BW Confidential - Issue #3 - September 2010 - (Page 20)

Interview O Boticário president Artur Grynbaum Poised for growth Brazil’s number-two beauty company O Boticário found success with its franchising model. President Artur Grynbaum tells BW Confidential how he is diversifying the company’s distribution strategy and exploring new opportunities to take advantage of the Brazilian market’s fast growth by Renata Ashcar G enerating growth has never really been a problem for Brazilian beauty company O Boticário. But now that Brazil’s market is looking a lot more stable than it has been in years and reporting growth rates that even the global economic crisis couldn’t dampen (the country’s beauty market increased by 14% in 2009 to R$24.9bn, or $14.16bn), rising sales look more or less assured for the company in the years to come. Founded in 1977 as a single pharmacy, O Boticário is now the second-largest beauty company in Brazil after Natura and is the world’s biggest cosmetics franchise group. Franchising has been key to the company’s success, and has allowed it to build strong brand equity across Brazil and a far-reaching store network: it now has a total of 2,840 stores in 1,550 cities in the country. Despite the success of this model, O Boticário is looking to alternative distribution. The company is currently testing direct sales, the model that made Natura so successful. Diversifying, whether in terms of distribution or product strategy (some ask when O Boticário will add third-party brands to its stores), is an important lever for growth, especially as Brazil is becoming a lot more attractive to foreign groups that could represent strong competition. In July LVMH-owned retailer Sephora acquired Brazilian e-commerce operator Sacks.com, a move that will no doubt be followed up by the opening of brick-and-mortar Sephora stores in the country. Another competitor to watch is L’Occitane, which has pinpointed Brazil as a key growth market and is investing heavily there. O Boticário is still also aiming to make its mark as an international brand, although finding the right 20 partners in some export markets has sometimes been challenging. The company is present in 10 international markets and is now focusing on these countries rather than expanding into new regions. BW: What is O Boticário focusing on to drive growth? AG: In order to have a more structured business for the competitive Brazilian market we announced the creation of Grupo Boticário in March, which is a holding that will operate several businesses for emerging opportunities. There are now two business units: O Boticário cosmetics franchising and another unit responsible for the prospection, identification and development of new business. The creation of the holding consolidates the corporate governance program that we started seven years ago and is helping us prepare for challenges and opportunities that the market will bring in the coming years. Brazil has a great market potential and we want to participate in a relevant way in the development of the country. BW: What is your focus in terms of expanding the number of doors in Brazil? AG: We want to continue expanding the number of stores and we’re evaluating the commercial potential in small, medium and big cities in Brazil. Last year we aimed to open 100 new stores and we opened 180, bringing us to a total of 2,840. For 2010 we will continue to rely, as always, on our franchising networks and we intend to open at least 100 new stores. BW: How is your new store format, which you introduced in 2007 progressing? AG: Almost 80% of our stores are already in this format and by the end of 2010 all stores should be revamped. In this format, all products are available for testing and are grouped by category and solution. Three concepts guide our products—Special Care (soap, oils, deodorant and shampoo); Skincare and Transformation products (make-up and fragrance). September 2010 - N°3 - BW Confidential http://www.Sacks.com

Table of Contents for the Digital Edition of BW Confidential - Issue #3 - September 2010

Cover
Contents
Comment
Update
- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
Launches
- The latest in fragrance, skincare & make-up
Interview
- O Boticário president Artur Grynbaum
Insight: luxury
- Category overview
- Pricing
- The internet
- Return to quality
Wellness
- The spa consumer
- Spa case studies
Retail
- New store concepts
Travel retail
- Inflight sales
Market watch: US
- Country overview
- Industry roundtable
- Retailing analysis
- Emerging retail channels
Radar
- Six up-and-coming beauty brands
Packaging trends
- Make-up innovations
Last word
- Inspiration&Creation founder Leïla Rochet-Podvin

BW Confidential - Issue #3 - September 2010