“In 2013 we managed to drive our business back to growth, with the increase rate being lower than 5%, but twice as fast as the market pace. Both purchasing frequency and order values increased. Moreover, in the second half of last year, the number of representatives also posted marginal growth,” says Razvan Diratian, commercial manager of Avon Romania and the Republic of Moldova.
Diratian, 37, has worked with the company for around 15 years.
Avon has around 130,000 representatives nationwide, a relatively flat number in the past 3-4 years marked by falling consumption. According to Diratian, the highest number of representatives stood at 140,000 people.
Diratian adds that though Avon’s revenue returned into the black, the advance does not come from rising consumption, but from higher promotion investments and offer numbers.
“There is no optimism in the market, though statistical data show a consumption rebound. Clients are still cautious when shopping, they are permanently seeking offers and discounts”.
Retail revenues, the most important indicator for consumption, went up by just 0.4% last year.
Diratian explains the company annually invests some $20 million (EUR15 million) in promotion, a sum that includes the marketing and advertising budget, as well as representative incentive programs.
Against revenue of EUR103 million last year, as estimated by ZF on the basis of company data, the marketing and promotion budget nears EUR15 million.
The company invested to promote both existent products and particularly new ones, the “engine” of Avon growth last year. “A rising number of representatives ordered new items last year, particularly perfumes and facial care products”.
As a matter of fact, perfumes weigh the most in Avon’s total revenue in Romania, around 30%-35%.
Diratian says he noticed Romanians prefer to give up other product categories rather than cosmetics. Romanians spend $1 billion (around EUR750 million) on cosmetics and personal care products annually, according to Diratian, meaning each person spends EUR3 monthly on average on such products.
“Cosmetics consumption in Romania is 3-4 times lower than in other Western countries and in the region. The gap comes from the number of purchased units. I believe Romania has the potential to double in around 10 years, and so does Avon business”.
Diratian says he’s noticed an increase in sales of luxury products in recent years, and these products have come to account for 20% in the company’s revenue (against 17% 4-5 years ago).
“We’ve budgeted growth for this year as well, we want to keep our market share at 13-14%”.
Avon boss explains it is low consumption that generates market potential and he believes sales of facial care products and make-up products will soar on the long term.
(English version by Catalina Apostoiu)