In Russia, they began to discuss the legislative consolidation of the share of domestic goods in stores

In the last year and a half, buyers in perfume shops often complain: they say, it is difficult to navigate and make a choice, there are completely unfamiliar names on the shelves! The good news is that this means that import substitution (or at least replacing European brands with Asian ones) is working. The bad news is that the names of these brands do not yet say anything to the consumer, therefore, his trust has yet to be won – and persuaded to buy exactly this, and not to look through intermediaries and at exorbitant prices for former favorites. How to deal with this situation, the experts have yet to understand.

French, Italian and American brands have become dear to Russians, so their departure from the domestic market turned out to be a much more serious blow than many would like to think. This situation is absolutely predictable – as Nikita Kuznetsov, director of the department for the development of domestic trade of the Ministry of Industry and Trade of Russia, explained, the roots of the current situation should be sought at the turn of the 1980s-1990s.

– When the former Soviet people entered the era of a market economy, imports poured into us in an uncontrolled flow. And not just “import”, but serious players with powerful brands. There was no and could not be any talk of competition, because the conditional “Zara” will never be able to compete with any provincial textile! The result is “the clearing is busy”: and absolutely legally busy, no one deceived anyone. Therefore, today we urgently have to look for a way to fill the niche of those who have left, if we do not want, of course, to be left without conditional shampoo at all. I am sure that no one is ready to wash their hair with laundry soap again.

According to Kuznetsov, a common problem in the absence of competition is that manufacturers begin to increase prices and decrease quality. Therefore, the task today is to make sure that consumers know and perceive Russian goods.

Analyst Daria Grinchak said that absolutely the same trend is observed in absolutely all categories of cosmetic products: sales are growing in monetary terms (by 12% over the past year), but declining in physical terms.

– It turns out that they sell fewer packages, and earn more money. This is due to the increase in prices for cosmetic products. At the same time, we are recording a reduction in the assortment in absolutely all cosmetic categories, and demand has also fallen. Today, the buyer primarily buys care products (30%), refuses optional products. By the way, aftershave products have fallen in sales even in terms of money.

According to the expert, the buyer is still very slowly switching to new Russian brands – he needs help with this. A possible way of “help” is the so-called “law on the Russian regiment.” This is a draft law, which deals with the legislative fixing of the minimum share of domestic products in large chain stores. There are three requirements here: the product must be produced in Russia, the manufacturer must be a Russian individual or legal entity not under the control of foreign persons, and the trademark must belong to Russian persons. The bill has not yet been submitted to the State Duma, it is only at the stage of discussion.

As Anna Dycheva-Smirnova, board member of the Russian Perfume and Cosmetic Association, said, after February 2022, a huge number of brands rushed to the market, but not all of them are worthy of the attention of consumers.

— It is very important to understand that the window of opportunity for new brands will not last forever, so you need to integrate into the market right now. In just six months, 75 new Russian brands have appeared – these are colossal numbers! However, not everything is smooth here. There are opportunistic brands that want to take advantage of the situation: they say that today the Russian consumer will allegedly buy anything. No, he won’t. This needs to be understood very clearly. The Russian consumer is spoiled, he will not be able to sell “anything” even now.

Indeed: as practice shows, many buyers still prefer to look – through intermediaries, with an overpayment, with the help of friends abroad – perfumes and cosmetics of familiar brands. An optimistic approach – they say, we have a reason to try something new! — not shared by everyone.

One of the good scenarios for retail chains is private labels (PL). Russians are familiar with this format mainly from grocery stores, but all over the world, private labels are gradually being developed by perfumery and cosmetics stores.

– This path is very promising, because both the manufacturer and the distribution network are interested in it. Today, the share of sales of private label goods is 15-24%. However, the requirements for private label products are even higher than for other brands, and in no case should they be “for show”. They must reflect industry trends and be absolutely competitive. If a consumer chooses a private label shampoo, then this shampoo must meet all the requirements, and even win in terms of price, Dycheva-Smirnova explained.

According to the expert, the main request today is functionality and compliance with current trends, but the trend towards ecology, alas, is slightly exaggerated. The Russian consumer today seems to want to be environmentally conscious, but can not always afford it – and voting will most often be a wallet. Therefore, analogue products that Russian brands seek to create are in great demand today.

At the same time, in the field of perfumery (aromas), and not cosmetics, the situation for Russian companies is still disappointing.

As Mariana Penkova, director of the Perfumery Club of Russia, explained, domestic perfumery today is primarily a mass market.

– Most of the domestic brands are inexpensive, for the appropriate audience. We have not matured to the premium and are unlikely to grow soon. Demand and supply go hand in hand, but so far there is no demand. People prefer luxury and niche perfumes of other brands, foreign ones. So where does the investment come from?

At the same time, the expert emphasized that there is room for development – today in Russia there are at least 50 perfumers with very small brands that are unknown on the wide market. Another problem is that the bureaucratic threshold for entering this market is very high.

Published in the newspaper “Moskovsky Komsomolets” No. 29041 dated June 1, 2023

Newspaper headline:
Shelf, Russian regiment