A Snapshot of the beauty market

The importance of aspirational black diamonds

While women remain the main drivers of consumption, men are becoming an important consumer demographic increasingly targeted by beauty purveyors. Men’s grooming products have witnessed double digit growth in value terms, and the rapid innovation and product launches within the category attest to the growing importance of this consumer segment. Apart from allocating more shelf space to products specifically targeted at men, retailers are making a visible effort to improve their shopping experience too, by having entire shopping aisles dedicated to men’s products. 

South Africa has high income inequality, known to be amongst the highest in the world. As per Euromonitor International socio-economic data, a third of the population in South Africa lives below the defined international poverty lines. As of 2016, 27% of the population was unemployed. However, over the last decade, more people have had access to formal education and been able to secure better paying jobs. Additionally, urbanisation has led to more people having access to better economic opportunities, leading to an emerging middle class. 

Consumer demographics show that middle class black consumers have a strong combined purchasing power. In terms of spending power, the Unilever Institute estimates the black middle class to exceed the white middle class. The rising black affluent middle class is commonly referred to as black diamonds in South Africa. This group of consumers is highly aspirational, status driven and has strong brand awareness, wanting to be associated with well-known international brands.

The growing middle class and higher aspirational population present opportunities for multinational companies. The top five players, Unilever, Avon Justine, Procter & Gamble, Colgate-Palmolive and L’Oréal, have a combined 40% of value share. South Africans perceive international brands as being of superior quality although this is slowly changing, with the rise of private label brands from popular local retailers

Colour cosmetics, the most dynamic beauty category, is growing at double digit figures”

Rubab Abdoolla, Research Analyst, Euromonitor

International players benefit from a wider channel of distribution and they are able to secure premium shelf space from leading retailers. Niche and smaller local players on the other hand, often battle to gain visibility to a wider audience, struggling with limited marketing budgets and limited shelf space. 

Parapharmacies and beauty specialist retailers are the main channels throughwhich beauty and personal care products are sold. 

Internet retailing is gaining momentum, although this channel appeals primarily to middle and higher income groups, given limited internet accessibility. The number of citizens accessing the internet rose from 11.1 million in 2010 to 24.9 million people in 2016, which represent only half of the population. With consumers becoming more connected than ever, and smartphone penetration on the rise, this is changing the digital landscape. Retailers are investing in their e-commerce businesses to make them user friendly and adopting an omni-channel distribution strategy. Given the nature of beauty and personal care products, shoppers are more inclined to buy products they have tested before and are familiar with. 

Products with a natural positioning are on the rise

Niche brands with a 100% natural positioning with ethically sourced materials are on the rise, albeit off a small base. However, with slightly higher unit prices, these products appeal primarily to higher income consumers. 

Finally, the challenging economic environment, characterised by rising unemployment, job insecurity and limited access to credit will lead to consumers seeking more value. Regular price promotions, value pack sizes both within mass and premium products, broadening private label offerings and stocking more affordable brands are some of the ways to increase footfall into stores and thus drive volume sales.