With the beginning of the special operation, Russia is experiencing the strongest sanctions pressure. Many foreign manufacturers of cosmetology products and consumables for equipment used in the beauty sphere, left the Russian market, logistics became more complicated. Under what conditions are brands working today?
How purchasing power has changed
Initially, many customers were frightened, which could not but affect sales. Prices for materials in the beauty sector began to rise, everyone began to buy for future use. Shops are empty, but now the situation has leveled off. Previous indicators recovered. Beauty is the last thing girls will give up notwithstanding the economic situation.
Beauty Market and Logistics
The issue of logistics was the only stumbling block for me. My brand is sold in many countries, and we had to change the logistics shoulder. Terms of deliveries increased slightly, as before there used to be more air shipments. Now we use mainly the land or sea route, but we take into account the situation when we plan shipments in advance.
The greatest difficulties arose with the shipment of goods to Europe, where our partner has monoshop. There are difficulties with payment and transfers, so we are going to open another office in Dubai.
How logistics affected prices
Brands are primarily thinking about customers and doing everything they can to keep the price of materials affordable and stable. But in general, beauty sphere largely depends on imported raw materials and equipment. Due to the increase in the cost of materials and consumables prices rose by an average of 20%, in premium segment the rise is up to 30%.
The latter faces more difficulties. The cost of cosmetics of this level grew by a third, and many clients emigrated. We have to compete and to look for ways to lower prices. Some actors solve the problem by applying more cheap raw materials, but it does not always succeed.
Import substitution problem
We are adapting to the situation. We have a strong team, so we succeeded to do it as soon as possible. There was no global change that would have a major impact for production. In terms of sourcing, we always monitor the market and are open to new offers. We continue to cooperate with many foreign partners from the United States.
But not all brands were able to reorient quickly and reformat their business model. A particularly difficult situation happened with cosmetic equipment. It is not yet possible to replace completely foreign products with Russian ones. It is necessary to establish production process, which requires time and effort. Actual situation and financial support of the state can give impetus to development of Russian industry in this area.
The situation is easier with raw materials for the production of cosmetics. It is partially imported from friendly countries, looking for analogues in Asia. But it requires time and effort, as well processing of the formulation.
Sanctions pressure is a chance for large companies and small businesses to assert themselves. Now brands that produce and sell products inside Russia, attract attention, getting the opportunity to develop, expand client base and occupy vacant niches.
In such a situation, you have to be flexible and react rapidly to any changes in the market. Restructuring of Russian production will require not a single year, and sales need to be carried out now in order not to lose business. The faster it will be possible to switch to a new model, the more chances to keep your place.
By Nadezhda Stepanova, entrepreneur, founder of international nail-brands, owner of beauty salon, a chain of materials stores for nail service craftsmen and master schools