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Beauty Retailing - China - February 2014

“Deals and discounting can be an entry point to attract new customers and personalisation and relevance in promotion will become the critical point for retailers in coming years. But in the long run, creating unique shopping experience remains essential.”

– Wenwen Chen, Research Analyst

Some questions answered in this report include:

  • How can retailers maximise consumer reach with channel convergence?
  • How can retailers attract shoppers beyond price promotions and discounts?
  • Could a more immersive shopping experience drive consumers in-store?
  • How can beauty retailers tailor their services at a city-specific level?

Following a continual strong historical sales performance, the beauty retailing market continued its strong growth in 2013. Technological advancements such as mobile shopping, tablet computers and internet penetration have boosted the popularity of online beauty retailing while the expansion of giant stores such as Watsons and Sephora into lower tier cities has contributed to make the market prosperous.

2013 was a strong year for innovation in the online beauty retailing, with retailers having utilised a number of new initiatives to encourage consumers to shop online, such as flexible delivery options, time-limited flash sales and special occasion promotion. That said, bricks-and-mortar stores have also dived deep in the era of digital revolution via promoting online-to-offline model attracting users online and directing them to offline physical stores. More importantly Mintel finds that, despite consumers increasingly moving online, they are still longing for distinctive in-store shopping experience. Therefore, focusing on creating a memorable, enjoyable and added-value shopping experience remains the key.

This report focuses on Beauty Retailing by which we mean the retailing of bodycare, facial care, colour cosmetics, and fragrances/aftershaves. However, blurred boundaries mean the report touches considerably on broader personal care goods retailing. Haircare, for instance, is borderline beauty/toiletries.

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Table of contents

  1. Introduction

      • Retailers covered in this report
        • In-store
          • Online
            • Methodology
              • Limitation
                • Abbreviations
                • Executive Summary

                    • A promising future
                      • Figure 1: Best- and worst-case forecast of China beauty retailing sales, 2008-18
                    • Maximise consumer reach with channel convergence
                      • Figure 2: Beauty retailing channels bought from in the last 6 months, by beauty retailing channel bought from in the last 6 months, December 2013
                    • Attract shoppers beyond price promotions and discounts
                      • Immersive shopping experience
                        • Figure 3: Consumer buying behaviour, by beauty retailing channels bought from in the last 6 months, December 2013
                      • Tailor services at a city-specific level
                        • What we think
                        • Issues in the Market

                            • How can retailers maximise consumer reach with channel convergence?
                              • How can retailers attract shoppers beyond price promotions and discounts?
                                • Could a more immersive shopping experience drive consumers in-store?
                                  • How can beauty retailers tailor their services at a city-specific level?
                                  • Trend Application

                                      • Return to the Experts
                                        • Let’s make a deal
                                          • Mintel Futures: Old Gold
                                          • Market Drivers

                                            • Key points
                                              • China revises e-commerce laws to fight fraud and boost transparency
                                                • Figure 4: Internet users and penetration rate, 2005-13
                                                • Figure 5: Online shopping category penetration (% of consumers who have shopped per category), 2012
                                              • Internet giants fight for market share in mobile shopping
                                                • Figure 6: Ownership of consumer technology products, February 2013
                                                • Figure 7: The rapid growth of mobile internet shoppers, June 2012 and December 2012
                                                • Figure 8: Weixin, the nation’s favourite social media with a few fun features like "Shake " and "Drift Bottle.", February 2014
                                                • Figure 9: Vending machine alliance with Weixin in a Shanghai tube station
                                                • Figure 10: Laiwang offers similar functions with Weixin, February 2014
                                                • Figure 11: Nike, L’Oréal paris, and Olay Weixin account, February 2014
                                              • The emergent middle class have the potential to boost both online and offline beauty sales
                                                • Figure 12: The growth of Chinese middle class households, 2000-15
                                              • The Woju generations shape online consumption
                                                • Figure 13: Five clusters based on lifestyle aspiration, September 2013
                                            • Who’s Innovating?

                                              • Key points
                                                • Facial skincare dominates NPD in the beauty sector
                                                  • Figure 14: New product launches, by top four beauty categories and other, 2009-13
                                                • Own-label launches see a decline in launch activity
                                                  • Figure 15: Beauty and personal care new launches, branded vs own-label, 2009-13
                                                • Watsons leads own-label NPD
                                                  • Figure 16: Own-label product launches, % share for A.S. Watson, 2009-13
                                                  • Figure 17: Examples of own-label facial skincare launches from A.S. Watson, 2013
                                                • Click and collect for added convenience
                                                  • Weixin “discount your Pepsi” machine generates opportunities for beauty retail
                                                    • The Rise of “Me-tail”
                                                      • Figure 18: Share with your best friend, Dove shower gel campaign, December 2013
                                                      • Figure 19: Afù campaign, “to become a catman”, January 2014
                                                    • Awakening the senses
                                                      • Figure 20: Shanghai’s Under Armour store, November 2013
                                                      • Figure 21: The Fat Duck's sound of the sea dish, help people experience one flavour more intensely by offering the sound of farmyard chooks, October 2013
                                                  • Market Size, Forecast and Segment Performance

                                                    • Key points
                                                      • Segment sales by sector
                                                        • Figure 22: Chinese value sales of beauty and personal care products, by category, 2009-13
                                                      • Forecast
                                                        • Figure 23: Best- and worst-case forecast of China beauty retailing sales, 2008-18
                                                        • Figure 24: Annual disposable income, 2007-12
                                                      • Forecast methodology
                                                      • Market Share

                                                        • Key points
                                                          • Figure 25: Retailers’ value shares in beauty and personal care, top five retailers, 2011-13
                                                      • Companies and Brands

                                                        • A.S. Watson
                                                          • Sephora
                                                              • Figure 26: Sephora Outrageous Volume Dramatic Mascara, May 2013
                                                              • Figure 27: Sephora flagship store in Shanghai, February 2014
                                                            • Gialen Cosmetics
                                                                • Figure 28: Gialen Collagen Whitening & Moisturising Mask, July 2012
                                                              • Tmall
                                                                  • Figure 29: Penetration rate of Chinese shopping websites, March 2013
                                                                • Jumei
                                                                    • Figure 30: Jumei home page
                                                                • Channels of Distribution

                                                                  • Key points
                                                                    • Figure 31: Value sales of beauty and personal care products, by channel of distribution, 2013
                                                                    • Figure 32: Number of stores, by segment, 2012 and 2013
                                                                    • Figure 33: Innisfree opened its flagship store in the Superbrand Mall, which is located in the downtown area of Pudong, Shanghai, February 2013
                                                                • The Consumer – Usage of Beauty Retailers

                                                                  • Key points
                                                                    • Mega online platforms take the retail lead
                                                                      • Figure 34: Beauty retailing channel bought from in the last 6 months, December 2013
                                                                    • Age proves no boundary to the online shift
                                                                      • Figure 35: Beauty retailing channels bought from in the last 6 months, by age, December 2013
                                                                    • The integration of online and offline
                                                                      • Figure 36: Beauty retailing channels bought from in the last 6 months, by beauty retailing channel bought from in the last 6 months, December 2013
                                                                    • Affluent people buy everywhere
                                                                      • Figure 37: Beauty retailing channels bought from in the last 6 months, by monthly personal income, December 2013
                                                                      • Figure 38: Repertoire of beauty retailing channels bought from in the last 6 months, by monthly personal income, December 2013
                                                                    • The disparity between cities
                                                                    • The Consumer – Beauty Products Purchased

                                                                      • Key points
                                                                        • High penetration of most beauty categories
                                                                          • Figure 39: Types of beauty products bought in the last 6 months, December 2013
                                                                        • Facial skincare remains essential
                                                                          • Figure 40: Types of beauty products bought in the last 6 months, by repertoire of types of beauty products bought in the last 6 months, December 2013
                                                                          • Figure 41: Types of beauty products bought in the last 6 months, by monthly personal income, December 2013
                                                                          • Figure 42: Repertoire of types of beauty products bought in the last 6 months, by monthly personal income, December 2013
                                                                        • Dalian, champion for beauty
                                                                          • Figure 43: Types of beauty products bought in the last 6 months, by city, December 2013
                                                                          • Figure 44: Types of beauty products bought in the last 6 months, by city, December 2013 (continued)
                                                                      • The Consumer – Buying Beauty Products In-store

                                                                        • Key points
                                                                          • Promotion as a standard?
                                                                            • Figure 45: Most important factors for buying beauty products in-store, December 2013
                                                                          • Members only
                                                                            • Weaning the affluent off discounts and deals
                                                                              • Figure 46: Most important factors for buying beauty products in-store, by monthly personal income, December 2013
                                                                              • Figure 47: Most important factors for buying beauty products in-store, by monthly personal income, December 2013 (continued)
                                                                              • Figure 48: Beauty retailing channels bought from in the last 6 months, by monthly personal income, December 2013
                                                                            • Shanghainese, deal seekers; Beijingese, time savers
                                                                              • Figure 49: Most important factors for buying beauty products in-store, by city, December 2013
                                                                              • Figure 50: Top five regions in China with the highest annual disposable income per capita (RMB), 2011
                                                                          • The Consumer – Buying Beauty Products Online

                                                                            • Key points
                                                                              • Authenticity and provenance
                                                                                • Figure 51: Most important factors for buying beauty products online, December 2013
                                                                              • Bespoke delivery service for the rich
                                                                                • Figure 52: Most important factors for buying beauty products online, by monthly personal income, December 2013
                                                                              • Guangzhounese are the real money savers
                                                                                • Figure 53: Most important factors for buying beauty products online, by city, December 2013
                                                                            • The Consumer – Future Opportunities for Beauty Retailers

                                                                              • Key points
                                                                                • Competition for savviness
                                                                                  • Figure 54: Added-value services to engage consumers, December 2013
                                                                                • Online buyers are more demanding for deals
                                                                                  • Figure 55: Added-value services to engage consumers, by beauty retailing channels bought from in the last 6 months, December 2013
                                                                                • Social and environmental responsibility matters more to the affluent
                                                                                  • Figure 56: Added-value services to engage consumers, by monthly personal income, December 2013
                                                                                  • Figure 57: Repertoire of added-value services to engage consumers, by monthly personal income, December 2013
                                                                                • Chengdu, an emerging centre for selling lifestyles
                                                                                  • Figure 58: Added-value services to engage consumers, by city, December 2013
                                                                              • The Consumer – General Behaviour towards Buying Beauty Products

                                                                                • Key points
                                                                                  • Building content online
                                                                                    • Figure 59: Consumer buying behaviour, December 2013
                                                                                    • Figure 60: Media used in the three months to October 2013
                                                                                  • Creating great customer experiences
                                                                                    • Figure 61: Consumer buying behaviour, by beauty retailing channels bought from in the last 6 months, December 2013
                                                                                  • Convenience is king
                                                                                    • Figure 62: Consumer buying behaviour, by beauty retailing channels bought from in the last 6 months, December 2013
                                                                                    • Figure 63: Consumer buying behaviour, by beauty retailing channels bought from in the last 6 months, December 2013
                                                                                • Appendix – Trend Application

                                                                                  • Old Gold
                                                                                    • Figure 64: China population trend, 2004-12
                                                                                • Appendix – Who’s Innovating?

                                                                                    • Figure 65: Top five areas for new product launches, 2009-13
                                                                                    • Figure 66: Own-label product launches from A.S. Watson, % share, by category, 2009-13
                                                                                • Appendix – The Consumer – Usage of Beauty Retailers

                                                                                    • Figure 67: Beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 68: Most popular beauty retailing channel brought from in the last 6 months, by demographics, December 2013
                                                                                    • Figure 69: Next most popular beauty retailing channel brought from in the last 6 months, by demographics, December 2013
                                                                                    • Figure 70: Other beauty retailing channel brought from in the last 6 months, by demographics, December 2013
                                                                                    • Figure 71: Beauty retailing channel brought from in the last 6 months, by most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 72: Beauty retailing channel brought from in the last 6 months, by next most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 73: Beauty retailing channel brought from in the last 6 months, by other beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 74: Types of beauty products bought in the last 6 months, by most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 75: Types of beauty products bought in the last 6 months, by next most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 76: Types of beauty products bought in the last 6 months, by other beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 77: Added-value services to engage consumers, by most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 78: Added-value services to engage consumers, by next most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 79: Added-value services to engage consumers, by other beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 80: Consumer buying behaviour, by most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 81: Consumer buying behaviour, by next most popular beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 82: Consumer buying behaviour, by other beauty retailing channel brought from in the last 6 months, December 2013
                                                                                  • Repertoire analysis
                                                                                    • Figure 83: Repertoire of beauty retailing channel brought from in the last 6 months, December 2013
                                                                                    • Figure 84: Repertoire of beauty retailing channel brought from in the last 6 months, by demographics, December 2013
                                                                                    • Figure 85: Beauty retailing channel brought from in the last 6 months, by repertoire of beauty retailing channel brought from in the last 6 months, December 2013
                                                                                • Appendix – The Consumer – Beauty Products Bought

                                                                                    • Figure 86: Types of beauty products bought in the last 6 months, December 2013
                                                                                    • Figure 87: Most popular types of beauty products bought in the last 6 months, by demographics, December 2013
                                                                                    • Figure 88: Next most popular types of beauty products bought in the last 6 months, by demographics, December 2013
                                                                                    • Figure 89: Types of beauty products bought in the last 6 months, by most popular consumer buying behaviour, December 2013
                                                                                    • Figure 90: Types of beauty products bought in the last 6 months, by next most popular consumer buying behaviour, December 2013
                                                                                  • Repertoire analysis
                                                                                    • Figure 91: Repertoire of types of beauty products bought in the last 6 months, December 2013
                                                                                    • Figure 92: Repertoire of types of beauty products bought in the last 6 months, by demographics, December 2013
                                                                                    • Figure 93: Types of beauty products bought in the last 6 months, by repertoire of types of beauty products bought in the last 6 months, December 2013
                                                                                • Appendix – The Consumer – Buying Beauty Products In-store

                                                                                    • Figure 94: Most important factors of choosing beauty products in-store, December 2013
                                                                                    • Figure 95: Most popular most important factors of choosing beauty products in-store, by demographics, December 2013
                                                                                    • Figure 96: Next most popular most important factors of choosing beauty products in-store, by demographics, December 2013
                                                                                • Appendix – The Consumer – Buying Beauty Products Online

                                                                                    • Figure 97: Most important factors of choosing beauty products online, December 2013
                                                                                    • Figure 98: Most popular most important factors of choosing beauty products online, by demographics, December 2013
                                                                                    • Figure 99: Next most popular most important factors of choosing beauty products online, by demographics, December 2013
                                                                                    • Figure 100: Other most important factors of choosing beauty products online, by demographics, December 2013
                                                                                • Appendix – The Consumer – Future Opportunities for Beauty Retailers

                                                                                    • Figure 101: Added-value services to engage consumers, December 2013
                                                                                    • Figure 102: Most popular added-value services to engage consumers, by demographics, December 2013
                                                                                    • Figure 103: Next most popular added-value services to engage consumers, by demographics, December 2013
                                                                                • Appendix – The Consumer – General Behaviour towards Buying Beauty Products

                                                                                    • Figure 104: Consumer buying behaviour, December 2013
                                                                                    • Figure 105: Most popular consumer buying behaviour, by demographics, December 2013
                                                                                    • Figure 106: Next most popular consumer buying behaviour, by demographics, December 2013
                                                                                    • Figure 107: Beauty retailing channel brought from in the last 6 months, by most popular consumer buying behaviour, December 2013
                                                                                    • Figure 108: Beauty retailing channel brought from in the last 6 months, by next most popular consumer buying behaviour, December 2013

                                                                                Companies Covered

                                                                                To learn more about the companies covered in this report please contact us.

                                                                                Beauty Retailing - China - February 2014

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