Table of Contents
Overview
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- What you need to know
- Covered in this Report
Executive Summary
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- The market
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- Figure 1: Best- and worst-case forecast of total value sales of beauty retailing, China 2011-21
- Figure 2: Store number of beauty retailing, by segment, 2014-16
- Companies and brands
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- Figure 3: Sales and annual growth rate of top five beauty retailers, China 2015-16
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- Figure 4: Number of stores of top five beauty retailers, China 2015-16
- The consumer
- Offline channels are still mainstreams for basic BPC products
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- Figure 5: BPC products purchased in the last six months, November 2016
- Brand speciality stores are important for attracting 20s
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- Figure 6: Most often visited bricks-and-mortar stores in the last six months, November 2016
- Competitive price is still the key to online retailers
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- Figure 7: Most often visited online stores in the last six months, November 2016
- Tier one cities are more driven by wide brand selection
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- Figure 8: Reasons for purchasing online and offline, November 2016
- Online/offline channels are almost equally accepted for buying premium products
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- Figure 9: Purchase channel of premium products, November 2016
- Fewer impulsive purchases, even for high earners
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- Figure 10: Purchase behaviour, November 2016
- What we think
Issues and Insights
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- Price is more transparent with M-commerce
- The facts
- The implications
- How to differentiate from other retailers?
- The facts
- The implications
- Wider brand choices will be key to attract premium beauty shoppers
- The facts
- The implications
The Market – What You Need to Know
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- Healthy growth…
- …yet mixed performance across channels
- Competition is not limited within Chinese market
Market Size and Forecast
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- Steady, but slowing value growth
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- Figure 11: Best- and worst-case forecast of total value sales of beauty retailing, China 2011-21
- Cosmetics stores continue to expand
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- Figure 12: Store number of beauty retailers, by segment, 2014-16
Market Factors
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- More brand specialty stores join the competition
- Multiple touchpoints for a seamless shopping experience
- Savvy shoppers pressure retailers to make more efforts
- Risk of losing savvy consumers to overseas channels
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- Figure 13: Countries consumers have bought imported products from, November 2016
Key Players – What You Need to Know
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- Opening new stores to compensate for declining sales per store
- Offline store cannot be a store only
- Leveraging high-tech to increase buzz
Top Five Players
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- Sales per store declining
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- Figure 14: Retail sales, store number of top five beauty retailers, China 2015-16
- Gialen
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- Figure 15: Dermo shelf in Gialen, China, 2017
- Sephora
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- Figure 16: Korean Beauty shelf in Sephora, China, 2017
- Watsons
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- Figure 17: Makeup studio in Watsons, China, 2017
- Sasa
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- Figure 18: Product display in Sasa O2O store, China, 2016
- Mannings
Competitive Strategies
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- Introducing K-Beauty products
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- Figure 19: Most favourite K-Beauty brands by Chinese consumers, 2016
- How far can private label go?
- Selling services in store
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- Figure 20: Brochure of Charlotte Tilbury, UK, 2016
- Figure 21: Sulwhasoo flagship, South Korea, 2016
Who’s Innovating?
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- Highlighting brand theme via VR
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- Figure 22: VR application in Innisfree store, China, 2016
- Better trial experience in-store
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- Figure 23: Smart Mirror in-store at Charlotte Tilbury, UK, 2016
- Develop bespoke beauty products to stand out
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- Figure 24: IPhone screen of MATCHCo APP, 2016
The Consumer – What You Need to Know
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- Online stores are often visited but mainly used for known products
- Super/hypermarkets losing out to brand speciality stores in attracting young consumers
- Brand selection becomes second most important after price for online
- Quality seekers are open to overseas channels
- Consumers are well-prepared
Products Purchased
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- Skew to offline for basic BPC products
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- Figure 25: BPC products purchased in the last six months, November 2016
- More product types purchased in bricks-and-mortar stores
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- Figure 26: Repertoire of BPC products purchased in the last six months, by channel, November 2016
- 40s catching up in online shopping for oral and feminine care
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- Figure 27: BPC products purchased in online stores in the last six months, November 2016
Most Visited Bricks-and-Mortar Stores
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- BPC chain retailers catching up with department stores
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- Figure 28: Most often visited bricks-and-mortar stores in the last six months, November 2016
- 20s have different preferences from the rest
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- Figure 29: Most often visited bricks-and-mortar stores in the last six months, by age, November 2016
- Brand counters are especially important in Beijing
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- Figure 30: Most often visited bricks-and-mortar stores in the last six months, by tier one cities, November 2016
Online Stores
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- JD exceeds Taobao in 2016
- VIP and Jumei rank before brand’s official website
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- Figure 31: Most often visited online stores in the last six months, November 2016
Reasons for Purchasing Online/Offline
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- Clear strengths and weaknesses of each
- Convenience is no longer a differentiating factor
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- Figure 32: Reasons for purchasing online and offline, November 2016
- How to retain savvy consumers in store?
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- Figure 33: Reasons for purchasing offline, by consumer behaviour, November 2016
- Wide selection of brands and imported products in-store more important for tier one cities
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- Figure 34: Reasons for purchasing offline, by city tier, November 2016
- Online price is especially important in tier two and three cities
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- Figure 35: Reasons for purchasing online, by city tier, November 2016
Purchase Channel of Premium Products
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- Almost no gap between online and offline
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- Figure 36: Purchase channel of premium products, November 2016
- What drive consumers to purchase premium products online?
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- Figure 37: Reasons for purchasing online/offline, November 2016
- 40s are less willing to buy premium products online
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- Figure 38: Purchase channel of premium products, by age, November 2016
- High earners go to different online channels
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- Figure 39: Purchase channel of premium products, by age, November 2016
Purchase Behaviour
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- Most purchases are planned not impulsive…
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- Figure 40: Purchase behaviour, November 2016
- …even for high earners
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- Figure 41: Purchase behaviour, by household income, November 2016
- Much smaller impact of ‘status’ in beauty than in technology
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- Figure 42: Purchase behaviour, November 2016
- Affluent consumers opt for premium and international products
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- Figure 43: Purchase behaviour, by household income, November 2016
- 37% research on mobile when shopping in-store
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- Figure 44: Mobile usage in shopping, November 2016
Meet the Mintropolitans
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- Much fewer visits to super/hypermarkets
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- Figure 45: Most often visited bricks-and-mortar stores and online stores in the last six months, by consumer segmentation, November 2016
- Trust overseas channel more
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- Figure 46: Most often visited online stores in the last six months, by consumer segmentation, November 2016
- Selection and service matter most
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- Figure 47: Reasons for purchase offline, by consumer segmentation, November 2016
- MinTs tend to be sophisticated buyers
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- Figure 48: Purchase behaviour, by consumer segmentation, November 2016
Appendix – Market Size and Forecast
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- Figure 49: Total value sales of beauty retailing, China 2011-21
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Appendix – Methodology and Abbreviations
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- Methodology
- Fan chart forecast
- Abbreviations
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