Cosmetics arena getting competitive in Australia

By Lucy Whitehouse

- Last updated on GMT

Cosmetics arena getting competitive in Australia
The cosmetics sector in Australia has recorded unexpectedly steady growth of late, according to the latest market report from IBISWorld, and rising competitivity means brands must continue to adapt to consumer preferences and demands to keep this momentum going.

The research observes that a discount purchasing consumer mentality and the rise of ecommerce in the country throws up an increasingly tricky landscape for brands looking to assert themselves.

Opportunities for cosmetics companies lie in ‘multifunctionality’ innovation and investing in digital, according to the analysis.

Challenges ahead

Industry analyst for IBISWorld Arna Richardson notes; “the industry's performance is increasingly influenced by intensifying competitive pressures, both within the industry and from a growing number of external competitors.​”

The increased competitivity in the market has resulted from the strong Australian dollar, which encouraged a flood of parallel imports in recent years.

Consumers are also increasingly able to access lower prices from internet retailers: L’Oreal’s recent investment in its digital marketing confirms brands are looking to manoeuvre this trend. 

The brand stated: “As the media landscape’s changes are accelerating, L’Oréal Australia requires more focus, recourses and insights in order to maintain its position as the frontrunner in the Australian Health and Beauty market.”

Furthermore it commented that; “With L’Oreal Australia’s increased focus in digital communications, combined with the rapid development of e-commerce, it has become necessary to fully engage with its consumer using the latest, most engaging communications.”

Bargain hunters

The analysts note that the “growing number of pure-play cosmetic e-tailers whose business models rely on aggressive price offerings and the ability to offer a wider array of international brands​” in the country participates in creating a widespread consumer demand for ‘discount retail’.

This demand is fuelled by the sales practices of the major supermarket chains, the largest of which, Woolworths and Coles, are involved in a ‘so-called price war’ of heavy discounting, according to market research firm Euromonitor.

Despite this discount-mentality, brands are still managing to assert themselves: both Procter & Gamble and L’Oréal remain market leaders in the region, each having launched successful multifunction BB and CC creams in the last year.

These innovations tap into the trend of multifunction products which the IBISWorld analysts suggest offers opportunities for brands to move forward in the marketplace.

The multifunctional bandwagon

Products marketed with key features such as time-saving, mini luxuries, instant gratification and long-lasting are set to tap into consumer demand, the analysts suggest.

By “borrowing” product attributes from adjacent categories, manufacturers aim to achieve wider consumer appeal through more holistic features, cross-category benefits, multi-functionality and value-driven price points​,” they note. 

Related topics Market trends Oceania

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