Estée Lauder Sets Up Shop In India To Dispense Beauty Products

Estée Lauder is a cosmetics giant with a history spanning 60 years and through 135 countries.  The company recently introduced its beauty products in India.  The beauty business was founded in 1946 by Estée Lauder with just four products.  Now the products are sold in 18,000 doors.

Mumbai was the first location for the Estée Lauder company-owned store in India, followed by one in Bangalore and two in Delhi.

Estée Lauder also planned to open the freestanding Delhi stores in Promenand and the other in Courtyard Malls.   Over the next three years, the company planned to open 20 locations and expand into cities including Hyderabad, Pune and Kolkata.

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Estée Lauder decided to move to India because the organized cosmetics market is growing at a healthy 25 per cent.  A major attraction for the renowned company.

The confidence emerges from the fact that the Indian cosmetic market is expected to move from $950 million in 2008 to $1.4 billion in a couple of years, as estimated by the Associated Chambers of Commerce and Industry of India.

In its second quarter results, Estee Lauder reported sales of $2.31 billion on the back of strong performances in the emerging markets. In particular, the company highlighted the Asia Pacific region and China where most of its brands sold out during the period and sales reached $347.4 million.

Estée Lauder has initiated India-specific cosmetic that includes six additional shades of Double Wear liquid and powder foundation developed specifically for Indian skin tones and a colour collection called Jewels of Summer, created by Lauder's granddaughter, Aerin Lauder, senior vice-president and creative director, Estée Lauder.

The Assocham report also brings to fore the dismal amount of money spent on buying cosmetics by Indians. The organisation says that the per-capita expenditure per year on international branded cosmetics products is just $0.68 in India, half that of China's $1.5.

Estée Lauder has an answer  "We are traditionally a departmental store brand and that is what we intend to do in India too." The brand is mulling to step up its presence through shop-in-shop counters in shopping malls and woo the departmental store crowd with entry-level products.

Meanwhile, the brand is struggling to add trained service staff comprising beauty advisors to deliver Estée Lauder's signature service and help customers choose the appropriate skin care and makeup products.  The low penetration of international cosmetics brands can be explained by the large differences in price between imported and domestically produced products.

Although India allows the entry of imported cosmetics without any restrictions the tariffs on such goods are particularly high at present, approximately 40 per cent. This results in a large price difference between imported and domestic products — a premium that the majority of the population is unable to pay.

Estée Lauder is re-inventing its retail strategy in India.  The company said "We realise that our customers might find the prices prohibitive. Thus, we will target departmental store customers with lower priced, entry-level products and premium store customers with our customer service and higher valued products."

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