Raluca Kisescu, the marketing manager of Avon Cosmetics Romania, the largest cosmetics importer on the local market, says that companies will not see significant rises in turnover over the following years, as has previously occurred.
"In late 2006 the cosmetics market witnessed a steadier growth pace and has grown more mature. We believe this steady pace of growth will continue in 2007," says Raluca Kisescu.
According to the market research company MEMRB the sales of non-food products (cosmetics and detergents) increased by only 7% in value over the first half of last year. This is compared with the 32% growth witnessed in the same period of 2005. MEMRB also says the market is expected to grow by 10% in value and by 3% in volume.
Lately, Avon Cosmetics, a company whose annual turnover was worth over 124 million euros in 2005, has been banking on the development of its sales network in rural areas, where the modern retail stores have not entered as competitors.
According to the Avon marketing manager, what prompted the large retailers to focus on urban areas where people have a high purchasing power, was infrastructure. One of the competitive advantages possessed by the cosmetics companies that use the direct sales system is the possibility to address directly to those markets that are insufficiently covered by the large FMCG stores or by the cosmetics store networks. Other large cosmetics companies that use the direct sales system include Oriflame, Amway and Forever Living Products. The latest company that entered this market sector is FM Cosmetics, which sells mainly perfumes and toilet water.
Raluca Kisescu comments, "The inhabitants of the rural areas have become more receptive, more eager for information, curious and willing to keep up-to-date. I think of the gaps among the country's different regions as being in terms of preferences of consumption rather than of profitability".
In other words the major gap among the different regions of the country and their contributions to company turnover no longer exists.
Still, Bucharest remains the leader in terms of sales. Raluca Kisescu also adds, "Approximately 10% of Romanians live in Bucharest and the fact that the foreign investments are focused on the capital has created an economic advantage for the city compared with the rest of the country. As a result this is reflected by a higher purchasing power and implicitly, by higher consumption".
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