Competition is fierce among beauty retailers in South Africa, given the tough economic situation, growing unemployment and increasing constraints on purchasing power, according to a recent report by BW Confidential. While South Africa is often given emerging-market status and all the growth prospects that go with it, including a rising middle class, it also bears many of the signs of a more mature country going through an economic crisis; indeed, business confidence is said to be at its lowest level in 10 years.

South Africa is considered by some as a two-speed market. “It’s a market that is both in full expansion due to consumers’ high purchasing power, but it is also somewhat mature,” explains Lionel Durand, managing director of French ethnic make-up brand Black Up.

The beauty business has also been hit by the volatility of the South African rand. “The South African rand is constantly fluctuating, so brands and retailers need a lot of financial muscle to deal with the constant changes,” comments François Nicollier, manager at distribution company Ciscoprod. Wilfrid Moulin, founder of niche retailer Metropolitain Cosmetics, agrees, citing the rand as the “biggest challenge” the market faces today, and says that in the past 12 months, the rand has seen a 32% devaluation against the Euro.

In addition, the retail scene is dominated by one strong player—Edcon, with its department store Edgar’s and Red Square beauty standalone concept, which commands a 50% share of the prestige cosmetics market, according to industry sources. Some see this dominance of one player as having created a certain sameness of offer. Add to that the strong position of major brands in the market, from Estée Lauder to L’Oréal-owned brands and Clarins, and competing retailers end up sharing a very similar assortment.

To read BW Confidential’s full report on South Africa click here.