Located on Europe’s Atlantic frontier, the Republic of Ireland’s share of the worldwide beauty market is a drop in the ocean compared with its closest neighbor, the United Kingdom, and mainland E.U. cosmetics strongholds such as France. However, with 2008 cosmetics and toiletries sales of $1.06 billion, according to Euromonitor International, for a population of about 4.5 million, the country is definitely on the beauty map. (In comparison, the U.K.’s 2008 cosmetics and toiletries turnover was $8.43 billion for a population of approximately 60 million.)
“The Irish [beauty] consumer is very sassy and trendy,” says Ian Marshall, managing director of Benefit Cosmetics in the U.K. and Europe. “She likes things that are different and she isn’t easily led. She’s independently minded. There is a perception that when you visit Ireland, you’ll end up at a party somewhere, and you do see that reflected in people’s personalities and shopping trends.”
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Like the rest of the world, though, Ireland’s traditionally festive disposition was rocked by the recent tectonic shift in the global economy. Further, as the first Eurozone market to officially slide into recession, it has perhaps felt the aftershocks more severely than others.
“[The situation] is not great,” says Noella Gabriel, director of U.K. sales, training and new product development at Elemis. “The market is not in its buoyancy. The recession hit worse there than in the U.K.”
The Nineties were a time of unprecedented boom, earning Ireland the nickname the “Celtic Tiger.” But the country’s economy lost its bite in 2008. After a decade of becoming accustomed to spending their disposable income on nonessential items and luxury goods, many consumers suddenly found themselves struggling to pay large mortgages taken out when access to credit was relatively easy and house prices were on a seemingly skyward trajectory. When the issue of negative equity emerged and unemployment figures rose, consumers cut back on discretionary spending, including spa visits and designer goods.
“The Irish housing boom, which fueled so much consumption, continues to deteriorate, which is in turn deflating the consumer bubble,” states a Euromonitor market report. “The rapidly rising asset prices, which allowed Irish property owners to remortgage and thereby finance a previously unseen level of spending, has burst, with house prices plunging by just over 2 percent in the first two months of 2009, pushing national prices back to February 2005 prices. Overall, properties in Ireland lost almost 10 percent of their value during the 12 months to the end of January 2009 as sources of credit available to potential homeowners continue to dry up.”
Strapped for cash—and with unemployment levels hitting almost 13 percent in January—Irish shoppers have tightened their purse strings at the beauty counter.
“Irish women want value for money now. Before, spending as much as possible was important to them. Now, that trend has reversed,” says Kirstie McDermott, co-founder of the influential Irish beauty blog Beaut.ie. “There is a certain cachet in finding a high-performance product at a bargain price.”
“Value is key,” adds Fizzah Kazmi, Euromonitor senior research analyst. “People are looking around more and bargain hunting online and in stores. They don’t want to trade down, but they will look around for deals.”
While the Irish beauty market grew in retail value terms by 33.4 percent between 2003 and 2008, growth between 2008 and 2013 is expected to come in at 8.8 percent, according to Euromonitor.
The newfound fashion for frugality involves scouring stores for discounts, researching purchases online and buying from U.S. Web sites, since the euro-to-dollar exchange rate results in more accessible price points. “When it’s cheaper for us to buy in America and to pay for the shipping [to Ireland], there’s something wrong,” says McDermott. “The typical markup on beauty products is 40 percent—and occasionally as much as 50 percent—over sterling prices. There are some elements that account for that—a 10 percent difference in exchange rates and a 6.5 percent difference in [value-added tax]—but that doesn’t account for the price gap. It’s very bad for brands’ profiles as it’s very easy for us to check online.”
Executives note that since the recession kicked in, increasingly price-conscious shoppers living in the Republic of Ireland have been crossing the border to shop in NorthernIreland, where prices are generally lower. A VAT reduction meant to act as an incentive for consumers to shop, which was introduced by the U.K. government on December 1, 2008, and ran until this January 1, further made the journey worthwhile.
“Now, customers are being a lot more savvy about how they get their products,” says Nicky Kinnaird, founder of the Space NK chain, which has outposts in Northern Ireland.
“Last year, there was a clear divide between North and South,” says Marshall. “The South took a pasting. The economy there fared far worse than mainland U.K. and Northern Ireland. While Northern Ireland reflects the situation in the U.K., the [Republic] is more comparable with America.”
McDermott says women are also now more open to swapping unwanted products with fellow beauty junkies and searching out look-alike items. “They’re looking for dupes,” she says. “They want the effect, but they don’t want to pay the price. Take Chanel Particulière, the huge [nail polish] shade this season. Women will want Barry M, Essie or OPI to match the shade for 14 or 15 euros rather than [21 euros].”
Research carried out by PricewaterhouseCoopers Ireland in January seems to confirm that observation on a wider scale. “The majority, 65 percent, of Ireland’s consumers are now buying ‘clever’ and spending more time hunting for value. Over half, 55 percent, are buying less, and over a third, 35 percent, are trading down or buying cheaper products,” states the firm, which surveyed the country’s leading retailers. “‘Scrimping and splurging’ will become even more pronounced. The same consumer, for example, is often willing to spend more on products and services that they perceive to have genuine value, while focusing ruthlessly on finding the lowest prices for more commoditized goods.”
Euromonitor’s Kazmi notes that the Irish beauty market tends to have a masstige orientation. “There was a move to premium two to three years ago, but now people are looking for quality and value,” she says. “Given the environment, they can, in many cases, find both.”
Premium cosmetics generated sales of $200.2 million in the Republic of Ireland in 2008. The category grew 40.9 percent between 2003 and 2008 and is forecast to increase by 8.7 percent between 2008 and 2013, according to Euromonitor. The treatment category is forecast to grow by almost 13 percent between 2008 and 2013.
“Skin care is still sought after,” says Elemis’ Gabriel. “People will invest in a moisturizer.”
“The fun money is gone,” says Peigín Crowley, international sales manager at Anne Sémonin. “But women are not afraid to invest. People are experienced and savvy about their product choices.”
Space NK’s Kinnaird adds women cutting down on trips to their facialists are looking for high-tech products to use at home. (Ireland’s spa industry has also taken a hit in recent months, according to executives.)
“Antiaging is gaining more strength, with the targeted age market lowered to include women and men in [their] late 20s,” says Miranda Hunter-Nolan, executive and secretary to The Cosmetic Association of Ireland.
Beaut.ie’s McDermott believes Irish women are particularly keen to see brands back up their antiaging claims with empirical evidence. “Clinical trials are big for the Irish consumer,” she says. “[They want] more transparency and honesty.”
Meanwhile, the color cosmetics category is expected to expand by almost 12 percent between 2008 and 2013, according to Euromonitor, while hair care is forecast to contract 3.7 percent. Fragrance sales are projected to increase 6.4 percent. In 2008, scents generated revenues of $130.2 million.
While the men’s grooming market is set to expand by almost 23 percent over the five-year period to 2013 after growing 60 percent over the previous five years, it’s growing from a small base. In 2008, men’s grooming product sales totaled $152.3 million, according to Euromonitor. “Male grooming is the most promising area of growth,” says Tracy Van Heusden, senior beauty buyer at department store chain House of Fraser, which has a store in Dublin. “This is an underexploited market.”
Irish men may be slow to incorporate beauty into their lives, but women are more apt to follow beauty trends. Celebrities, both local and international, play an important role in driving trends in the market. “[Irish women] are very led by celebrities and who is using the brand of the moment,” says Gabriel. Such interest in beauty and the expectation that an economic turnaround will happen at some point mean executives are cautiously confident regarding the future of the Irish beauty market.
“It’s not going to happen overnight,” says Marshall. “But there is some optimism.”
“The Irish don’t stay down for long,” adds Gabriel. “They’ll be back.”
Capital: Dublin
Largest City: Dublin
Official Language: English, Irish Gaelic
Area: 27,135 square miles
Currency: Euro (EUR)
Population: 4,459,547
Internet TLD: .ie
Calling Code: +353