L’Oreal is all set to expand its portfolio in India by rolling out Kiehl’s, a 159-year-old brand. Kiehl’s has been a part of L’Oreal since 2000 and is present in 39 countries worldwide.
In India, the brand will take off at the Ambience Mall in New Delhi. Subsequently, L’Oreal plans to take the brand to other cities like Mumbai, Bangalore, Pune, Chennai and Kolkata.
In India, the strategy is to establish the brand through standalone stores, unlike the West where Kiehl’s is also present in shop-in-shop formats in upscale departmental stores. L’Oreal has partnered with Quest Retail which will help the company identify retail locations and recruit staff.
“Online retail is not on the agenda for now, as we want consumers to visit our store and experience the brand first-hand,” says L’Oreal Group Chief Operating Officer Dinesh Dayal.
Kiehl’s will sell grooming lines for both men and women — cosmetics for the face, body and hair. “Initially, we will stick to our core product portfolio. We will not display our extended range like pet products (dog shampoo etc) as we believe the market is too early for that,” says Dayal.
With households raising discretionary purchases such as personal products from 8 per cent in 2005 to 11 per cent in 2025 (says a McKinsey report), ignoring this market would be a missed opportunity.
In addition, with rapid growth in average annual household incomes, the demand for luxury products is rising at a fast clip. The brand’s primary target will be individuals who have bought these products overseas. Thus the price tags in India are similar to Europe. “We also see the new working woman as a target group, who now has the wealth and desire for self-indulgence and opulence,” says Dayal.
The immediate target audience might seem like low-hanging fruit which can be easily captured, but Kiehl’s has ample company in the luxury skincare space. There are brands like Lancome from L’Oreal’s existing portfolio. Then there are multitude of others like Estee Lauder, Chanel, Shiseido, Clarins and the nature-driven L’Occitane and Body Shop that vie for consumer attention.
However, the competition does not intimidate Dayal who believes the premium skincare market, though small, is witnessing double-digit growth, and there will be an opportunity for brands to co-exist. Kotak Institutional Securities Analyst (consumer division) Manoj Menon sees the entry of premium brands as an investment towards the future. “The premium skincare market has grown in other countries like Thailand, Singapore, China and brands are hoping that the same will happen in India.”
As far as differentiation goes, the company says it will capitalise on retail engagements to stand out in the marketplace. Dayal believes that Indian consumers are today seeking a personalised retail experience, and distributing free samples and offering in-store consultation are unique ways that the brand will connect with the customer.
“Our entire brand draws inspiration from natural ingredients, and our beauty guides are equipped to educate consumers about our products,” claims Dayal. “In fact, the brand team flew down from New York and Singapore to train the staff at the Delhi store.”
To generate awareness for the brand in India, L’Oreal will not invest in above-the-line campaigns. “Following Kiehl’s global policy, we will focus on word-of-mouth marketing to build a loyal base of customers which includes achievers in different walks of life like dermatologists, fashion designers, artists and musicians.”
The brand will also pursue the digital route to build a community around the Kiehl’s brand. It is preparing to release a micro-site and a Facebook page soon.
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