"Oriflame" Romania sales on the rise

Cornelia Angelescu

Sales of cosmetics, alcohol and chocolate increase in times of economic crisis. This is however in terms of units sold, not of value, due to consumers turning away from premium products to mass market products. Thus, sales of cosmetic products in specialized stores, where prices are higher, are decreasing, but not in supermarkets. Monica Tatoiu, General Manager of "Oriflame Cosmetics" Romania, says: "This trend presents an opportunity for us, because we operate in direct sales, where we have far lower operating costs, than cosmetics retailers. For us, the lack of infrastructure generates small growth and high opportunities. The number of units sold by us increased, but the average price per unit decreased. Premium products sales stagnated".

French cosmetics maker "L"Oreal" recently published a report concerning the cosmetics market, which, according to Mrs. Tatoiu, draws a newer picture of the market, closer to the truth. "Knowing that the Romanian consumers spend on average EUR 17 on cosmetics, and that the Romanian cosmetics market is worth EUR 500 million (instead of the estimated EUR 650 million), gives us concrete information to work with", Monica Tatoiu said, who added: "For the first time we have a real report on the cosmetics market".

This year Oriflame relaunched several product ranges. "Time reversing", targeted at customers aged 45 or older, who were not affected by layoffs (but rather by inflation) and the "Giordani Gold" product range, which managed to retain its customers and received two additional mineral make-up products- eyeshadow and foundation.

Monica Tatoiu said: "As consumers are more cautious when making purchasing decisions, we have launched the program, which was executed in 12 county capital cities. We literally had political economics training for our direct sales agents, as many of them lacked the knowledge of economic terms. For instance, 80% of them didn"t really know the meaning of GDP. We tried to explain to our sales agents how the crisis they see on TV affects their social circles. A positive attitude when looking at reality stimulates creativity".

The current structure of legal entities that "Oriflame" works with has changed, with PFAs (certified natural persons) gaining against LLC. This is a trend that is visible in all economic sectors, as economic agents wanted to avoid the lump sum tax, by turning into PFAs.

"Romanian consumers are now becoming more cautious when it comes to purchasing things that they don"t strictly need. Whereas last year they"d fill their shopping cart, they are a lot more cautious now before adding a new item. This is a good thing for Romania"s economy", Monica Tatoiu claims.

Sales of "Oriflame International" increased 25% in Q1 2009. This makes it the company with the largtest quarterly growth for 2009, and "Oriflame Cosmetics" Romania followed a similar trend.