady, mainly dominate this market. Revlon has a market share of 80% in the premium market. Lakme is the overall market leader in the color cosmetic segment (lip care and nail enamel) with a wide range of products and prices,
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both. The organised colour cosmetics market is estimated at Rs 340 crore currently. Revlon's sales account for Rs 60 crore of that. Lakme leads the market with sales of Rs 100 crore. Lakme, has recently joined forces with Hindustan Lever Limited (HLL) and calls itself Lakme-Lever. Other international brands in the sector include L'Oreal, Revlon, Maybelline, Benckiser and Avon with a major part of the rest, some of them engaged in the multi-level-marketing model for their products. The most important global players are already in India (except perhaps Estee Lauder, Mary Ann Kay, Kao and Body Shop) and are in an advanced stage of market development. They are already exploiting prospects based on imports of active ingredients, packaging and completely built products. In that regard, new entrants have to contend with serious competition in India from local as well as global players. Multinationals feel that Indian companies - Lakme, Pond's, Nivea-makers J. L.Morrison and Tips & Toes makers Paramount Cosmetics - have not identified the changing needs of the new Indian woman. It is therefore that Switzerland's Torstone's Chambor, Sweden's Oriflame, USA's Avon Cosmetics, Revlon, Benckiser (Coty Vitacare), Paris-based Escada group and Laboratories Garnier (Synergie) are ambitiously fishing in the Indian waters. It is not coincidence that many of these MNCs entered the Indian market in the mid-Nineties. Fired with the zeal of changing the complexion of the cosmetics market, they are fuelling the change using satellite television, women's magazines and beauty pageants. Maybelline competes with Revlon and Lakme in the colour cosmetics market in India. Revlon too has grown 65 per cent to strengthen its share to 13 per cent during the period. As per the data, Lakme's share stands at 34 per cent, and that of Elle 18 is 25 per cent - both of which have suffered a de-growth over the previous period. The lip and nail colour market, at Rs 107 crore, has registered a growth of 11 per cent. Mass market products account for a major share, around 70 per cent, while the premium segment accounts only for a mere 9 per cent in lipsticks and 5 per cent in nail enamels.
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Manufacturing and SCM : After recent globalization and change in policies the opportunities for manufacturers & exporters have widen. Today we can say that the producers are coming-off their age from traditional methods. The developments are becoming trend setting. The Manufacturers are versatile to cope up with the vibrant consumer behavior. The globalization in terms of foreign trends & acceptability has penetrated finely into the Indian buying market and so is the Local manufacturer’s struggle to captivate the opportunities by matching the same trends & international qualities. The practice of quality control & organizational management has improved drastically by emergence of New generation working as a Team work. All this things has together gained importance for a Foreign Buyer seeking his eyes to create a valuable outsourcing partner in India. What’s so appealing about Outsourcing a Cosmetic Product for a European Buyer from India? Here some important aspects for this 1. The Research base in India have revolutionalized with exceptional Education. Indian cosmetic companies employs experienced cosmetologist & PHDs for research & product development. 2. Indian Engineering Industry have created State of the Art Process machineries for renowned Pharmaceuticals & Cosmetic Industries worldwide. Its inevitable that the Process engineering today is expertly competed by India. 3. The Skilled & Unskilled Labour even today is a Prime resource for Lower value addition in India. 4. Quality Control, Lab trials & ISO accreditation Practices is a Prime criteria which companies adopt for their creditability.
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5. All kinds of Packaging materials & Raw Materials are easily outsourced from Local access. For a particular Input a Producer have an option of more than 5 vendors in the Indian local competitive thriven market.. 6. New Policies & Sectors such as Special Economic Zones cut outs completely Tax burdens & overheads. 7. Indian Policies for Export is Not subsidized. Country like China wherein the Producers enjoy unreasonable government subsidies are not reliable for long term partnership. As we are not sure when can a product from China crash from global competition. 8. Information Technology as India being pioneer, have made communications made more & more faster & convenient. Designing & Branding Solutions can be provided at highly professional level, at economic costs. 9. Stringent Laws for protection of Brands & Copyrights.
The Business for India is beyond private label supplies for Chain stores & Dollar Shops. We see India in near future as partnering for Giant brands of Europe & American Segments. Amongst the Cosmetics & Toiletries, with a professional outsource job owners produces a wide range of Creams, Lotions, Talcum Powders, Tooth Pastes, Body Oil, Baby Products, Toilet Soaps, Compacts, Shampoos, Conditioners, etc. with constant knowledge & update of New-age Active Ingredients & Packaging.
Global Scenario : According to the Euromonitor survey, the top ten markets worldwide account for 70% of global demand. Leading the chart is the US followed by Japan, Germany, the UK and France. China is in sixth place above Italy, Canada, Spain and Korea. However, when looking at the purchasing power (PP), a different pattern emerges. The two factors that combine to reveal a country's PP, population and income levels, are more favorable to emerging markets. Although the US still takes the number one spot, China tips Japan into third and India ousts Germany into fifth place.
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The UK and France manage sixth and seventh place, while Brazil, Italy and Russia bring up the rear. While on the whole the emerging markets are strong in terms of population yet weak in terms of PP - and the converse is true of developed markets - there are exceptions when volume sales are evaluated for certain goods. For washing machines and televisions, China trumps the US while Indians buy more refrigerators and televisions than Germans.
Cosmetics Specialty store – Ulta a case study : Today, the woman who previously picked up her inexpensive lipstick at the drugstore and her pricier cosmetics at the department stores has discovered one-stop beauty shopping. Romeo, Ill.based Ulta is the store that is unashamed to be everything to everyone, and its success has cost department stores and drugstore chains a chunk of their cosmetics commerce. Women no longer have time to spend hours shuttling from the salon to the department store to the drugstore to take care of their beauty needs. They have so little time to devote to themselves that they want to be able to meet their personal care and beauty needs in one place. Ulta stores makes it as easy as possible for its customers to visit, locating stores in strip centers with easy access and plenty of parking. Product range and accessibility are not its only virtues, however. Ulta has turned cosmetics shopping into a form of entertainment, with its brightly lit stores inviting shoppers to sample makeup, drink coffee and indulge themselves with massage, manicures, pedicures, makeovers and haircuts. Shoppers are even treated to a variety of presentations, some of which — how to decorate a home, for instance — are not directly related to beauty. Little wonder they have become destinations in themselves. The stores are richly appointed, with wide aisles, wooden cabinetry, luxurious bathrooms and soothing music. Cosmetics are not locked behind counters, and Ulta’s shoppers don’t find themselves ambushed and squirted by atomizer-brandishing product promoters. The atmosphere in an Ulta store is one of relaxed elegance and indulgence; we want customers to feel instantly
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that they have escaped. Samples are plentiful and accessible to encourage customers to entertain themselves by sampling different products. Flower displays, bubbling Zen rock garden fountains and the prominently displayed vibrant Ulta private-label color library accentuate the store’s uplifting ambience. In short, the chain provides a “total beauty experience,”. Ulta has done away with its stripped-down format, but not to appease its suppliers. While the spartan look works for factory outlet centers, it didn’t satisfy women looking for some pampering and self-indulgence. In 1999 Ulta began rolling out a new look, with 10,000-squarefoot to 11,000-square-foot stores featuring hardwood floors, sleek fixtures, wide aisles and soft lighting, with everything except the prices designed to evoke the ambience of a fancy store. It also expanded its offerings to include spa services, full-service salons, manicure stations, facial treatment rooms and a pro hair care section. Today, the target Ulta customer is about 40 years old, college educated, enjoys a family income exceeding $75,000 a year, and uses four facial and three hair care products daily. Consequently, anyone answering that description in the parking lot of a center anchored by Marshalls isn’t necessarily lost.
Ulta is not the only company changing the way people shop for cosmetics, of course. Sephora, a division of Moët Hennessy Louis Vuitton, with more than 215 stores in Europe and in excess of 77 in the United States, also sells a range of products, and has altered the face of cosmetics retail since opening its first location in Paris in 1993. Its stores are attractive, offering a mixture of brand-name cosmetics and perfumes, and private-label products. Sephora is opening about 20 stores a year in the United States, in both freestanding and mall locations. Meanwhile, there is a steady exodus of customers from drug chains, according to a survey by WSL. While 19% of women in a 1998 survey listed drugstores as their first choice for cosmetics, only 16% did so in 2008. Increasingly, mass retailers seem to be willing to let go of their traditional merchandising habits in favor of trying to attract more consumers into their beauty aisles by adding sets of imported
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beauty brands. But have these new merchandising tactics worked, and will they become the norm rather than the exception to mass beauty merchandising? Although it may be too early to tell, many beauty experts agree that more worldly exclusive brands could be around to stay. "It certainly is a way that a drug retailer can differentiate itself from its competitors," said Karen Grant, senior beauty industry analyst for The NPD Group, a market research firm. "And the exoticness and cache of these new brands certainly doesn't hurt." In fact, the uniqueness of a European beauty brand exclusive could make mass retailers the place to go for certain products. You can buy things like Tide and contact solution any old place. The idea behind these beauty introductions is to make the customer say, 'I need to go here for this certain brand.' And many retailers are trying to do just that. Target, Duane Reade CVS and, more recently, Walgreens have revamped their beauty strategies to include international players. Earlier in2009, Target unveiled a specialty bath collection with such imported brands as Keen's from South Africa and Baylis & Harding from England. Walgreens, with the assistance of beauty marketing company Excelsior Beauty, is bringing the European Beauty Collection to about 1,000 of its top beauty stores in early October. The collection is comprised of seven exclusive skin care lines from France, Germany, Spain, Switzerland and Greece. Understanding that today's consumers want to be able to try before they buy, the display will feature testers, and there will be millions of product samples that beauty advisors can give to their clients. Gone are the days when grooming was just about a routine trip to the neighborhood parlour for a facial, hair-cut and make-up. It’s now much more than that. Newer products are flooding the market shelves offering grooming, healthcare and even pampering solutions. All said and done it’s increasingly becoming a beauty obsessed world with ‘looks’ assuming paramount significance. Whoever said that ‘beauty lies in the eyes of the beholder’, should take a look around. Beauty lies across shelves of super markets and beauty spas waiting to be picked!
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Significance of Study :
Organized cosmetics retailing is on the growth phase in India. Though there are very few exclusive cosmetic store in India. Consumption is increasing and retailers are finding new ways to attract the consumers. This study, by analyzing the customer movements in a cosmetic retail shop would help in understanding their behavior and buying pattern. It will help the retailers to place their products in a better way which would complement the consumer’s buying behavior. By analyzing the current trends and visual displays that the retailers use it would also suggest a change in their approach. This Project is aimed to observe the cosmetics buying behavior in retail chains. It also analyses the various consumer profile and the variety of products they purchase. This project would also help in analyzing the various retail mix that cosmetic retailers in Ahmedabad implement to enhance their sales.
Study and Analysis:
Two major retail stores in Ahmedabad were studied on various parameters. Consumer purchasing patterns were observed in both the stores. One was Lifestyle –cosmetics section and the second store was “Smruti collection”. Following study shows the comparison between the two stores in terms of : 1) Visual Merchandising/ Store presentations/displays and signage 2) Product offering 3) Store Layout & Locations 4) Store Promotions 5) Consumer Buying Patterns.
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Lifestyle Cosmetics section:
Lifestyle International (P) Ltd is part of the Landmark Group, a Dubai – based retail chain. With over 30 years’ experience in retailing, the Group has become one of the foremost retailers in the Gulf. Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at an exceptional value for money, Lifestyle India began operations in 1999 with its first store in Chennai. Currently there are 15 Lifestyle stores and 8 Home Centre stores across Ahmedabad, Bangalore, Chennai, Hyderabad, Jaipur, Mumbai, Pune, New Delhi, Noida and Gurgaon.
Visual Merchandising/ Store presentations/displays and signage:
The cosmetics section is situated at the ground floor after the immediate entrance from the main door.
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The Grid Layout format of Cosmetics section was arranged in a gondolas format where major brands like Lakme, Loreal, Revlon Occupied Individual gondolas for all types of products while other brands shared the gondolas.
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Most of the new collection was arranged on the eye level along with the high demand products. The older merchandise moves a lower rack according to the date of arrival.
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Each Gondolas has various lifestyle images of various brands and models displaying concerned products.
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There were very less promotional signage in the store for cosmetics. Those present were only at the point of sale or billing counters.
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Category signage were displayed on gondola with major brands. There were freestanding displays around the corners of the cosmetic section displaying major brands and pictures of models endorsing those brands.
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The whole section was lit with a combination of white, pink and yellow colored lights giving a classy and serene atmosphere
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A harmonica instrumental music was being played in the background making the whole atmosphere very pleasant
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Perfumes were kept at the end caps of the cosmetic section aisles but were highly visible as the they were displayed in glass windows with signage above each rack window of the respective perfume brands.
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Different brands sections were lit differently according to the image of perfume brands.
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Product offering • Cosmetics section offered variety of products from lipsticks to beauty lotions to perfumes. • • The products were not placed category wise but they were placed brand wise. Various categories in each brands were placed on separate gondolas. For Example Lakme section included all the lakme products from lipstick to nail polish and various other beauty lotions. • • There were huge collection of national and international brands in the store. Complete perfume’s section was at the end cap of the cosmetic section but still highly visible Brands included : • Color Cosmetics : Loreal, Maybelline, Lakme, Revlon, Chambor, Bourjois, Maxfactor, Diana of London, Color Bar. • Health and Beauty : Kaya, H2O, Ponds, Toni and Guy, Shahnaz Hussain, Biotique, Lotus Herbals • Perfumes/Fragrances : Azzaro, Burberry, Escada, Lacoste, Valentino, Dolce & Gabbana, Gucci, Jean Paul Gaultier, Issey Miyake, Tommy Hilfiger, DKNY, Aramis, Caroline Herrera, Paco Rabbane, Nina Ricci, Thierry Mugler, Cartier, YSL, Elizabeth Arden, Lanvin, Paul Smith, Lolita Lempika, Versace, Moschino, Loewe, Kenzo, Calvin Klein, Davidoff, Givenchy, Christian Dior, Hugo Boss, Boss, Mont Blanc, Dunhill, Baldessarini,
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Ferragamo, Ralph Lauren, Bvlgari, Cacheral, Nautica, Armani, Britney Spears, FCUK, Balenchiaga, Christian Lacroix, Chevignon, Ferrari, Max Mara, Canali, Luciano Soprani, GANT, Ted Lapidus, Mango, S.T. Dupont, UDV, Kenneth Cole, JLO, Joop!, Sarah Jessica Parker, Jilsander , Nike, Police, Van Gils, Adidas, Jovan, Espirit, Pierre Cardin, Miss Sixty, David Beckham
Store Layout and Location: • Lifestyle store in Ahmedabad is located in the Gallops mall situated on the SG highway near ISKON Temple. This is essentially a Central Business District (CBD) area and is home to numerous malls, Shopping centers, multiplexes and restaurants. • Though the complete store has a racetrack layout but the cosmetics section specifically has a grid layout. • The Section is situated on the ground floor and is the immediate section after the main entrance into the store.
Store Promotions • Lifestyle does not generally provide much sales promotions on cosmetics except from those by product company itself. • However some of the older merchandise are sold through bundle offers for example: Valentino Perfumes and Deodorant in a combo pack or Lakme complete makeup kit in discount prices. • Lifestyle however comes up with theme based promotions for promoting its popular brands. For example Colors fest by Lakme. • Discount offers are prevalent during monsoon sales or other end of season sales.
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Lifestyle has lot many media promotions in terms of outdoor banner and hoarding advertizing, print ads and other promotions.
Consumer Buying Patterns: A study of buying behavior of 10 consumers were observed during different time periods for three days. Buying patterns are described below:
1. (Monday, 7:30pm-8:00pm, Single Lady ,apprx age:early 30s) Entered the store, directly went to the cosmetics section. Looked for Lakme lipsticks and other products. Went to Maybelline section. Searched for similar products. Finallly came back to Lakme, picked up 2 lipsticks with different shades. Walked away to women’s clothing and finally to billing counter.
2. (Monday, 8:00-8:10, Single lady ,apprx. age 20-25)
Entered the store, directly went to cosmetics section. Straight way went to Loreal section. Picked up facepack. Moved to Bourjois section. Picked up beauty cream. Walked away to billing counter.
3. (Monday 7:00-7:20, single male ,apprx age 25-30) Entered the store, Went to perfumes section. Checked and tested Valentino, Gucci, Hugo and David Beckham brands. Selected Valentino 50 ml bottle. Went to Loreal section. Picked up color conditioner with some cream pack. Went to billing counter.
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4. (Thursday 3:30-4:50, lady with husband ,aaprx age 35-40) Entered the store. Checked Lakme, Loreal, Maybelline and Ponds products. Checked for prices but did not purchase any. Went to women’s apparel section, bought some kurti then went to men’s section searched for shoes. Didn’t buy any. Came back to cosmetics section. Purchased Pond’s 4 different types of creams. Picked up one Mybelline lipstick and nail polish and went to billing counter.
5. (Thursday 5:00-5:30, 3 ladies ,apprx age 18-23) Entered the store, Went to women’s apparel section. Purchased some clothes. Went to shoes section. Purchased some footwear. One girl came to cosmetics section while other two went back to apparel section. The girl curiously looked and searched products from all the available sections. Then other two girls joined in. they discussed something. Purchased 5 lipsticks from 4 brands : Loreal, Maybelline, Lakme, Revlon. Purchased Lakme Nail polish (2 in number) and went back to billing counter.
6. (Thursday 6:15-7:15, girl and boy ,apprx age 20-24) Entered the store, went to men’s apparel section. Purchased some clothes. Went to women’s section. Purchased some clothes. Came to cosmetics section. Went to perfumes. Tested some. Didn’t buy any. Boy went to billing counter. Girl still searching for lipsticks. Found one from ’Chambor’. Gave it to boy and was added to the bill.
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7. (Sunday 4:30-4:55, 2 ladies ,apprx age 30-35) Entered the store. Went in to roam around complete store. Finally came to cosmetics section. Lokked and compared products from almost all the sections. Left the store without buying any product.
8. (Sunday 4:45-5:15, Husband, wife and little girl apprx age male: mid 30’s ) Went to different sections in the store. Purchased some products. Came to cosmetics section. Husband went to Perfume section while lady and her daughter went to color cosmetics section. Man purchased ‘Hugo’ 100 ml. perfume and his wife purchased 3 different types of creams and one nail polish. They left the sore.
9. (Sunday 5:00-6:00, Boy and a girl apprx ages:23-28) Roamed around complete store. Purchased some apparels, footwear and other accessories. Came to cosmetics section. First went to perfume section. Tested some of them. Bought Moschino 50ml, came to color cosmetics bought 3 different shades of lipsticks and nail polishes, purchased 1 bundle of “complete kit’ by lakme. Left the store.
10. (Sunday 5:45:6:15, 2 males apprx age 28-32) Entered the store. Directly went to perfumes section. Searched for almost all the brands. Seemed conscious about prices. Bought one 50 ml bottle of Azzaro. Went to billing counter. But didn’t bill. Went to apparel section. Came back to billing counter and left the store.
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Smruti Collections:
Smruti collections is a privately owned cosmetics and jewelry store situated on C.G Road area in Ahmedabad. It is a specialty store with two sections namely cosmetics which is their prime and major revenue collector and Jewelry. This is much smaller shop as compared to Lifestyle cosmetic section and is essentially a service shop catering to middle class income groups.
Visual Merchandising/ Store presentations/displays and signage:
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The cosmetics section is situated on the ground floor of the store while Jewelry section is situated on the below ground level.
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The store is essentially a service store where customers needs to ask for the products to the sales personnel on the counter. The sales people would then assist the customers in selecting the products.
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Though small but merchandise is kept according to brand wise. Each section belongs to separate brands (only popular national and international) and each brand section consists of various product categories offered by that brand.
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Backlit visual displays of respective brands are placed above the brand section. All the merchandise is kept only at or above the eye level. Three gondolas are also kept consisting of only lipsticks and nail polishes of various brands.
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No outdoor displays were placed also no freestandings were placed inside the store. The store was moderately lit but no special or effective lights. Also no background music was being played in the store.
Product offering: • Smruti collections offered variety of products. They include color cosmetics, Health and beauty cosmetics such as body lotions and face creams and vary little range of perfumes. • Major Brands which are divided section wise are : Loreal, Maybelline, Lakme, Revlon, Ponds. • Other imported and premium brands (available in Lifestyle) were not available in this store. • Along with the Cosmetics it offers other women and beauty accessories along with jewelry. • Most of the Products available range from medium to high level prices. But no products belong to premium price range
Store Layout and Location:
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Since it’s a service store the layout is essentially a “Boutique layout” where all the merchandising is displayed behind the store counters.
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The store is located at Swastik CHaar rasta on C.G. Road in Ahmedabad which is a Cental Business District (CBD), a famous shopping area in Ahmedabad.
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Billing counter is located near the entrance/exit of the store. There are impulse merchandising displays at the billing counter.
Store Promotions • • Almost all of the company offered promotions are being offered in the store In addition to that store also gives discounts on some out of fashioned products (lipstick shades etc) to sell off the inventory. • Couponing system is being followed regularly to generate repeat visits and purchases by the customers. • In terms of media promotions, only print ads in local newspapers appears.
Consumer Buying Pattern:
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The customer buying pattern was observed on one day and since it is a service centre store an observation of 10 customers were done on Sunday in between 6:30 to 8:30.
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Since it is not a large store hence detailed behavior is not been mentioned in the report whoever some of the findings through observations are :
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Most of the customers were alone while they came to shop for purchase.
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Husband accompanied wife in one case while a friend accompanied another in one case.
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All the customers who came to shop were pre decided as what to buy and asked for the same thing. e.g : Loreal hair color, Lakme sun screen, Maybelline nail polish etc.
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The shopping bill wasn’t much large for individual customer who came to purchase products.
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All of the individuals observed purchased some or the other thing from the shop and none went without shopping anything.
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There was no impulse purchase made by any of the observed shoppers.
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Most of the customers were price sensitive and often compared the prices of different brands for the same category.
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Item purchased were mostly standard products and there was no purchase of premium product in the shop.
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When asked one of the customer, Convenience was the major factor for selecting the shop.
Analysis & suggestions:
1. Mode of Purchase Around 60 per cent of the respondents have purchased cosmetics individually. About a third of the consumers purchased cosmetics with their spouses. And rest with their friends etc. Purchasing cosmetics individually seems to be the prevailing practice among both males
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and females. The practice of purchasing cosmetics with their friends seems to be more prevalent among females compared to their counter parts . Thus high service factors and improving the salesman interaction within the store would be highly beneficial to boost the sales by making customers more comfortable while purchasing.
2. Brand Selection Majority of the respondents selected the specific brands of cosmetics individually by themselves. Around 20 per cent of the respondents entrusted the brand selection to their spouse/friends. The percentage of respondents who selected the brands by themselves is slightly high among females compared to those among the males . Selecting the brand exclusively by the spouses or together by both the spouses seems to be enjoyed by the men compared to women. Majority of the teenagers did their brand selection individually. Thus the through survey about the popularity of brands must be done by stores such as lifestyle to know the current trends in the market and the preferences of the consumers. Also these brands should be highly visible when customer enters the store to create the positive impact.
3. Point of Purchase and Shop Preference There is no specific shop of preference for most of the observers in purchasing cosmetics. However it is found that lower income group preferred Smruti over lifestyle while higher income group preferred Lifestyle. Also the percentage of female consumers is high among those who purchase it from variety shops compared to males. But men preferred to purchase it from a single shop. That means male
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consumers enjoyed purchase of all their cosmetic requirements from a single shop. This may be because the variety and types of cosmetics available for men are less compared to women. Targeting the right customers for both the types of stores is extremely important and thus the promotions and communications should be done in consideration with the selected target customer segment. 4. Brand Preference Among the total, more than 60 per cent of the respondents were very strict about their specific brand. Male respondents purchase some other brands if they do not get the specific brand of cosmetics but the percentage of females doing same is less. Restricting to a single brand has been more prevalent among females compared to male consumers (brand loyalty high among the females compared to males).
5. Criteria for Purchase When Asked to some of the observers around little more than 50 per cent of the respondents considered quality as the most important criteria for selection of purchase of cosmetics. About a quarter each of the respondents considered the factors like price and brand for determining the purchase of cosmetics. About 50 per cent of males and 60 per cent of the female respondents considered quality as the main criterion for purchase of cosmetics. Price seems to be a concern for men for selecting cosmetics compared to their women counterparts . There is no substantial gender difference among the respondents considered brand as the main criterion. Stores such as lifestyle should focus on quality and fashion statement of the product categories while smruti collections should more focus on providing the convenience and utility factor to its customers.
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6. Spending Patterns It has been found that Females tend to spend more on the cosmetics and are more prone to impulse purchasing. While Males are sensitive in terms of price while choosing particular product or brand of cosmetics. Also Males are less prone to impulse purchase and spending amount on impulse purchases is found to be more in females than males. Spending is influenced more by ‘needs’ in case of males while it is influenced by ‘variety’ in case of females. Thus high margin cosmetics/private labels should be placed in strategic locations such as near to billing counters or in between two popular brand collections so that impulse purchase would increase in both the stores especially in Lifestyle. 7. Store Image The store image plays a very important role in preference of store. Lifestyle is a high fashion and premium store and thus it creates a store patronage among the fashion seekers in high income people. Thus the inner and outer store image depicts the elite fashionable and lifestyle like image which certainly goes with the store’s name. However Smruti Collections store tends to give a sober look and though creates an image of specialty store but the ambience and its design essentially gives a standard non premium cosmetic’s store image. The store loyals would generally fall in the category of people needing to buy cosmetics products mainly for utility purpose rather than style statement and fashion orientation. The Smruti Falls into category of “High Involvement- Convenience” store while Lifestyle falls into category of “High Involvement- Experience” store Similar to fashion retailing a pentagon model could be formed to explain the value proposition of lifestyle store so that store image can be improved by making suitable changes.
Pentagon Model :
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Place
Produ ct
Value
Peopl e
Communicati on
Place: The Lifestyle is situated in the Gallops mall which is the central business district of Ahmedabad. It is buzzling with various malls, multiplexes and restaurants. It is a famous shopping area. Product: The Product offering as also mentioned earlier is essentially the lifestyle products for fashion conscious customer. Variety and limited merchandising gives the feeling of lesser product availability which makes customer feel to pick the product immediately which he could have postponed later by the fear of getting out of stock. People: People in terms of customers are upper middle to high class segment with trendy and fashion conscious needs. In terms of sales personnel and employees, they are well trained to the basics of salesmanship, etiquettes, and ability to close the sales. They work on commission basis and understand the importance of customer relationship. Communication: The message that Lifestyle stores want to convey to their customers is that “It is a high class store with latest trends and it positions itself as “Positioned as a trendy, youthful and vibrant brand that offers customers a wide variety of merchandise at an exceptional value for money” Value: In terms of customer it is a premium store offering high priced and high end cosmetics. However the store feels that it offers a greater and exceptional value for the customer’s money.
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References : http://www.foolonahill.com/adcosmo.html http://www.cosmeticsbusiness.com/story.asp?storycode=62 http://www.icsc.org/srch/sct/sct1101/page29.php
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