TsUM’s Cosmetics and Perfumery Department was hosting a makeup week to promote its new beauty products, and the savvy marketing campaign seemed to be working well. The perfectly made up ladies, beaming, lined up at the cashier’s counter to pay for the Chanel items they had picked up during their pampering sessions. Paying a few hundred dollars for beauty didn’t seem a problem for them, despite the continuing economic downtown in Russia and the supposedly thinning wallets.
The beauty business has long proved itself recession-proof, but this notion is especially true in today’s Russia. Cultural and demographic factors in this country, where women outnumber men and looking good is considered a key competitive factor when both man- and job-hunting, have created one of the world’s most attractive markets for cosmetics, perfume and beauty services. Experts agree that the industry, which grew at a rate of around 25 percent year on year during the economic boom of the mid-2000s, remained one of the most immune to the recession that arrived in Russia in late 2008.
“We weren’t even talking about the recession,” said Gianna Kolesnikova, head of TsUM’s Cosmetics and Perfumery Department. “We couldn’t afford to even think about it.”
Kolesnikova said that her department has boasted the highest sales in this massive 600,000 sq. ft. store since the economic downturn began. Last year, the Cosmetics and Perfumery Department which sells more than 200 brands, mostly premium ones, launched three new luxury titles – Dolce & Gabbana makeup, Bobby Brown and MAC. All three turned out to be hits, helping TsUM rise to third place in revenues among the world’s department stores. Only New York’s Saks Fifth Avenue and Milan’s Rinascente were more profitable.
“It turns out that Russians find it hard to stay away from luxury, even these days,” Kolesnikova said, smiling. “And Russian women have always had to look their best, no matter how difficult the times were.”
Indeed the economically challenging times don’t seem to scare TsUM’s customers away, even though the store’s glitteringly chic hallways often look deserted. Still, Kolesnikova insisted that women had not begun spending less on the things that make them gorgeous. The average check for customers in the Cosmetics and Perfumery Department has remained about $130, and the very expensive products, such as Crème De La Mer serum, which runs around $600 dollars, or La Maison Guerlain Haute Couture perfume, which costs for more than $300, still sell incredibly well.
Corinne Jacques, Vice-President for Rive Gauche, Russia’s second-largest retail chain selling both mass market and premium cosmetics and perfume, echoed the idea that the country’s beauty industry is one of the most recession-resistant.
“Russian women are addicted to cosmetics,” she said. “They can save on food and other necessities, but they’d still manage to buy themselves mascara and lipstick.”
Jacques, a French national who has worked more than a dozen years in Russia’s beauty industry, observed that Western European women are not as focused on their looks and the impression they make as Russian women are. Western European women, she said, also tend to be much more conservative when it comes to beauty shopping and tend to become even more cautious and reserved when times get rough. Not Russians, though.
“People don’t try to save money in this country, even if they don’t have much,” Jacques said. “Women are so beautiful here, but they want to be even more beautiful as they think it will help them to get a rich man.”
“This helps our business a lot,” she added.
The Rive Gauche company, which grew out of a small beauty section at a St. Petersburg department store 15 years ago, now boasts 44 shops in that city, 10 in Moscow and 60 in the regions. The company’s sales have grown 30 percent overall in 2009 compared with the previous year, and are expected to increase at least 20 percent this year.
One recent consumer trend here, perhaps brought on by the recession, has been women switching to a slightly less expensive brand still within the premium span, such as Clinique, whose market share has increased lately, or quality mass-market products, such as L’Oreal.
L’Etoile, Rive Gauche’s chief rival and the country’s biggest cosmetics and perfumery retailer, hasn’t reduced its ambitions either. Recently, the company opened two sizeable beauty supermarkets – a 13,000 sq. ft. store in Rostov-on-Don and a 16,000 sq. ft. store in Moscow. According to Mikhail Schedrin, L’Etoile’s marketing director, there are more openings and product launches in the plans.
“Of course we’ve suffered in the recession. Who hasn’t?” Schedrin said. “But the industry still has immense potential, especially when it comes to the makeup segment.”
“Mascara and lipstick are the religion in this country,” Schedrin added.
Still, he admitted that the economic crisis has affected the industry.
“If a customer used to buy a new mascara once in three months,” Schedrin said, “she might now switch to buying once every five or six months, or turn to a cheaper brand.”
In the regions, the situation is often even tougher. “Sometimes people don’t get their salaries in time there,” he said. “When this happens, our profits plunge immediately.”
But even for some middle-class Muscovites, the economic crisis has been a noticeable punch on the beauty budget. Olga Pavlova, 31, an editor at the Russian edition of the Forbes magazine, admitted to cutting her self-pampering expenses dramatically when the panicky mood spread in the country in late 2008-early 2009.
“I didn’t get a manicure and a pedicure at the salon for almost six months,” Pavlova said. “I was really scared about what was going to happen to the economy and I had three bank loans to pay. I was trying to save on everything I could, so I did the manicure and pedicure at home.”
But after she her job situation stabilized and the fears over the global economic situation calmed down, she happily returned to her usual spending habits and recently spent more than $200 for some face cream and hair products.
Maya Gussarova, 35, who works as a project manager for the World Bank headquarters in Moscow, supports herself and is paying on two loans, said she wouldn’t ever consider cutting back on cosmetics. She said changing her self-care routine which includes buying premium brand and having lavish spa treatments frequently would be a really desperate thing to do.
“I’d rather save on food or clothes than on beauty items,” said Gussarova, who not long ago began a lengthy photo-rejuvenation course where each treatment costs around $250. She stressed that for her, staying pretty is a good investment.
“It also makes you feel better,” she said.
Anastasia Kharitonova, the director of the Health and Beauty section of the Russian edition of Marie Claire magazine, agreed.
“Life is hard in Russia, and for many women, shopping for beauty product and self-pampering is the ultimate stress-reliever,” she said. “It’s one of the few definite ways to get a quick mood boost.”
Other industry experts observe that one doesn’t even necessarily have to buy anything to feel better.
Corinne Jacques of Rive Gauche said that many women stop by cosmetics shops on the way home from work just to look around.
“Window-shopping and making plans about what to get when they get paid is enough for some women,” she said.
“In fact, I think Russian women often use make-up more as therapy, because physically they are very beautiful already,” she said.
Even so, an early March evening at one of large Rive Gauche shops located at the downtown Moscow mall Tverskoy Passage, proved that local women were still quite willing to empty their wallets, too. A few days before International Women’s Day, the store stayed open until 11 pm, and was so crowded it was hard to breathe. The consultants sweated trying to satisfy the numerous impatient buyers and the cashiers rushed counting cash and packing the creams, make-up and perfumes into the store’s cute, multicolored bags.
“We’re always crowded like this, since the day we opened two years ago,” said Irina, a cashier, as she wiped her forehead, looking exhausted.
Asked how the economic crisis in Russia had affected the consumer activity in the business, she just laughed the question off. “The crisis? Who’s talking about the crisis here?”
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