Even if selective brands have their cachet with high-tech claims or stunning packaging to woo consumers, one cannot ignore the growing appeal of budget brands, such as fast-fashion retailer H&M or Italian beauty brand, Kiko. In 2015, H&M captured the limelight when it announced a major 700-sku beauty relaunch boasting products priced between $2.99 and $24.99. The high-profile launch was just one of a number of entries in recent years that have succeeded in turning the image of budget brands around.

The figures speak for themselves. According to Cosnova Beauty, owner of German cosmetics brands Essence and Catrice, Essence is the biggest make-up brand in the lower price-segment globally, based on Euromonitor figures. The Essence brand is sold in 80 countries, while Catrice is distributed in 50 markets. The brands sell 95% of their products at the average price of €3.50 (Catrice) and €2 (Essence). Italian cosmetics brand Kiko, meanwhile, now sells to more than 700 directly-operated brick-and-mortar stores in 12 countries and has developed e-commerce business in 35 countries.

Clearly, Kiko has changed the direction of the category by introducing a visionary approach of selling low-priced cosmetics in its own stores, a strategy that has enhanced the budget brand’s image and built a connection with consumers. It is also a strategy that other budget players have adopted. Following a handful of store openings in the US, cult budget brand e.l.f. opened its first boutique in France last year. At the same time, Spanish budget fragrance company, Equivalenza, is rapidly expanding an own-store franchise network, and has started opening outlets in Brazil. Founded in 2011, Equivalenza has 821 stores in 30 countries. The chain sells fragrances that it presents as an equivalent to those from well-known brands at a low price—a practice that has angered many players.

Equivalenza boasts that its retail model is a pull for consumers. “Our main success is with the shopping experience we offer to our customers where they can choose perfume according to their olfactory preferences. We guide them to the scent that suits their personality and way of life, and even for different occasions. We also adapt our offer to local consumers to fulfill their needs and preferences,” says an Equivalenza spokesperson.

To read BW Confidential’s full report on budget brands go to: www.bwconfidential.com.