Is L'Oreal still worth it? Ask French hair salons

Wed Nov 12, 2008 10:58am EST
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By Astrid Wendlandt

PARIS (Reuters) - For years the undisputed leader at high-end hair salons, L'Oreal is losing its shine as hair stylists turn to cheaper products from rivals such as Germany's Wella and Schwarzkopf to weather an economic downturn.

It is still early to tell how far the trend is being replicated elsewhere in Europe, but on its home turf along the boulevards and avenues of Paris, the world's biggest cosmetics group is feeling the pressure.

"L'Oreal is no longer reigning supreme," said Michele Duval, head of the French National Council for Hairdressing Businesses, which represents 4,500 hair salons. "It is increasingly challenged by the aggressive price policies of Wella and Schwarzkopf."

L'Oreal, whose professional brands include Kerastase, Matrix, Redken and Mizani, is the most expensive and toughest supplier, according to hairdressers like Dominique Garret, who owns a salon called C Comme Cheveux in a residential quarter near the Arc de Triomphe.

"L'Oreal is so big, it has been dictating conditions to stylists and some, like me, just got fed up," said Garret, who switched to Wella. "Wella and Schwarzkopf have stolen customers from L'Oreal -- that's for sure."

Wella is owned by Procter & Gamble Co of the United States and Schwarzkopf is a subsidiary of Germany's Henkel.

Even though sales to salons make up only 15 percent of L'Oreal's turnover, what customers see on the shelves of their hairdresser influences what they buy at the supermarket.

"The professional channel is important for their image," Charles Manso de Zuniga, analyst at Dresdner Kleinwort in London said of L'Oreal. "Hair salons are also a good place to test new products."   Continued...

<p>L'Oreal cosmetic and beauty products are seen in a hairdresser shop in Nice, southern France, November 5, 2008. REUTERS/Eric Gaillard</p>