XVI International perfumery and cosmetics exhibition
20-22 September • IEC, Kyiv, Ukraine

Secrets of Ukrainian beauty market

News
Secrets of Ukrainian beauty market
At the beginning of 2016, premier expo assessed the index of business activity in Ukraine among the managers/owners of beauty salons.

It was done with a help of call center, in accordance with the methodology that is used in the world.
So, the evaluation of 2015

with respect to 2014 was 42 points (only 18% of companies rated 2015 better in comparison with 2014, and 35% rated it to be the worst year). the expectation index in 2016 amounted to as much as 67 points! 61% of salon executives believe that

2016 will be better than 2015 and less than 4% think it will be even worse.
the survey involved 7305 professionals.

According to premier expo which conducts 2 major exhibitions of the beauty industry in Ukraine –
InterCHArM Ukraine and Estet Beauty Expo - the market for salon products was worth around US $ 350 million in 2015. the assessed categories included professional cosmetics, equipment, instruments, disinfectants and consumables for aesthetic medicine, cosmetology, hairdressing, nail art, massage, spa, makeup, and tattoo.

What are the main features which characterize Professional Beauty market of Ukraine?
  • First of all, it is a B2B market but with the elements of B2C market (buying decision is often made by the specialist; the number of people involved in the decision making process, and the short decision making cycle puts it closer to B2C market). Therefore, it can be called a B2B market for micro businessor a B2S (Business 2 Specialist).
  • It is a market of absolute competition. None of the companies has a monopoly position, and if you make a mistake, the replacement can be quickly found.
  • There is no systematic research on this market in Ukraine as well as in the rest of the  world.
  • The goods for this industrydo not have their own codifiers, in terms of statistical reporting these goods are placed among the consumer goods or medical devices.
  • Taking into account the specificity of statistical reporting in Ukraine, which is not mandatory
  • for micro enterprises, this factor can also hinder an accurate assessment of the market

Market volume was calculated using 3 following methods:
 
  • Based on the number of beauty salons in Ukraine, the average annual revenue, as well as the share of costs for the purchase of products.
  • Based on the amount of revenue of two largest beauty exhibitions
  • (InterCHARM-Ukraine and Estet Beauty Expo), the market share of companies participating in the exhibition, as well as % of the company’s turnover, which they spend on participation in exhibitions

There are about 450 companies in Ukraine which are exclusive distributors of foreign brands for beauty salons
 
in Ukraine. More than 2/3 of them specialize in one field or 2-3 similar ones (eg, cosmetology and waxing, nail service and lashmaking etc.).
 
There are over 100 Ukrainian manufacturers of products for beauty salons:
Hair - 23 companies; Nail salon - 27; Cosmetology - 35; other –  31.
46% of companies have their own online stores. 2/3 of the companies which do not have an online store are cosmetic companies and equipment. 64% of companies can be found on Facebook. Unlike other countries,
Facebook is a very active channel of communication of the business environment in Ukraine.
 
The next link in the supply chain of products is regional distribution and retail. This category is represented by the professional buyers at beauty exhibitions. Buyers program Manager of InterCHARM Ukraine and Estet Beauty Expo works with them:  personally invites them to the show and takes care of them. They were collected by the personal visits to their offices for 8 years of buyers program. In addition, the word of mouth about such service multiplied the interest. Buyers, who visited the exhibition on their own before, nowadays are happy to participate in the Buyers program.
Regional dealers are not importers. They work in the specific region of Ukraine and can represent products of different distribution companies same or in several directions.

There are about 150 regional dealers in Ukraine; their number is reducing due to the rapid development of logistic services and the use of high-quality office2office service.
 
All in all, premier expo database contains 709 distributing companies, which can be accounted for 70% of all existing companies on the market.
So, to sum up the information about the exclusive distributor and regional distributor links, there are several trends
within the last 2-3 years: the structure of distribution is changing massively:
Specialized distribution companies start to work in other directions, becoming a multidisciplinary (etc Nail+Hairdressing).
 
  • Less headquarters of exclusive distributors financially contain extensive regional network and move more to the dealership model.
  • Educational centers became a must-have for the distribution companies, which are engaged in selling prof. products.
  • More and more distribution companies open their salon as a useful model of business
  • Some companies develop KAM model - Key Account Management (pharmaceutical representatives analogue systems)
  • Internet-shop (site) is another must have
  • Only internet-shops are becoming exclusive distributors of brands
  • 4p Marketing is transformed into 4e=experience + everyplace + exchange+evangelism.

Customer experience Management means super-positive experience at every stage of communication with the company (the simplicity and user-friendliness, positive emotions). It is necessary to analyze all business processes ; each stage should have the added value for the customer. everyplace/everytime phylosophy - 24/7/365.
Total Exchange – unified system for information and product exchange within different channels of the same provider: read it on their   website, see it on the conference/presentation, buy it in their online store, try it at the beauty show or from a dealer but can excange it at the office of the company in case of product failure.
I can leave a review using a mobile device, price synchronization).
Consumer evangelism - the formation of groups of evangelists (Brand Ambassadors).
 
Professional Beauty Market of Ukraine consists of more than 180 thousand professionals who work in more than 35 thousand enterprises of different level. the National exhibition of products for beauty salons estet Beauty expo, held in Kiev in 2016, has grown by 40% compared to the previous year. It allows us to look optimistically into the future.
 
Tatyana Fedorova,
Deputy General Director - ITE Ukraine, Divisional Sales Director Health & Beauty 
 
See you at InterCHARM Ukraine from 20-22 September 2017!