Chang­ing land­scape

The cur­rent eco­nomic re­al­ity is chang­ing the busi­ness of beauty.

The Star Malaysia - Star2 - - TRENDS -

SO, IT’S been al­most 18 months now and I thought I’d re­visit a touchy sub­ject that’s prob­a­bly still a sore point with many – the GST.

No, that doesn’t stand for Great Sale To­day. On the con­trary, sales have been any­thing but great these days for the re­tail sec­tor, no thanks to the im­ple­men­ta­tion of the Good Ser­vices Tax along with the not- so- en­cour­ag­ing econ­omy and poli­tical scene.

Stay­ing beau­ti­ful can be a beast of a feat re­ally, what with ris­ing prices and stag­nated wages.

Beauty en­thu­si­ast Ai Leen, for in­stance, says the GST price hike has def­i­nitely af­fected her beauty ex­penses.

“I in­vest heav­ily on skin­care and fa­cials on a monthly ba­sis. But ever since GST kicked in, my en­tire skin­care reg­i­men has changed. I used to buy skin­care prod­ucts and go for fa­cial treat­ments which ranged from RM200 to RM600. Hav­ing to pay ex­tra on each item, even if it’s just 6%, works out to be quite a bit col­lec­tively and eats into my to­tal house­hold ex­pen­di­ture,” says Ai Leen, who has re­cently switched from a high- pow­ered man­age­rial post to a part- time con­sul­tancy job.

Women are adapt­able crea­tures though and have ad­justed to the new beauty land­scape.

“Af­ter GST, I opted to sub­sti­tute cer­tain prod­ucts with a cheaper brand, and de­creased the num­ber of fa­cials as well as the type of fa­cials I go for. I no longer colour my hair as of­ten go for more DIY hair treat­ments in­stead sa­lon treat­ments,” she adds.

Beauty com­pa­nies are caught in a bind as well as they have no choice but to ad­just their prices due to higher costs, weaker ring­git ex­change and de­creased prof­its. Some pres­tige brands have found them­selves los­ing out to cheaper brands which are less tied up in ad­ver­tis­ing and mar­ket­ing costs which are of­ten passed on to the cus­tomer.

One trick some com­pa­nies may have re­sorted to could be to keep to old prices, but cut down on qual­ity and quan­tity.

Take for ex­am­ple, some of the hawk­ers in Pe­nang who still sold their As­sam Laksa and Char Kway Teow at old prices, but halved the in­gre­di­ents. Foodies found them­selves hav­ing to buy a sec­ond, if not a third bowl, just to fill their stom­achs! That be­ing the case, I would much rather fork out an ex­tra 50 sen and be as­sured that I’m still get­ting the same value for money.

Ac­cord­ing to a ( WSJ) on

It also warns that “peo­ple who feel that they’re be­ing cheated or tricked can be very an­gry cus­tomers. And these days, so­cial me­dia gives them an easy way to pub­licly voice their anger”.

On a pos­i­tive note, re­search has shown that con­sumers not only re­spond to price lev­els, but to how fair they think it is. If they think that the in­crease is tied to profit- tak­ing or to other hid­den mo­tives, they’ll con­sider it un­fair. Con­versely, they are more likely to ac­cept the in­crease if it’s tied to higher costs, added WSJ.

For one new­bie FMCG cos­met­ics brand, GST turned out to be a boon of sorts.

“Since we’re new in the Malaysian mar­ket, it wasn’t so hard to es­tab­lish a new price range as we don’t have that many loyal cus­tomers yet. The GST has kind of worked out for mid mass brands as some con­sumers have turned to brands such as ours as al­ter­na­tives,” ex­plains its brand spokesper­son.

WSJ also sug­gests that it’s bet­ter and eas­ier to raise prices when in­tro­duc­ing a new prod­uct as that usu­ally means im­prove­ments and new fea­tures can jus­tify new prices.

What’s in­ter­est­ing is that on­line op­por­tu­ni­ties have also grown, open­ing doors for more play­ers and brands to en­ter the mar­ket as beauty bor­ders are no longer so clearly de­mar­cated. Es­tab­lished brands are also court­ing cus­tomers with pro­mo­tions and dis­counts on so­cial me­dia, without foot­ing ex­tra for in- store ad­ver­tis­ing.

So yeah, main­stay skin­care prod­ucts which we used to buy may have be­come a lit­tle pricier, but it’s not all bad as it’s also spawned a whole lot more choices for con­sumers and in­tro­duced new names which we oth­er­wise would never have both­ered to try.

One com­pany that has man­aged to defy the odds is Korean group AmorePa­cific, which de­spite GST or what­ever the mar­ket has thrown at them in the last cou­ple of years, has still man­aged to en­joy tremen­dous growth.

Rid­ing on the pop­u­lar­ity of K- beauty and the weak­ness women have for Korean dra­mas, their prod­ucts are fly­ing off the shelves, and giv­ing con­ven­tional French and Amer­i­can brands a se­ri­ous run for their money.

How will they fare when the hal­lyu love af­fair is over?

Well, if a prod­uct is proven to be ef­fec­tive, re­li­able and the qual­ity be­yond re­proach, and there’s con­stant in­no­va­tion to keep the mo­men­tum go­ing, there’s no rea­son why the Kore­ans can’t be the beauty in­dus­try lead­ers which the world will look to in fu­ture.

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