The NPD Group, which already tracks prestige beauty sales in the U.S., France, Italy and China, has set its sights on Spain's beauty market.
The firm is expected to announce this week that it has established beauty operations in Spain and anticipates releasing in January 2009 data on the Spanish beauty market from this year and last.
Ultimately, the aim is to go global, in the way that many of the beauty marketers to which NPD provides sales data have, according to Claude Charbit, president of global beauty for The NPD Group.
During an interview from his office in Paris, Charbit discussed the challenges of entering a new country, how Spain compares with NPD's other beauty markets, and the firm's plans to track the beauty markets of what he called Europe's "big five countries." In addition to France, Italy and now Spain, he noted, NPD would like to enter the U.K., German and Russian beauty markets within the next three years.
Here, a look at NPD's strategy for Spain.
WWD: How did NPD begin beauty operations in Spain?
Claude Charbit: We started to prepare for the launch more than a year ago. We had discussions with our potential customers and we started looking at the retail environment to understand the business there. We started to get contacts with retailers and it's now that we feel we have all the ingredients. WWD: Why did NPD Group enter Spain now?
C.C.: It's impossible for us to enter many countries at one time because it's a heavy investment and a lot of work to start up. So, we prioritized the market. We started with France, followed by Italy, and now Spain is on the list.
WWD: What part of the beauty market are you going to cover?
C.C.: Strictly the prestige beauty market. But we understand many customers are interested in getting the full picture of the beauty business. In Spain, we are going to partner with Information Resources Inc., which will track the mass market. We cover three categories everywhere we are present: fragrances, skin care and makeup.
WWD: How does Spain fit into the global beauty market?
C.C.: For beauty brands, Spain can rank between four and seven in a given beauty manufacturer's top 10 worldwide markets. Spain is part of the globalization of the business and it is seen as a growth market for three beauty retailers in Europe: Sephora, Marionnaud Parfumeries and Douglas.
WWD: How important is Spain in Europe?
C.C.: Of the European big five, the biggest market is France, at a bit more than $4 billion. Germany and the U.K. are each around $3.5 billion and Italy and Spain are around $3 billion. The U.S. is around $9 billion.
WWD: With what retailers are you partnering?
C.C.: We are working with chains like Sephora, Marionnaud and Douglas, independent stores and Spanish regional chains, including Oriental, Marvimundo, Disperfum, If and Julia. For the time being, we'll start without the biggest department store operator, El Corte Inglés, but we are talking to them regularly.
WWD: How many stores make up the sample size?
C.C.: We had to determine where the goods are sold and it is a very cumbersome exercise to gather all the sources in a fragmented market. We sent 7,000 surveys to independents selling prestige brands to limit the number of stores to 2,500 — a figure that's close to what we find in France and Italy. Out of that, our sample will be 600 stores located all over the country, which is statistically more than OK.
WWD: What is the breakdown of beauty sales in Spain?
C.C.: Fragrance is 65 percent of sales in France and it is very small in China. In the middle, you have the U.S., where fragrance is about one-third. In Italy, fragrances account for 40 percent of sales and we believe the share of fragrance in Spain will be equal to Italy.
WWD: In what city will NPD's Spanish operations be headquartered?
C.C.: Madrid. The business unit reports to NPD Beauty Europe and that reports to Beauty Global, which are both in Paris. Beauty U.S. also reports to Beauty Global.
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