India poses unique challenge to L'Oréal

8 March 2013

NEW DELHI: L'Oréal, the cosmetics firm, believes it is vital to take a unique approach in India, as the diversity observable among consumers resembles that of a "continent" rather than a country.

Speaking to Moneycontrol, Pierre-Yves Arzel, the managing director of L'Oréal India, reported that there are 44 different skin types in the Asian nation, which presents a major challenge.

"I wasn't aware of the amazing diversity of the country," said Arzel. "In Japan, it's very homogenic; you probably have three to four skin tones and no more. Koreans have one or two skin tones. In the US, you have mixed skin tones."

More broadly, he argued, the fact India houses 1.2bn citizens masks the reality that the amount of active consumers is much smaller, as affluence levels typically remain modest.

"India is much more than a country; it's a continent, a different planet," Arzel said. "It's hard to manage a business in an emerging market as specific as India. It has a huge number of people spending just a little bit, and that too, not very often.

"You learn that a lot of figures circulating about India are not true, like there are 500–600 million middle class consumers. Also, the market isn't easy. It's very tough, very competitive."

To enhance the firm's understanding of local buyers, Arzel has conducted numerous home visits, yielding insights such as that bathrooms are almost always shared, and the water supply is frequently limited.

In response, L'Oréal has developed products like shampoo that foams and rinses very quickly, and therefore does not require a lot of water.

More broadly, the "aspirational standards of beauty" are also highly specific in India, with hair holding the central position, while eyes and a fair skin tone are usually afforded a greater priority than the body.

"The way Indian women play with colours is quite extraordinary," Arzel added. "Whatever their social class is, you never see a sari-clad woman who's not looking good."

India's retail market is also unique, with kiranas, or small traditional stores, still responsible for the majority of sales. While organised chains are gaining ground, Arzel said this trend should not be overstated.

"Some say the Walmarts or Tescos of the world will kill the kiranas in India. That is the biggest myth," he suggested. "Which other retailer delivers a bottle of shampoo at your home for free, that, too, within ten minutes? Which other retailer gives you one-month credit at 0% interest? Carrefour is not able to do this."

Data sourced from Moneycontrol; additional content by Warc staff