Beauty Retailers - China - February 2013

INTRODUCTION
Definition
Report structure
Methodology
EXECUTIVE SUMMARY
The market
Figure 1: Forecast - value sales of beauty retailers in China (value sales), 2007-17
Figure 2: Forecast - beauty retailer market in China (store numbers), 2007-17
Companies and brands
Figure 3: Main brands, by store numbers and value sales, 2012
The consumer
Frequency of use and core consumers
Figure 4: Frequency of purchasing products from beauty retailers, December 2012
Occasions of visiting beauty retailers
Selecting beauty product retail stores: important factors
Main product categories bought at beauty retailers
Key issues
Brand experiences that focus on product testing and in-store consultation can be a competitive advantage for beauty retailers
Driving sales growth by optimising product categories, brands and product mix
Using specialist cosmetic retailers to expand in lower tier cities
THE MARKET
Key points
Market size
Figure 5: Beauty retail market in China, 2007-12
Facial skincare dominates sales
Figure 6: Beauty and personal care market in China, 2007-2011, (RMB mn)
Market drivers
Growth in beauty retailer sales is being driven mainly by people’s growing demand for beauty cosmetics and increasing consumer spending power
The rapid growth of the Chinese middle class is also driving growth in the cosmetics retail market
Figure 7: Discretionary spending, April 2012
Improved infrastructure has created new opportunities for beauty retailers
Multinational brands have driven growth
New formats and channels offer consumers greater choice
Market challenges
Cultural barriers
Demographic challenges
Figure 8: Usage frequency of make-up and colour cosmetics products, by monthly personal income, May 2012
Concerns over product safety could hold back the market
Regional variation makes expansion difficult
A lack of R&D spend restricts innovation
Rising costs are putting pressure on retailer margins
Competitive environment
Figure 9: Beauty retail channels market share 2005-10
Figure 10: Characteristics of beauty retail channels
Health and beauty stores
Specialist cosmetic retailers
Brand retailers (including cosmetic and cosmeceutical brands)
Supermarkets and online sales present the greatest threat to beauty retailers
The forecast
Figure 11: Forecast - value sales of beauty retailers in China (value sales), 2007-17
Figure 12: Forecast - stores numbers of beauty retailers in China (store numbers), 2007-17
COMPANIES AND BRANDS
Key points
Brand market share
Figure 13: Main brands, by store numbers and value sales
Main brands
Health and beauty stores
Guangzhou Watson’s Personal Care Stores Limited (Watson’s)
Mannings Guangdong Retail Company Limited (Mannings)
Specialist cosmetic retailers
Sephora
Guangzhou Gialen Cosmetics Co., Ltd (Gialen)
Sasa
Vinistyle
Brand stores
Avon
Herborist
THE CONSUMER
Key points
Frequency of visiting beauty retailers
Figure 14: Frequency of purchasing products from beauty retailers, December 2012
Beauty retail stores: core consumers
Figure 15: Attitudes towards shopping for beauty products from beauty retailers, December 2012
Occasions for visiting beauty retailers
Figure 16: Occasions of going to beauty retailers, December 2012
Selecting beauty retailers: important factors
Figure 17: Important factors when selecting a beauty retailer, December 2012
Beauty retail stores: brand loyalty
Watson’s
Figure 18: Watson’s brand loyalty (%), December 2012
Mannings
Figure 19: Mannings brand loyalty (%), December 2012
Sephora
Figure 20: Sephora brand loyalty (%), December 2012
Sasa
Figure 21: Sasa brand loyalty (%), December 2012
Gialen
Figure 22: Gialen brand loyalty (%), December 2012
Avon
Figure 23: Avon brand loyalty (%), December 2012
Vinistyle
Figure 24: Vinistyle brand loyalty (%), December 2012
Ayaya
Figure 25: Ayaya brand loyalty (%), December 2012
OMEY
Figure 26: OMEY brand loyalty (%), December 2012
Main product categories bought at beauty retailers
Figure 27: Items bought from beauty retailers in the past 6 months, December 2012
Important factors in choosing beauty products
Figure 28: Important factors when selecting beauty products, December 2012
Attitudes towards shopping for beauty products from beauty retailers
Figure 29: Attitudes towards shopping for beauty products from beauty retailers, December 2012
BUILDING STRONGER BRAND EXPERIENCES
Key points
Beauty retailers are focusing more and more on product testing and in-store consultation
Brand experience can help retailers differentiate
Figure 30: Attitudes towards skin care products, May 2012
Figure 31: Important factors when selecting beauty products, December 2012
Figure 32: Attitudes towards shopping for beauty products from beauty retailers, December 2012
The retail environment can help educate consumers
Figure 33: Attitudes towards cosmetics, 2012
Figure 34: Attitudes towards shopping for beauty products from beauty retailers, December 2012
Providing product trials without bricks-and-mortar outlets
Enhancing brand experience by providing value-added services
Figure 35: Occasions of going to beauty retailers, by age and monthly personal income, China, April 2012
Integrating in-store experiences, social media and company websites
The advantages of offering a wider range of services
Building brand experience through store design and ambiance
Increasing brand engagement through brand ethos
What this means
DRIVING SALES GROWTH BY OPTIMISING PRODUCT CATEGORIES, BRANDS AND PRODUCT MIX
Issues at a glance
Brand offering: retailers need to consider major categories and smaller but high-growth categories
Figure 36: Market size for beauty and personal care products in China, 2007-11
Unique own-brands and products: an important draw for consumers
Figure 37: Important factors when selecting a beauty retailer, December 2012
Figure 38: Attitudes towards shopping for beauty products from beauty retailers, December 2012
Figure 39: Proportion of private label product launches, 2008-13
Facial skincare: new products tap into segmented demand and drive sales
Figure 40: New product claims in the skincare market, 2008-13
The growth of natural ingredients
Figure 41: Important factors when selecting beauty products, December 2012
Figure 42: Agreement with the statement “I tend to buy products with all-natural ingredients”, May 2012
Packaging innovation can help drive sales in beauty retailers
Figure 43: Attitudes towards cosmetic packaging, by type of product, May 2012
Men’s toiletries: room for growth
Figure 44: Frequency of using men’s toiletries products, July 2012
Figure 45: Attitudes towards the range of male beauty products, December 2012
Figure 46: Place of buying men’s toiletries, July 2012
Beauty products gifting not yet fully explored/personalised gifts can drive sales
Figure 47: Attitudes towards shopping for beauty products from beauty retailers, December 2012
What this means
USING COSMETIC SPECIALIST RETAILERS TO EXPAND IN LOWER TIER CITIES
Key points
Rapid growth of specialist cosmetic stores due to growing demand for beauty products in tier two and three cities
Figure 48: Urban and rural population, GDP, and per capita income in 2010 in China
Figure 49: CAGR of population, GDP and per-capita income, 2000-10 in China
Regional growth of Chinese specialist cosmetic retailers
Figure 50: Major health and beauty stores and specialist cosmetic stores, by coverage, city tier and store numbers
Figure 51: Beauty retailers, by brand loyalty (%)
Domestic specialist cosmetic retailers: overcoming limitations and achieving growth
Figure 52: Important factors when selecting a beauty retailer, December 2012
Chinese beauty brands breaking into the market through specialist cosmetic stores
Figure 53: Brands of skincare purchased in past 12 months, May 2012
Domestic brands need to allay fears over the quality of their product range
Figure 54: Attitudes towards cosmetics, May 2012
International brands can expand into tier two and three cities via domestic specialist cosmetic retailers
Major brands can form partnerships with specialist retailers
What this means
APPENDIX – FREQUENCY OF PURCHASES FROM BEAUTY RETAILER
Figure 55: Frequency of purchase from beauty retailer, December 2012
Figure 56: Frequency of purchase from beauty retailer, December 2012
Figure 57: Occasions of visiting beauty retailer, by most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 58: Occasions of visiting beauty retailer, by next most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 59: Occasions of visiting beauty retailer, by most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 60: Occasions of visiting beauty retailer, by next most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 61: Occasions of visiting beauty retailer, by most popular frequency of purchase from perfumeries, December 2012
Figure 62: Occasions of visiting beauty retailer, by next most popular frequency of purchase from perfumeries, December 2012
Figure 63: Occasions of visiting beauty retailer, by most popular frequency of purchase from other beauty retailer, December 2012
Figure 64: Occasions of visiting beauty retailer, by next most popular frequency of purchase from other beauty retailer, December 2012
Figure 65: Most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), by demographics, December 2012
Figure 66: Next most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), by demographics, December 2012
Figure 67: Most popular frequency of purchase from beauty retailers (Sephora etc), by demographics, December 2012
Figure 68: Next most popular frequency of purchase from beauty retailers (Sephora etc), by demographics, December 2012
Figure 69: Most popular frequency of purchase from perfumeries, by demographics, December 2012
Figure 70: Next most popular frequency of purchase from perfumeries, by demographics, December 2012
Figure 71: Most popular frequency of purchase from other beauty retailer, by demographics, December 2012
Figure 72: Next most popular frequency of purchase from other beauty retailer, by demographics, December 2012
APPENDIX – OCCASIONS OF VISITING BEAUTY RETAILER
Figure 73: Occasions of visiting beauty retailer, December 2012
APPENDIX – PRODUCTS BOUGHT AT A BEAUTY RETAILER IN PAST 6 MONTHS
Figure 74: Products bought at a beauty retailer in past 6 months, December 2012
Figure 75: Products bought at a beauty retailer in past 6 months, by most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 76: Products bought at a beauty retailer in past 6 months, by next most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 77: Products bought at a beauty retailer in past 6 months, by most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 78: Products bought at a beauty retailer in past 6 months, by next most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 79: Products bought at a beauty retailer in past 6 months, by most popular frequency of purchase from perfumeries, December 2012
Figure 80: Products bought at a beauty retailer in past 6 months, by next most popular frequency of purchase from perfumeries, December 2012
Figure 81: Products bought at a beauty retailer in past 6 months, by most popular frequency of purchase from other beauty retailer, December 2012
Figure 82: Products bought at a beauty retailer in past 6 months, by next most popular frequency of purchase from other beauty retailer, December 2012
Figure 83: Most popular products bought at a beauty retailer in past 6 months, by demographics, December 2012
Figure 84: Next most popular products bought at a beauty retailer in past 6 months, by demographics, December 2012
Figure 85: Other products bought at a beauty retailer in past 6 months, by demographics, December 2012
APPENDIX – MOST IMPORTANT FACTORS CONSIDERED WHEN SELECTING A BEAUTY RETAILER
Figure 86: Most important factors considered when selecting a beauty retailer, December 2012
Figure 87: Most important factors considered when selecting a beauty retailer, by most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 88: Most important factors considered when selecting a beauty retailer, by next most popular frequency of purchase from beauty drug stores (Watson’s, Manning, etc), December 2012
Figure 89: Most important factors considered when selecting a beauty retailer, by most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 90: Most important factors considered when selecting a beauty retailer, by next most popular frequency of purchase from beauty retailers (Sephora etc), December 2012
Figure 91: Most important factors considered when selecting a beauty retailer, by most popular frequency of purchase from perfumeries, December 2012
Figure 92: Most important factors considered when selecting a beauty retailer, by next most popular frequency of purchase from perfumeries, December 2012
Figure 93: Most important factors considered when selecting a beauty retailer, by most popular frequency of purchase from other beauty retailer, December 2012
Figure 94: Most important factors considered when selecting a beauty retailer, by next most popular frequency of purchase from other beauty retailer, December 2012
APPENDIX – MOST IMPORTANT FACTORS CONSIDERED WHEN BUYING BEAUTY PRODUCTS
Figure 95: Most important factors considered when buying beauty products, December 2012
Figure 96: Most important factors considered when buying beauty products, by most popular products bought at a beauty retailer in past 6 months, December 2012
Figure 97: Most important factors considered when buying beauty products, by next most popular products bought at a beauty retailer in past 6 months, December 2012
Figure 98: Most important factors considered when buying beauty products, by other products bought at a beauty retailer in past 6 months, December 2012
Figure 99: Most important factors considered when buying beauty products, by demographics, December 2012
Figure 100: Second most important factors considered when buying beauty products, by demographics, December 2012
Figure 101: Third most important factors considered when buying beauty products, by demographics, December 2012
APPENDIX – BEAUTY RETAILERS VISITED IN PAST SIX MONTHS
Figure 102: Beauty retailers visited in past 6 months-Shanghai, December 2012
Figure 103: Beauty retailers visited in past 6 months-Beijing, December 2012
Figure 104: Beauty retailers visited in past 6 months-Guangzhou, December 2012
Figure 105: Beauty retailers visited in past 6 months-Chengdu, December 2012
Figure 106: Beauty retailers visited in past 6 months-Shenyang, December 2012
Figure 107: Beauty retailers visited in past 6 months-Xi’an, December 2012
Figure 108: Beauty retailers visited in past 6 months-Changsha, December 2012
Figure 109: Beauty retailers visited in past 6 months-Wuxi, December 2012
Figure 110: Base: 296 female internet users aged 20+ who have purchased in any beauty retailer
Figure 111: Beauty retailers visited in past 6 months-Qingdao, December 2012
APPENDIX – BEAUTY RETAILERS VISITED THE MOST OFTEN
Figure 112: Beauty retailers visited the most often-Shanghai, December 2012
Figure 113: Beauty retailers visited the most often-Beijing, December 2012
Figure 114: Beauty retailers visited the most often-Guangzhou, December 2012
Figure 115: Beauty retailers visited the most often-Chengdu, December 2012
Figure 116: Beauty retailers visited the most often-Shenyang, December 2012
Figure 117: Beauty retailers visited the most often-Xi’an, December 2012
Figure 118: Beauty retailers visited the most often-Changsha, December 2012
Figure 119: Beauty retailers visited the most often-Wuxi, December 2012
Figure 120: Beauty retailers visited the most often-Wenzhou, December 2012
Figure 121: Beauty retailers visited the most often-Qingdao, December 2012
Figure 122: Most popular beauty retailers visited the most often, by region, by demographics, December 2012
Figure 123: Next most popular beauty retailers visited the most often, by region, by demographics, December 2012
APPENDIX – ATTITUDES TOWARDS BUYING BEAUTY PRODUCTS IN BEAUTY RETAILERS
Figure 124: Attitudes towards buying beauty products in beauty retailers, December 2012
Figure 125: Agreement with the statements ‘I don’t really care where I buy beauty and personal care products’ and ‘I prefer to shop around for beauty and personal cares products that offer the best promotional offers’, by demographics, December 2012
Figure 126: Agreement with the statements ‘I prefer shops where I can use my loyalty card’ and ‘I like to see how products feel/smell before buying’, by demographics, December 2012
Figure 127: Agreement with the statements ‘I prefer to shop at beauty stores where staff are helpful and offer me advice’ and ‘My choice of beauty stores depends on whether I am buying for myself or for someone else’, by demographics, December 2012
Figure 128: Agreement with the statements ‘There are too few products for men’ and ‘Private label products are just as good as branded ones’, by demographics, December 2012
Figure 129: Agreement with the statements ‘I use the internet to research prices and/or product function before buying beauty products’ and ‘I like to try out new products and brands’, by demographics, December 2012
Figure 130: Agreement with the statements ‘I’d like to see more beauty retailers offering their own ranges ’ and ‘I prefer to shop at beauty stores as they tend to offer certain beauty brands that are not necessarily available elsewhere.’, by demographics, December 2012
Figure 131: Agreement with the statement ‘I prefer to shop online for beauty and personal care products’, by demographics, December 2012