Lakme's makeover

Some call it the ‘Air Deccan of the cosmetics industry’, but India’s biggest beauty brand is trying hard to go the premium way.

Just four days from now, it’s again going to be lights, camera and style for fashionistas, as the Lakme Fashion Week, now in its 10th year, gets going in Mumbai.

The Fashion Week has been a part of India’s biggest cosmetics brand’s strategy to go in for an image makeover – from a brand of the masses to the preferred brand of the classes as well. The associated started 10 years ago when a survey by Hindustan Unilever, which had then acquired the brand from the Tatas, showed that the youth perceived Lakme to be their mothers’ brand.

“Fashion and cosmetics go well together and we became the first sponsors,” says Anil Chopra, advisor, Lakme Fashion Week (LFW). Lakme has since graduated to become the co-host of the Fashion Week along with IMG, a sports and fashion events management company. “The association with Fashion Week has helped Lakme to traverse the entire spectrum from the mass-end to the premium, unlike other cosmetic brands,” says Ravi Krishnan, managing director, IMG.

Chopra says Lakme is well on its course to become a more premium brand. “The Fashion Week, the 140 Lakme Beauty Salons, which offer consumers a ‘Beauty Sutra’ experience, and now the recently-launched Lakme Studio, are all part of those efforts,” he says. Lakmé also partners with leading cosmetic house Milan-based Intercos Italia, Germany’s Schwann Stabilo and Paris-based Fiabila to combine international cosmetics technology with its understanding of the Indian woman’s needs. Chopra has reasons to feel encouraged as high-end products now contribute over 10 per cent of Lakme’s overall revenues.

But not everyone is convinced whether these efforts have been enough for the brand to make a lasting impression in the premium space. Experts say what goes against Lakme in its bid to take on the likes of L’Oreal and Revlon is its image. “Lakme is still the Air Deccan of the Indian cosmetics industry. Its image of a budget brand for the masses will be difficult to shed,” says Harish Bijoor of Harish Bijoor Consults.

Bijoor’s prescription: The one-size-fits-all strategy won’t work. Lakme needs to create two distinct brands and formulate separate strategies for the masses and the classes.

The journey to become a leading premium cosmetics brand in the Rs 500-700 crore modern retail market is proving to be a long haul. Listen to Govind Shrikhande, managing director, Shoppers Stop: “With the increasing number of new brands now available in the Indian market, Lakme over the last five years has been losing market share in the modern trade format. Consumers who enter the market for the first time usually choose among Lakme, L’Oreal, Chambor and MayBelline. And here L’Oreal has the largest market share.”

Further, regular cosmetics users are moving from the masstige (a marketing term meaning prestige for the masses) to the premium and prestige brands. “The prestige and premium categories have higher growth as compared to the masstige segment,” Shrikhande says.

Cosmetics is a Rs 2000 crore market, out of which the mid-premium is a Rs 1000 crore category where L’Oreal is the market leader. The premium is a Rs 300 crore category with players like Estee Lauder, Shisiedo and Lancome and the mass segment is a Rs 700 crore market.

Lakme’s bid for the premium segment got a major push last month when Lakmé Salon launched a first-of-its-kind Lakmé Studio in Delhi which will offer ultra-premium beauty services. Lakme Studio has tied up with Nail Spa that uses the latest nail technology from the US to bring a bouquet of services like nail extensions and nail art.

The strong point of Lakme, experts say, is its reach. With a retail reach of close to 1000 counters and an overall direct reach of 40,000 stores, Lakme is one of the most widely available brands. This large presence gives the brand volumes and makes it the largest cosmetics brand in India.

“The association with the Fashion Week has given us the ability to launch a new range of products catering to the lower masstige and masstige segments,” says N Rajaram, vice president (Lakme), Hindustan Unilever. Players in the masstige segment include Revlon, L’Oreal, Chambor, Maybelline and Colorbar.

But a leadership status in the premium segment would call for something more than just reach. That’s because unlike the FMCG market, the cosmetics market really works by creating awareness and education. For instance, Colorbar, which launched in India over four years ago with a footprint of 1100 stores, has doubled its growth rate despite reducing its reach to 650 stores.

Samir Modi, MD of Colorbar says, “Our strategy is to reduce the number of our stores and improve the quality of our advisors to increase our per store output. We have seen this paying off.”