Beauty Retailing - China - March 2016

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Figure 1: Best- and worst-case forecast of total retail sales of cosmetics in china, 2010-20
Key players
The consumer
Consumers are buying less frequently…
Figure 2: Purchase of beauty/personal care products in the past three months, Oct 2015 and Nov 2014
…but they are not spending less
Figure 3: Spending on beauty/personal care products, Oct 2015
…and Mianzi (facial beauty) will not be downgraded
Figure 4: Spending on beauty/personal care products, Oct 2015
In-store experience remains essential for brands
Innovative mobile payment will be the future battlefield
Figure 5: Mobile digital marketing opportunities, Oct 2015 and November 2014
Figure 6: Purchase channel of beauty/personal care products, Oct 2015
O2O marketing continues to flourish in China
Figure 7: Purchase channel of beauty/personal care products, by mobile digital marketing opportunity, Oct 2015
What we think
ISSUES AND INSIGHTS
Locating the best resources for facial skincare
The facts
The implications
Creating an irreplaceable in-store experience
The facts
The implications
Innovative mobile payment
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Mobile is becoming an important platform for shoppers to buy beauty products
Cross-border e-commerce will pose a threat to local players
MARKET DRIVERS
Consumers are increasingly shifting online to buy beauty and cosmetics products
Go Mobile
Figure 8: Preferred Purchase Method of Popular Products, July 2015
Cross-border e-commerce will post a threat to local players
MARKET SIZE AND FORECAST
Growth remains stable…
Figure 9: China beauty retailing value sales, 2010-15
…and it will retain stable growth over the next five years
Figure 10: Best- and worst-case forecast of total retail sales of cosmetics in china, 2010-20
KEY PLAYERS – WHAT YOU NEED TO KNOW
Sephora, innovation never stop
Watsons struggles with sales growth per store due to shoppers shifting online
Alibaba’s battle with counterfeit goods continues
Yihaodian, lost in translation
JD.com enters Silicon Valley
MARKET SHARE
Online retailers continue to erode share of wallet
Figure 11: Top five offline players, by value, 2012-15
WHO’S INNOVATING?
Disruptive In-store innovation
Virtual beauty is everywhere
Red Book
Face Swipe payment
THE CONSUMER – WHAT YOU NEED TO KNOW
Consumers are buying less frequently…
…but spending in some categories remains strong
Most respondents reported buying the beauty products via the brand counter at department stores
The fragmentation of beauty channels across different cities
Watsons leads on location and brand selection
Authenticity remains the biggest challenge for Alibaba
Innovative mobile payment will be the future battlefield
PURCHASE OF BEAUTY AND PERSONAL CARE PRODUCTS
Consumers are buying less frequently
Figure 12: Purchase of beauty/personal care products in the past three months, Oct 2015 and Nov 2014
Young females care more about facial care
Figure 13: Purchase of beauty/personal care products, by demographics, Oct 2015
Figure 14: Purchase of beauty/personal care products, by demographics, Oct 2015
Cross-selling opportunity to female consumers
Figure 15: Repertoire of Purchase of beauty/personal care products, by demographics, Oct 2015
Oral health promotion for Sichuanese
Figure 16: Purchase of beauty/personal care products, by demographics, Oct 2015
SPENDING PER CATEGORY
Despite less frequent purchase, spending remains strong…
Figure 17: Spending of beauty/personal care products, Oct 2015
…and Mianzi (Facial beauty) will not be downgraded
Figure 18: Spending of beauty/personal care products, Oct 2015
However, young men reported spending the least on facial skincare
Figure 19: Spending of beauty/personal care products, by demographics, Oct 2015
Shower and bath market remains flat
Figure 20: Spending on beauty/personal care products, Oct 2015
PURCHASE CHANNELS
In-store experience remains essential for brands
Figure 21: Purchase channel of beauty/personal care products, Oct 2015
Figure 22: Innisfree store in shanghai, q4 2015
Tmall leads beauty retailing online
Independent bricks-and-mortar store will continue declining
The fragmentation of beauty channels across different cities
Channel loyalty varies in different categories
Figure 23: Repertoire of Purchase channel of beauty/personal care products, by purchase of beauty/personal care products, Oct 2015
Figure 24: Repertoire of Purchase channel of beauty/personal care products, by purchase of beauty/personal care products, Oct 2015
PERCEPTION OF RETAILERS
Beauty-specialist chain store
Watsons leads on location and brand selection
Sephora leads on in-store design and professional service
Gialen has the advantage in offers and promotions
Mannings still needs to establish its unique selling point
Figure 25: Perception of major beauty retailing offline, Oct 2015
E-retailers
Taobao leads on user experience but has a poor perception of authenticity
Tmall leads on brand selection
JD has a good reputation for authenticity and delivery service
Yihaodian offers smart recommendation
Figure 26: Perception of major beauty retailing online, Oct 2015
MARKETING OPPORTUNITIES
Innovative mobile payment will be the future battlefield
Figure 27: Mobile digital marketing opportunities, Oct 2015 and November 2014
Make mobile alerts exciting
Figure 28: Mobile digital marketing opportunities, Oct 2015 and November 2014
How to retain smart young female shoppers
Figure 29: Mobile digital marketing opportunities, by demographics, Oct 2015
O2O marketing continues to flourish in China
Figure 30: Purchase channel of beauty/personal care products, by mobile digital marketing opportunities, Oct 2015
MEET THE MINTROPOLITANS
Why Mintropolitans?
Who are they?
Higher buying power
Figure 31: Spending on beauty/personal care products, Oct 2015
APPENDIX – METHODOLOGY AND DEFINITIONS
Methodology
Market Sizing definition
Fan chart forecast
Abbreviations