SÃO PAULO — Brazilian perfumery chain O Boticário hopes to double its store count to 200 in the international arena by 2018, with Latin America and Europe the main targets, according to chief executive officer Artur Grynbaum.
“We just opened in Colombia, where we are going to focus much of our upcoming expansion,” Grynbaum said, while standing on the sidelines of Brazil’s beauty-industry awards ceremony, held here by trade lobby group Abihpec. The company took most of the awards, including those handed out in the fragrance category, in which it currently leads the market ahead of overall market leader Natura.
After it gains a solid footing in Colombia, O Boticário will begin deepening its foothold in other Latin American markets, including Mexico, where there is strong growth potential, even though the market has yet to develop a bigger monobrand shopping culture, Grynbaum said.
The chain is also “more selectively” eyeing Andean markets, such as Ecuador, Peru or Chile. Argentina, meanwhile, will remain off the radar, due to volatile politics and consumers’ limited spending power, the executive said.
In Europe, O Boticário is mainly interested in Italy but could also set up shop in Spain and other Mediterranean markets. In Asia, it is mainly focused on Japan, where it already sells in some regions, while China is not yet in the cards.
“China is not a priority right now,” Grynbaum said. “We have to understand the market, its categories and products,” before expanding there.
Grynbaum said O Boticário will flesh out a footprint in Colombia through its own stores and franchises in other markets. Colombia will join Portugal as another key market in which the chain operates its own floor space. In Portugal, the firm has 55 shops.
O Boticário, the flagship brand and international banner of the four-unit Grupo Boticário, also has a strong presence in Venezuela, Paraguay, Mozambique and Angola, the four countries in which the company runs the remainder of its roughly 100 foreign doors, according to Grynbaum.
The retailer, which markets self-branded fragrance, skin-care and body-care products, hopes to ring in the New Year with nearly 3,700 stores.
The group also operates the makeup-focused Quem Disse, Berenice? and the multibranded perfumery chain The Beauty Box, both of which Grynbaum said could be taken abroad in the longer term, once O Boticário’s international presence is solidified.
Despite the planned foreign rollout, the group has decided to slow its domestic expansion, as Brazil’s weakening economy dampens consumption in the world’s third-largest beauty market.
“Our average store openings have been 250 to 300 a year,” Grynbaum said. “It’s impossible to continue with those numbers. We are now talking about 100 to 150 [stores] for this year and maybe 130 in 2015.”
Revenue growth, set for a 10 percent gain this year, could fall further in 2015, Grynbaum added, without providing a forecast.
“Consumption will fall, and the premium market will suffer,” predicted Grynbaum, noting that The Beauty Box, which retails upmarket products, will boost discounting and launch new labels to stoke consumption.
Meanwhile, O Boticário will increase marketing spending, deepen discounts and introduce new and more innovative products within its strong fragrance and hair-care categories.
Despite a weakening economy that is set to expand 0.9 percent in 2014, Grynbaum expects the industry to remain resilient as consumer appetite remains relatively buoyant.
“In the past few years, the government has brought 30 million new [middle-class] consumers to the market,” he said. “They love to try cosmetics, especially fragrances, hair products and lotions.”
Grynbaum, however, said the sector is worried about whether the new government of President Dilma Rousseff, who began her second term last month, will raise consumer and other duties in an already heavily taxed society.
“Taxes here are 10 to 45 percent higher than in other countries,” Grynbaum said. “We are asking that they don’t touch them.”
Another key request is that product-approval red tape be slashed to enable new products to reach shops more quickly.
Grynbaum said O Boticário recently scrapped a new suntanning lotion’s launch because regulators “lost our papers.”
However, Grynbaum said the government is introducing a new online registration capability that will hasten the approval process, ending some of the current delays.