Skin care industry has been evolving from ancient times. Earlier women used to use Castor oil, rose water etc. for their skin. With the change in era and developments this industry flourished in all parts of the world. Earlier skin care was just limited to face but now they are meant to be applied to face, eye area and cosmetics are divided by the area of body where it is intended to be applied. Various multinationals have acquired the market in skin care from ages L’Oreal, Unilever, The Procter and Gamble Company are few of the names. Though this industry have also seen some of the issues with safety due to use of animal skin etc. which caused irritation to the skin of consumers but still it is flourishing as beauty is something from which consumers will never part away. There are changing trends in the skin care industry which can be seen worldwide. Consumers are moving towards anti-ageing products, organic and natural ingredients in cosmetics, even Men are concerned about their skin now so this industry is also opened to Men segment.
Today one of the most upcoming trends in skin care industry is evolution of anti-ageing products. This is expanding due to increasing consumer concerns towards their skin. Even wrinkles are no longer the only sign of aging, dry skin, uneven skin tone, hair damage; aging spots are few of the concerns which are arising in the market. According to Euro monitor report, spending in this product segment is expected to reach $291.9 billion by 2015.
UAE is constitutional federation of seven emirates and Dubai is one of the emirates.One of the flourishing market in UAE is skin care industry which has increased by 7% in 2013 amounting to AED532 million, according to Euromonitor.
[bctt tweet="Skin care is expected to generate 46% of revenue or market value growth in Dubai market."]
Young consumers are looking for novelty and others are concerned for self-image in the society. Growth in skin care is expected to be healthy in the United Arab Emirates as the influx of expatriates moving to the country is likely to continue due to the country’s ongoing economic boom and the fact that more jobs are being created. There is a belief of consumers in the UAE that global brands offer higher quality products making global brands highly trusted.
Let us look through the lens of Porter's Five Forces, hows the competition emerging in UAE?
Bargaining Power of Suppliers
In the anti-aging market the bargaining power of suppliers/distributor’s is very high as the company/brands depend upon their reliable and robust distribution network to make sure that their product is available at the right place at the right time. In Dubai with the increasing number of mom and pop shops it is important for the companies to make their product visible and available at the nearby stores for their customers. Since at the price level almost all products are similar, hence the availability and positioning of your product at eye-level is a very important factor in influencing the buying decision of any customer. If the product is not available it is very likely that the customer will buy the next available substitute.
Bargaining Power of Buyers
The increasing presence of social media in the society has played a very important role in increasing the knowledge and awareness of the consumer. Hence the consumer of today is much more aware and knowledgeable than ever before, which has also increased its bargaining power. Today's consumer wants to maximize its surplus hence they follow global brands and compare the prices, availability and differentiating factors amongst all competing brands before making any decision. Consumers choose those products that add more value to their money spent. Also the reason that all the products offered in the anti-aging market at same price are relatively same in terms of quality and effect, which gives more bargaining power to the consumers as now they can make their purchasing/rejection decisions instantaneously.
Threat of New Entrants
The threat of new entrant in Dubai market is low because all the important brands are already present in the city. The barriers to entry into this industry are also high as huge amount of investment is required in terms of time and money to set-up a robust network effectively. In FMCG industry trade relations are very important which is built over time which adds another layer to the complexity to entry for a new player. Since this industry works at very low margins, hence economies of scale is imperative to survive and compete which is again difficult for a new entrant, as it won't be able to displace the current players on the Dubai market instantaneously.
Threat of Substitutes
In Dubai residents have high disposable income due to which the substitutes available is the market are also larger in number which results in competitive anti-aging market in Dubai. With time surgical and non- surgical technology has also improved resulting in effective and affordable anti-aging treatment. Also the number of anti-aging treatments and clinics providing these treatments has mushroomed. Most of the competitor's product in skin care market is either substitutes or offer identical benefit’s to consumers. Hence this has also created stiff competition for Anti-aging cream market.
Threat of existing competition
The anti-aging market in Dubai is very competitive. Since undifferentiated products are available at same price points hence the switching cost for a customer is very less. To add to this, most of the brands have same reputation in the eyes of customer hence the companies can't bet on exclusive customer loyalty for their brand. Also the companies operating in Dubai in this segment of the market have well established distribution network which ensure that their product are readily available at majority of retail outlets across city which eliminates the possibility of any competitive advantage.