Cosmetics are washed away by a wave of migration – Newspaper Kommersant No. 37 (7482) dated 03/03/2023

Russian perfume networks have stepped up development projects in neighboring countries. Letual began to prepare for entry into several neighboring markets at once, and Golden Apple plans to expand its foreign presence. The expansion can be explained not only by the desire to increase turnover, but also by the desire to establish logistics chains for the import of goods to Russia through third countries, experts say.

The Russian perfumery and cosmetic network “Letoile” is considering the possibility of entering several countries of the near abroad: Kazakhstan, Armenia, Belarus, Kyrgyzstan, Tajikistan and Mongolia. This follows from several vacancies published in the Letual profile on the HeadHunter portal in February 2023. The company, in particular, is looking for a director of security in Almaty, who will participate in the opening of stores. A vacancy for a chief accountant for the CIS has also been posted, who will develop a methodology for conjugating the business processes of the group in the Russian Federation and business processes of subsidiaries in the CIS. The job descriptions indicate that active work in the countries will begin in a few months, while preparatory work is underway to open legal entities, settlement accounts, etc.

A Kommersant source in the cosmetics market also spoke about Letual’s plans to develop a retail chain of stores, in particular in Uzbekistan and Kazakhstan. According to him, demand in Uzbekistan can be provided by a large number of young consumers, as well as Russians who have moved to the country. And in Kazakhstan there are no major players in the perfumery and cosmetics market working with Letual in the same segment, the interlocutor of Kommersant explains. Letoile declined to comment.

Letual is the largest perfume retail chain in Russia, founded in 1997 by Maxim Klimov. Now the company manages about 1 thousand stores in 250 cities of the country. Since 2020, Alkor and Co LLC, the manager of Letual, also owns the Podruzhka chain, which includes more than 250 outlets. In 2021, the revenue of Alkor and Co. increased by 21.7%, to 80.41 billion rubles, net profit increased by 44.4%, to 8.49 billion rubles.

Other major Russian cosmetic chains are also entering foreign markets. Magnit opened 12 MCosmetic stores in Uzbekistan in 2022. Golden Apple launched the first store in Minsk in 2021, and in Kazakhstan in 2022. Golden Apple says that by the end of 2023 they plan to open a fourth store in Kazakhstan, where the market is actively developing and ranks second in terms of turnover in the CIS. The company is also working on entering another new country this year, but details have not yet been disclosed. In “Magnet” “Kommersant” did not answer.

Infoline-Analytics CEO Mikhail Burmistrov also considers the development of players in Uzbekistan, Kazakhstan, the capitals of Georgia, Armenia, Kyrgyzstan to be promising due to the growing economy and consumer market in these countries, as well as the effect of the emigration wave from Russia. One of the significant risks when working in the CIS countries, the Executive Director of the Association of Manufacturers of Perfumery, Cosmetics, Household Chemicals and Hygiene Products, Petr Bobrovsky, considers the lack of information about consumer preferences and effective demand, which may not allow reaching the planned sales.

According to Mr. Burmistrov, access to neighboring countries can also allow cosmetic chains to build new supply chains under direct and parallel import schemes, which will increase the efficiency of operations. As Petr Bobrovsky notes, large retail chains are now interested in adjusting their logistics routes in order to expand their assortment and establish direct contacts with foreign manufacturers. Sellers working on large online platforms are also increasing purchases of goods in Kyrgyzstan and Belarus today.

Alina Savitskaya