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Market Watch: South East Asia credit: istock Malaysia Cooling down Growth in Malaysia’s prestige market is in for a slowdown, but there is still much to play for by Alex Wynne alaysia is one of the most mature beauty The introduction of Goods and Service Tax shopping and are digitally savvy. Recruiting Mmarkets in South East Asia, and the (GST) on April 1 this year has also impacted new consumers is seen as key to growing country’s relatively stable economy and growing the market, with a surge in consumer spending the market. “The expanding middle-class middle class have over the years led to steady prior to its introduction and a subsequent population is driving growth for the luxury growth for the prestige segment, one of the slowdown in the second quarter. Business was cosmetics market,” L’Oréal’s Lau comments. most developed in the region. expected to even out in the third quarter. “Consumers yearn for a slice of luxury,” she But like other markets in South East Asia, In an already promotionally driven market, the adds, specifying that luxury cosmetics brands Malaysia’s economy has begun to slow, situation has become exacerbated as industry are seeing good growth. She adds that impacted by recent aviation disasters, which players try to boost the market’s slowing products like the Lancôme Advanced Génifque have had a negative effect on tourism, growth. “Clearance and warehouse sales franchise have performed extremely well and is especially from China. GDP growth of 4.8% have been very active as brands try to bring is anticipated for this year (2014 GDP growth back the spending momentum to normal,” was 6%), along with infation of between 2 says La Prairie Group president and ceo and 3%, and this is causing consumers to be Patrick Rasquinet. “Consumers are also Malaysia beauty and personal-care sales* by more cautious with spending, according to becoming more value-driven, expecting more category 2014 industry sources. “The luxury cosmetics market GWPs and anticipating promotions from Category Sales $m % change in Malaysia has enjoyed steady growth over the department stores.” 2014/2013 past fve years at an average of 3-4%,” says Skincare 532.5 +5.6 L’Oréal Malaysia Luxe division general manager Innovation & service Sook Ping Lau. “We expect 2015 to continue to Due to the maturity of the market, brands are Color cosmetics 155.8 +4.2 grow, albeit at a slower rate due to the maturity increasingly seeing service, new retail concepts Fragrance 119.8 +5.2 of the market.” Last year the total beauty and and innovation as ways to attract the Malaysian Beauty & 1,965 +5.5 personal-care market rose 5.5% to $1.97bn, consumer. More than 50% of the population personal care according to Euromonitor International. is under 50 years of age, and consumers love Source: Euromonitor International *Retail sales 88 November-December 2015 - N°24 - BW Confidential