Business

Thursday March 5, 2009

Warts surface in beauty industry

By EILEEN HEE


Downturn turning ugly for players

PETALING JAYA: Beauty, health and wellness industry players are all bracing for tough times this year as the global economic woes take a toll on their business.

At present, the beauty industry worldwide is estimated to be worth around US$350bil. In Malaysia, the industry is valued at over RM10bil.

Clara International Beauty Group business development & marketing manager Jason W.Y. Woo said while the company’s sales had not been significantly affected yet, he anticipated the “beauty industry as a whole will be adversely affected along with the general Malaysian economy in the later part of the year.”

“The impact is only just beginning,” he told StarBiz. He said the company’s sales were holding up as it had been carrying out aggressive marketing, roadshows and beauty educational talk programmes.

“Most of our clients have been with us for many years and are not likely to switch brands as they are comfortable with our products and services,” he added.

Clara International provides professional beauty courses, skin care and beauty products and beauty treatment services. It has more than 50 beauty centres throughout Malaysia and affliates in the Asia Pacific region and worldwide.

Despite a slowdown in the beauty industry, the group expects its business to improve with the opening of five new outlets this year.

“We also plan to venture into foreign markets like Australia, Europe and the US,” Woo said.

On strategies to mitigate the impact of the challenging year ahead, he said the company planned to penetrate untapped niche segments like college students and metrosexual males.

“We are also looking at new beauty machines and products made at our research and development facility using the latest herbal-nano technology,” he said.

Body Perfect Sdn Bhd managing director Mandy Tan said sales started to slow down after the Chinese New Year period and had dropped by 20% compared with the same period last year. The company offers beauty treatments like facials, body slimming and spa services.

“Frequency of visits has also been reduced,” Tan said, adding that consumers were more careful with their spending. “They are also reluctant to take up new packages at the moment, using the current economic situation as an excuse to start saving for rainy days,” she said.

Meanwhile, Mary Kay (M) Sdn Bhd marketing manager Penny Chin said while the company recorded strong sales growth in 2008, there would be fierce competition among industry players this year especially for beauty products targeted at mid-income consumers.

“Consumers are expected to tighten expenditure on fast moving consumer products and that includes personal care products,” she said, adding that the company continued to chart encouraging sales in the first two months of the year.

Mary Kay is a direct selling company that sells skin care cosmetic products around the world via more than 33,000 women, known as independent sales directors.

Spa operator Cres Wellness Sdn Bhd chairman Chew Wai Ming said an economic downturn and buying power are interrelated.

“It (the downturn) affects not only the beauty industry but most businesses,” he said, adding that consumers would still purchase essential care items but cut down on intensive treatment products.

He said the beauty industry has been experiencing double-digit growth for the past 10 years. However, he did not anticipate dramatic negative growth for the company, which operates 10 spa outlets in the country. “Established players are able to grow or maintain their business compared to smaller players,” he said.

Taking a more bullish view is Nu Skin (M) Sdn Bhd marketing manager Christina Ng. The direct selling company markets personal care products. Ng said the impact of a slowing economy on the industry would be minimal as “beauty products are now more a necessity than luxury”.

“We do not foresee any negative impact on the business and expect sales to continue to grow double digit,” she said adding that as Malaysia’s population grows, so would the demand for beauty products.

“The younger generation starts to take care of their looks earlier and the older generation is also more affluent and continues to take care of their looks; that’s why anti-ageing products sell well and we see more and more older celebrities endorsing beauty products,” she said.

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