The Romanian branch of Swedish cosmetics company Oriflame posted approximately $22.2 million turnover last year, up 47% from 2001, when sales reached $15.1 million and net losses amounted to $150,000.
"We had a difficult year in 2002 because of the ROL/EUR exchange rate fluctuation. As most of our products come from the European Union, they had become more and more expensive by the end of the year. The decision of the company was to take the costs of this turbulence upon itself, just as it did in 1997, and preserve the market share. We kept the prices steady, we cut profits and played the volume card. The results were spectacular as demand in the last quarter was well beyond our expectations," general manager Monica Tatoiu said.
The euro's surge against the dollar on the international markets last year led to a 25% gain of the single European currency against the ROL, against 18% inflation and a 6% drop of the ROL against the USD.
Statistics show the cosmetics market shrank last year due to the low purchasing power and to the competition. The market is estimated at about $200 million. Tatoiu, however, says last year's decline did not make much of an impact on the company she runs.
"The market seems to have gone down, but this did not make much of a difference to us. We registered growth on the segment of those products offered at promotional prices, and a better price/quality ratio. We did see a drop on the high-end segment, but we compensated it by an increase on the complementary segment. The Romanian market is highly price-sensitive, yet slightly favouring quality, though," Tatoiu said. Oriflame's 2003 plans target 30% growth by broadening the product range, by keeping prices below inflation, increasing the number of offers and developing social projects and working together with the civil society.
"In other words, we will do so by involvement," Tatoiu said.
In spite of the downward trend witnessed by the cosmetics industry, the company did not give up its no-TV-or-radio-advertising policy.
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