MILAN — Everybody loves an underdog.
Especially when underdogs are indie cosmetic brands that are delivering beauty consumers’ expectations in a more effective way than bigger, established companies.
This is the David-versus-Goliath scenario that emerged from the latest white paper study released by Chalhoub Group, one of the leading operators of luxury brands in the countries of GCC, or Gulf Cooperation Council. Presented here on Wednesday by the firm’s co-chief executive officer Patrick Chalhoub, the study lists and analyzes the hottest emerging local brands and trends, consumers’ changing behavior and the role of social media in shaping the Middle Eastern beauty market, the tally of which came in at $4.2 billion in 2017.
In the first half of 2017, sales of luxury beauty brands decreased 5 percent compared with the previous year. Fragrances and makeup were down 10 percent and 3 percent, respectively, while sales for skin care were flat. Difficult financial conditions affecting imports, leading companies’ cuts in marketing investments in the area and price gaps due to currency fluctuations contributed in creating an opening for local indie brands in a market dominated for decades by big players.
These emerging labels leveraged the proximity to the audience compared with international competitors to intercept consumers’ needs, trends and fill the gaps in the market. One of their key assets is their ability in exploiting digital tools — social media in particular — to communicate and create authentic engagement.
According to a 2016 report of the United Nations, half of the population in the Gulf is under 30 years old, constituting a Millennial- and Gen Z-filled audience of tech-savvy, curious, well-informed and demanding customers, who disrupt the established market rules, favoring experiences over brands and status.
These consumers’ shopping behavior is also affected by web sites and social media, which offer a platform to compare prices, get updated on trends and develop professional skills through tutorials.
According to the white paper study, in 2013, 79 percent of shoppers of the Gulf asked for friends’ advice before acquiring a luxury good and 70 percent of consumers confirmed their peers influenced their style. Last year, online platforms replaced them in the role, with 90 percent of the population confirming they looked for information on the web before a purchase.
Local consumers are also seeking products aligned to their values and identity. For instance, in fragrances — the strongest product category, accounting for $3.2 billion, or 75 percent of the total beauty sales in the area last year — local products are interpreting customers’ taste in a more authentic way compared with the scents created by Occidental players for this market.
Emerging local labels, including Ne’emah, Arcadia, Odict, Widian and Ghawali, rely on the culturally rooted tradition of using scents not only for the body but also homes, workplaces and during meals, according to rituals such as layering up to seven different fragrances. Key essences as oud, incense, rose, musk, amber and jasmine are used in high concentration and disseminated in spray, oils, hair scents, home linen perfumes and “bokhour” for homes. Sales of local fragrances in the Middle East accounted for $1.4 billion last year.
Makeup-wise, the strongest categories are eyes products, due to cultural reasons. The quest for more eye shadows, eyeliners, mascaras, brow pencils and, most of all, fake lashes led to the success of brands such as Huda Beauty, as Huda Kattan launched her business after noticing a gap in the fake lashes market.
“If one of these entrepreneurs becomes successful, this encourages the others to do the same,” said Chalhoub, mentioning the rise of Dubai-based makeup artist Natasha Zaki, who launched her Arabia Collection range of fake lashes. With names such as Lashes in Abu Dhabi, Lashes in Qatar or Lashes in Kuwait, these products met the local consumers’ expectations by being made of mink hair and being reusable up to 12 times.
Some beauty companies are also replicating the successful format of international players with a tailor-made approach to satisfy local needs. Chalhoub mentioned the case history of Fenty Beauty by Rihanna and the idea of inclusiveness represented by its wide range of foundation shades for every skin type. A similar approach was developed by local cosmetic brand Pinky Goat, which offers more than 50 kinds of fake lashes, and by beauty retailer Wojooh, which launched the Wow by Wojooh makeup line to offer formulations dedicated to Middle Eastern consumers with humidity-resistant foundations.
Regarding skin care, the category is slowly starting to appeal to consumers who generally prefer the instant gratification and results of makeup products.
Contrasting with the global trend, in the Middle East sustainability and environmental concerns are still at a minimum, both in formulations and packaging, which is meant to impress rather than to send a sustainable message.
Marketing strategies are also contributing to the role of the beauty industry in the area. Limited editions, capsule collections, collaborations and limited stock availability contribute in boosting the attractiveness of a local brand.
Hosting big events, in-store meet-and-greets with influencers-turned-entrepreneurs or master classes with renowned makeup artists are also initiatives adopted by brands to engage new customers and secure the loyalty of existing ones.
As for retail, the emerging, digital-oriented brands have “shaken up and challenged the retail scene,” according to Chalhoub. “Now, if you want a store to be interesting you need to offer experience, exclusivity and customization,” he added, mentioning the bespoke corner in Dubai Mall’s Sephora as an example.
The executive urged bricks-and-mortar environments to reinvent their formats, adapting them to the real demands of consumers, including more agility and less time-consuming processes to complete the purchase in store or the implementation of tools, tracing the history of what clients buy and tracking their preferences.
While young customers are contributing to the growth of the digital retail in the area, with online luxury sales climbing 31 percent year-over-year and expected to reach $24 billion in 2022, according to a Bain & Company study released last year, online sales still accounts for less than 1.3 percent of the local retail market overall.