C&A: at 46, retailer innovates and launches its own line of beauty products
- July 9, 2022
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Fashion retailer will start selling body and bath products, with an eye on making better use of the square meter of physical stores
Finding beauty products at retail stores fashion is already more than common in Brazilian daily life. buy cosmetics manufactured by large companies in the sector, on the other hand, is far from usual. THE Zara is one of the rare examples of a company that has taken the first steps in this direction — made in the last year, with Zara Beauty — and now it’s time for HERE join this select group. The company starts selling, as of next week, its own line of beauty products, called beautyin 271 stores throughout Brazil, in addition to the website and application.
There are 12 products in the body and bath category (moisturizers, body splash, gel and hand cream), divided into three different fragrances: macadamia and bergamot, cherry and vanilla and cotton and jasmine. All will be sold in the store-in-store model, in physical stores, with prices ranging between R$19.90 and R$35.90. The focus is to provide an affordable offer to consumers who already frequent the store. “It is just the beginning, we see immense potential in this category and we will continue to invest to expand the product portfolio over time”, he says. Paulo Correa, CEO of C&Ato EXAM IN.
At the end of the day, it is much more an initiative to increase average ticket than from bring in new customers into stores. An objective that matches the company’s recent results. In the first quarter of this year, the high inflation and the increase in operating expenses with the reopening of stores caused the company to have a loss, even with an increase in revenue, which reached the billion mark – an increase of 54.2% compared to to the same period last year. And a 75.2 percentage point increase in same-store sales (SSS). no wonder, belt states that “the investment is a way to make the square meter of the store yield more”, in a pragmatic analysis of the subject. “The sale per square meter of this category is very high, higher than that of clothing. This should bring more productivity to the company”, he says.
The cost of putting the new vertical on its feet, of launching the new products and the estimated return from the new line are not yet points disclosed by the executive, at least for now. But, also, the executive does not leave completely in the air the potential that he sees in the new line. Correa says that, with his own cosmetics, it will be possible to triple or even quadruple in size sales in this segment made by C&A within the next two years. The company, it is worth remembering, will not stop selling third-party products from the launch of its own line. The company does not disclose specific cosmetics data, they are included in the Fashiontronics category in the financial statements. In the first quarter of this year, the vertical earned R$ 214.3 million, an increase of 50% compared to the same period last year.
Marketing body and bath products is a significant opportunity for the company, in the same way that it represents a great challenge. The sector grows, in general, according to data from Euromonitor: looking at annual bases, sales of personal hygiene, perfumery and cosmetics products rose 1.7% in 2021 in the country, to R$ 124.5 billion. The result was below the levels of previous years (3.9% in 2019 and 4.7% in 2020) but the good side of this story is that bath products, even with lower growth, continued to rise. The growth was 7.2% in the last year, second only to oral care products. The challenge—perhaps even more relevant than slower growth—is the concentration of this market. Also according to data from Euromonitor, Natura&Co, Unilever and Grupo Boticário have 37% of hygiene and cosmetics sales in the country.
Asked about the differentials of the C&A line in relation to the competition, Correa highlights the tripod: low price, wide dissemination of physical stores and C&A’s e-commerce in the country and credit. In other words, offering the products to 1 million people a day (this is the volume that passes through C&A stores), at attractive prices for classes B and C, having the possibility to try them in a nearby store and, if necessary, pay these products and clothes in a single purchase in up to ten interest-free installments, with C&A Pay.
All this without deviating from the company’s main focus. “C&A doesn’t want to become a cosmetics company. Our story is not just cosmetics. It’s connection, it’s the group together. We will always be aligned in fashion”, says the executive. On a day-to-day basis, this translates into an integration of intelligence within the company and between the style teams, with an eye on developing, for example, gift packaging that differentiates C&A’s products from what the competition already has.
To select the products that will be sold within the C&A from those that will not, the company has established a kind of rule, looking at the more aspirational side of the thing, based on three characteristics: Indulgence, Ease and Joy. A product has to present all of them to be sold by the company – either via its own brand or third-party brands – always with an eye on low-complexity items. Again, the retailer’s focus is much more to make life easier for customers who go through stores with affordable and good quality products than to dedicate rivers of money to research into new technologies in dermocosmetics.
Which does not mean, however, that the company only prioritizes low costs when delivering the products it offers. This is not the only criterion for creating margin from the new line. The company has a long tradition of ESG contributions to fashion, with the certification of the Moda Livre platform — created by the NGO reporter Brasil — in the highest category since 2018, a reference against slave labor in fashion, in addition to the C&A Institute.
Now, it has transferred these precautions to the production of the cosmetics line as well. All products are cruelty-free and vegan. “We took a long process to develop the products because of the company’s values. We wanted to work with suppliers that, unfortunately, we weren’t able to, but in the end we stayed with the companies where we were more confident about the production process. There are large companies in the sector that work with smaller outsourced workers, but we are not risking absolutely anything”, says Correa. The products are manufactured by Yuzi Indústria de Cosméticos Ltda., located in Diadema (SP).
The focus, from now on, is to bring these lessons learned and continue with a sustainable footprint for the other products to be marketed within C&A’s own cosmetics line. Correa gives a slight spoiler: makeup is among the categories analyzed by the company.
It makes sense. Brazil is the fourth largest beauty market in the world and sales for eye, face and mouth products grow with the end of mandatory masks. In addition to the general feeling of growth, with frequent launches by content creators in partnership with brands, data from the consultancy Euromonitor show that the sector started the year with 10% growth compared to the same period of the previous year, with revenue of R$ 7 billion.
At C&A, there are still no details on when and how the new line should hit stores. What is known, at least for now, is that the purpose remains the same: to unite cosmetics with fashion increasingly ‘in-house’. Asked about a possible line of perfumes, Correa says: “We have a series of novelties in production. We want to make it different from what is available on the market, but there are still details to be shared,” he says.
In this environment, one thing is certain: the retailer, present in Brazil for 46 years, understood the changes in consumer behavior and combined the potential for gains at this end to also bring more positive results to the company’s balance sheet. The verdict that remains is that the company seems to have the knife and cheese in hand to make everything work, at least for now.