MOSCOW — It’s been 15 years since Estée Lauder chairman Leonard Lauder visited Russia, but the cosmetics titan made it very clear while visiting here this week that he’s still got designs on the country’s beauty business.
He’s certainly not the only executive to recognize the growing buying power of the Russian consumer — what with recent visits here by everyone from designer Karim Rashid to the rock group Pink, the Russian capital has lately been turning into VIP Central — but he was without a doubt one of the first. It’s a natural occurrence, considering Lauder’s mother, the late Estée Lauder, was one of the first consumer products companies to enter Russia, back when the country was still part of the Soviet Union.
Estée Lauder and Raisa Gorbachev had a handshake deal on Dec. 7, 1988, and by the following November, the brand was operational both in Moscow and in neighboring Eastern Bloc country Hungary.
Nevertheless, it was still surprising to bump into Lauder sitting on a marble fountain and people-watching in G.U.M., the country’s most famous shopping destination across from the Kremlin on Red Square.
“Look behind you at those women. See the mother and daughter in the jeans and fur jacket?” Lauder asked. “You would never have seen that kind of reverse-chic look here 10 years ago. I’m seeing remarkable changes!”
One of the biggest changes has come in the form of increasing competition. In the last decade, dozens of makeup and skin care lines from Helena Rubinstein to Shiseido have arrived here, and they are all fighting for market share — something Lauder isn’t willing to give up.
“This is the fiercest competition anywhere,” Lauder said of Russia. “We have a superb position, but the challenges are slightly different than in other countries. We compete here with a different array of competitors. Whereas in Germany we might be competing with Japanese brands, here, our main competitors are Europeans, specifically the French. Russia’s love affair with Paris goes back to prerevolutionary times when Russian aristocrats spoke French.”
Still, Lauder has his eye firmly on the future, noting that he is particularly interested in growing even further the Estée Lauder brands that are already sold throughout Moscow, St. Petersburg and major cities across Siberia and the Far East. “One of the reasons I’m here is to lay out plans to make Russia one of our strongest markets, to make Estée Lauder, Clinique and MAC as strong as possible here,” Lauder said. “Moscow does far more business than any other city in Russia. The potential for business here is still enormous — from Moscow in the west, all the way across the country to Vladivostok in the east.”
You May Also Like
In Moscow, Lauder visited the three Lauder stand-alone stores in G.U.M.: the ornate Estée Lauder flagship that overlooks the cobblestones of Red Square, a Lauder Make-up Center and a Clinique boutique. While in the country, Lauder also strolled through Articoli Vesna, a new luxury parfumerie and accessories store in downtown Moscow, and the Articoli boutique in G.U.M., where there are Estée Lauder, La Mer and Clinique counters, as well as Russia’s only MAC door.
Aside from the French flank, other challenges for Lauder in Russia include increasing acts of terrorism by Chechen separatists. “The Lauder boutique in G.U.M. is beautiful, but when we opened it years ago we could not have predicted that there would be a security crisis. Because of security issues, they close Red Square half of the time and you have traffic problems,” Lauder said. “Imagine how closing Fifth Avenue half the time would impact the traffic in Saks.”
Despite the challenges, Lauder remains bullish on the Moscow beauty market. Other items on his itinerary here included throwing a dinner Tuesday night at the Balchug Kempinski Hotel for the editors in chief of Russia’s glossy women’s magazines. He also had lunch with Mikhail Kusnirovich, the retailer whose company owns the Articoli perfumeries and that is a majority stakeholder in G.U.M.
At lunch in Bosco Café overlooking Red Square, the two magnates bonded over the fact that, as they said, their “wives are more important to [their respective] businesses” than they are. Kusnirovich’s wife, Ekaterina Moiseyeva, is the retail director of his company, which has a $200 million yearly turnover. Evelyn Lauder is senior corporate vice president of Estée Lauder Cos. and oversees the company’s fragrance business.
“I’m not in Moscow to eat caviar,” Lauder told the Russian retailer. “I’m here to make sure Russia becomes one of Lauder’s biggest markets in the world.”
Moscow was just one of Lauder’s stops on a multicity tour to do reconnaissance on the state of beauty retailing including Barcelona, Paris, Genoa, Berlin and Helsinki; accompanying him on the two-week trip are Cedric Prouvé, group president of Estée Lauder International, and Robert Aquilina, executive vice president of Estée Lauder International.