Make-Up for the Slowdown

Written by Suman Tarafdar | Updated: Jun 28 2009, 08:25am hrs
Economic downturns have been good for this brand. Perhaps it is not surprising that Leonard Lauder, Chairman of Este Lauder, had coined the term Lipstick Effect after 9/11 attacks in 2001 to indicate that in times of uncertainty, consumers tend to turn to relatively inexpensive indulgences. Well, at a time when the global luxury brands are struggling and have put expansion plans on hold, Este Lauder, amongst the most admired and most expensive personal care brands, has opened its third store in less than a year. Sonia Michon-Flochlay, Vice President, Regional Brand Director, Europe, Middle East and Africa, was in India recently for the opening of the third store in arguably Delhis most popular mall, Select Citywalk. Amidst the pastels and glitter of this ultra elegant store, Suman Tarafdar looks on as an eager line of ladies cant wait to get their skin examinations and lay their hands on personalised cosmetics, with their names inscribed on the distinctive gold and blue bottles if they so desire. So what if they come at a price manifold times the ones they have been used to paying till now!

Is the brands entry into India rather late

The retail atmosphere was not there yet. We were clear that we wanted free standing stores. Finding the right mall or location in the right city has not been easy.

What will be your USPs for India How has the experience been so far in India

We are known globally for our skin care services. And that remains our core here too. We are classical, aspirational brand, symbolising elegance and style. Our service is impeccable we train our staff for three to four months. Fortunately, we already had a lot of Indian customers who shopped abroad and were familiar with us. Our stores at Palladium in Mumbai and UB City in Bangalore, which opened in August and September respectively, have done well. However, while in Bombay, many of our customers were familiar with the products, in Bangalore a lot of the customers are women working in offices nearby who are trying out a new product. And that is a category we want to tap. They add value to business. In Delhi we are looking at similar mix. In our current cities, we want to expand to three to four stores, till about 20 nationally. We want to expand to other cities like Kolkata and Hyderabad.

In the face of the current economic slowdown, has it been easy to launch such an expensive brand in India

India is a long term investment. Also globally, cosmetics have been far less impacted. Overall, we actually grew slightly last year. Though sales in India are less than a percent of our global sales presently, the growth potential is exponential. India is at a stage China was a decade ago. Today China is a top 10 market for us. However, the customer behaviour is very different in the two countries. Cosmetics in India have a heritage, and it makes our task easier. The Indian market is hardly touched. We had an open approach to India, where the $1.3 million cosmetics markets is growing at 25% per annum. Out target is to get to 10% of the luxury market in the country.

Also India, along with other markets in Asia, are among the emerging markets where we see potential for growth. Though Europe and the US are our major markets, our growth in these markets is slow.

There are a number of brands that Este Lauder has in India. What are the synergies between them

For the consumer they are all different and will have their own identity. In this mall itself, there are Clinique, MAC and Forest Essentials stores. Each brand is going to go its own way. Only the back-end operations are shared finances, HR etc. Forest Essentials for example will be able to leverage the international presence of the company to grow internationally as well.

Was it easy finding partners in India What have been the biggest challenges so far Why did you choose Select Citywalk rather than Emporio, the usual destination for luxury brands in Delhi

For us, every store has a separate legal partnership. We were clear that we wanted to come on our own. We have silent partners as well as affiliates to understand the market. The rents were outrageous to start with, though now people have calmed down. Some malls that we had planned to be in were delayed. The condition of roads or other infrastructure is very different from other markets. A challenge still remains to establish a solid ground for the brand. Our future investment in India will be around building new stores, creating awareness as well as in people. Our presence in Galleria in Trident, Mumbai was a great learning. After the 26/11 attacks, no one came for a few months, so we had to go out. We went out, especially to womens clubs and recruited quite a few clients! In Select, an opportunity came up, and we had been in direct connection with the mall. And here we have the right mix of consumers too.

Is there any difference in the behaviour of the Indian market or the customer Is there anything that is developed specially for India

Womens concerns are the same everywhere, so there are no differences in this regard. All women care about clarity, radiance, avoiding wrinkles as they age. Just the level of knowledge and the skin tones differ. And it is not true that women do not have money. We are working on the loyalty of the customer. In many of our markets, women come to us when they are 20 and stay till they are above 60. India is going to grow and we have everything to look forward to in India.

There are some ranges that are in demand everywhere. Then there is the local demand. We have colours and foundations specifically for India. We did research, and the women we focused on mentioned fairness as a major issue. We have a brightening line developed specifically for India. We also realised that this was in demand in other countries too where there was Asian clientele.

Inventory has been a major concern for luxury brands in India. How are you addressing this

We have lean stock in India. We have a distribution centre in Dubai, from where we can get stock quickly. We are also learning. When some colours do not work well, we ask the shops to sell them out. In the beginning we did not have bridal colours, for which there was greater demand.

Are you looking to source from India

No, we will not be sourcing for EL from India. Our production centres are in the US, Switzerland, Belgium and UK.