Beauty Retailers - China - February 2013
“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 has driven growth of the cosmetics retail market. Urbanisation, a prosperous commercial real estate industry, market segmentation and multi-channel growth models for beauty retail will increase coverage and penetration of products and will drive growth of beauty retail sales.”
– Mao Wei, Senior Research Analyst
In this report, we answer the key questions:
- What is the current state of beauty retailers in China and what are the growth trends, drivers and barriers?
- How do consumers behave and what are their attitudes to baked goods?
- What are the key factors in operating a beauty retailer?
- What opportunities lies in competition between beauty retailers and online and supermarket channels.
Beauty retailers in China grew at a CAGR of 14.5% from 2007-2012. Value sales grew to RMB 60 billion in 2011, up from RMB 33.6 billion in 2007. Value sales are expected to reach RMB 66 billion in 2012. Higher living standards and the increasing influence of Western culture and images are contributing to growing demand. 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 has driven growth of the cosmetics retail market. Urbanisation, a prosperous commercial real estate industry, market segmentation and multi-channel growth models for beauty retail will increase coverage and penetration of products and will drive growth of beauty retail sales. Watson, Gialen and Sephora have grown rapidly in recent years, becoming market leaders by differentiating their brands, brands and product mix, and expanding distribution and regional spread.
The beauty and personal care retail markets of tier one cities are saturated. Future growth will come from the rapid development of tier two cities and the growth of tier three and four cities. Domestic specialist store retailers have a regional advantage in lower tier cities. They will be an effective channel for retailers to expand their market. Retailers will be able to differentiate themselves by offering information and advice, superior product experiences, improving shopping ambience, innovating in value-added services; and enhancing brand experience by strengthening brand ethos. Product mix will continue to be key to competitiveness.
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