TOKYO — Shiseido Co. Ltd.’s corporate executive officer Carsten Fischer said he is optimistic that Japan’s largest beauty player will continue to see its international business grow this year.
Fischer admitted the yen’s appreciation has hurt the company’s international sales, causing them to decrease on a reported basis, but the executive said they are growing in like-for-like terms.
“We continue and will continue to grow in 2010,” the executive told WWD in an interview, extolling the still-untapped potential of China as well as other emerging markets like Morocco, Egypt, Laos and Vietnam. “We believe that the growth rates overall are a little bit lower than before [the financial crisis] but they will pick up significantly compared to 2008 and 2009.”
Shiseido is working to reduce its dependence on the aging and stagnant Japanese market. The company saw its consolidated sales slide 4.6 percent to 690.3 billion yen, or $7.02 billion, for the year ended March 31, 2009. International sales comprised about 38 percent of the total. Shiseido’s results for the fiscal year ending this month are due in late April.
Fischer, a Procter & Gamble Co. alumnus who joined the Japanese company in 2006, said the current year will be an important bellwether for the beauty industry and there were signs of a pick up at the end of last year.
“[The year] 2010 will be the first year where we really have a better understanding of where we are standing,” he said, “The business is growing again, the market will grow again but probably our growth rates will need some time to get back to what we had previous [to the crisis].”
He said that Shiseido, like other beauty players, is learning to adapt their strategies to cater to increasingly cost-conscious consumers reluctant to expand their beauty regimes to include new products.
Fischer said the company is making more of an effort to reach out to customers not making it to department stores and other traditional beauty retailers. To that end, Shiseido dispatched a bus of beauty consultants around Hong Kong to lure passersby into trying skin creams and other products. The company staged a similar initiative on Singapore’s Orchard Road.
The executive said Shiseido is also plotting new ways to tap into the Chinese market by moving its products into the country’s pharmacies and hair salons. On Thursday, Shiseido said it has started selling hair products from its Shiseido Professional and Joico brands at salons in China. The company said it is aiming for distribution at about 700 salons in Shanghai and Beijing by the end of the year, and as many as 2,500 by 2014.
Fischer also said Shiseido hopes to glean valuable knowledge about online sales from San Francisco-based mineral makeup player Bare Escentuals, which Shiseido is acquiring for $1.9 billion including the assumption of the American company’s debts. The Japanese company has dabbled with e-commerce in Japan in the past but it hasn’t attempted it internationally.
“You have to get more active with creating touch points with consumers and we are more outgoing these days,” he said.
The company is also tinkering with the way it rolls out products and focusing on quality rather than quantity, he explained. Last year, Shiseido launched a new line of premium skin care products called Future Solution LX as well as a group of whitening serums named White Lucent. Both launches were part of the company’s attempt to streamline its various product lines into one cohesive Shiseido brand.
“We tried to be more conscious of launching less products but more meaningful initiatives,” he said “So bigger but fewer.”
While Shiseido is channeling much of its international efforts into Asia, Fischer said the company still believes there are growth opportunities for the company in mature markets like Europe and the U.S.
“We obviously believe in the future of the non-Asian markets very much because otherwise we wouldn’t have acquired Bare Escentuals,” he said, noting that the company has been active in Europe as well. In January Shiseido bought its distributor in Switzerland and last fall it set up a joint venture with a local company for the Greek market.
Fischer said the company is open to considering additional acquisitions if it finds the right targets, but the firm is concentrating on Bare Escentuals for now.
He declined to talk about the specific business plan for the American company but said Shiseido wants to grow the business without destroying Bare Escentuals’ independent structure and identity.
“We’re not going in and burning houses,” he concluded. “If we believe this house needs another room, we build it together.”
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