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Beauty Retailing - China - February 2017

“Online shopping is supporting the growth of the beauty retailing market and compensating for stagnating offline sales. Concern about product authenticity does not prohibit consumers from looking for products online, even for premium products, because the wide selection of imported products and competitive prices in online stores are still strong incentives.”

– Jessica Jin, Associate Director of Research

This report is looking at the following areas:

  • Price is more transparent with M-commerce
  • How to differentiate from other retailers?
  • Wider brand choices will be key to attract premium beauty shoppers

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • 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
            • Figure 3: Sales and annual growth rate of top five beauty retailers, China 2015-16
            • Figure 4: Number of stores of top five beauty retailers, China 2015-16
          • The consumer
            • Offline channels are still mainstreams for basic BPC products
              • Figure 5: BPC products purchased in the last six months, November 2016
            • Brand speciality stores are important for attracting 20s
              • 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
              • Figure 7: Most often visited online stores in the last six months, November 2016
            • Tier one cities are more driven by wide brand selection
              • Figure 8: Reasons for purchasing online and offline, November 2016
            • Online/offline channels are almost equally accepted for buying premium products
              • Figure 9: Purchase channel of premium products, November 2016
            • Fewer impulsive purchases, even for high earners
              • Figure 10: Purchase behaviour, November 2016
            • What we think
            • Issues and Insights

              • 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

                                • Healthy growth…
                                  • …yet mixed performance across channels
                                    • Competition is not limited within Chinese market
                                    • Market Size and Forecast

                                      • Steady, but slowing value growth
                                          • Figure 11: Best- and worst-case forecast of total value sales of beauty retailing, China 2011-21
                                        • Cosmetics stores continue to expand
                                          • Figure 12: Store number of beauty retailers, by segment, 2014-16
                                      • Market Factors

                                        • 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
                                                  • Figure 13: Countries consumers have bought imported products from, November 2016
                                              • Key Players – What You Need to Know

                                                • 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

                                                      • Sales per store declining
                                                        • Figure 14: Retail sales, store number of top five beauty retailers, China 2015-16
                                                      • Gialen
                                                        • Figure 15: Dermo shelf in Gialen, China, 2017
                                                      • Sephora
                                                        • Figure 16: Korean Beauty shelf in Sephora, China, 2017
                                                      • Watsons
                                                        • Figure 17: Makeup studio in Watsons, China, 2017
                                                      • Sasa
                                                        • Figure 18: Product display in Sasa O2O store, China, 2016
                                                      • Mannings
                                                      • Competitive Strategies

                                                        • Introducing K-Beauty products
                                                          • Figure 19: Most favourite K-Beauty brands by Chinese consumers, 2016
                                                        • How far can private label go?
                                                          • Selling services in store
                                                            • Figure 20: Brochure of Charlotte Tilbury, UK, 2016
                                                            • Figure 21: Sulwhasoo flagship, South Korea, 2016
                                                        • Who’s Innovating?

                                                          • Highlighting brand theme via VR
                                                            • Figure 22: VR application in Innisfree store, China, 2016
                                                          • Better trial experience in-store
                                                            • Figure 23: Smart Mirror in-store at Charlotte Tilbury, UK, 2016
                                                          • Develop bespoke beauty products to stand out
                                                            • Figure 24: IPhone screen of MATCHCo APP, 2016
                                                        • The Consumer – What You Need to Know

                                                          • 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

                                                                    • Skew to offline for basic BPC products
                                                                      • Figure 25: BPC products purchased in the last six months, November 2016
                                                                    • More product types purchased in bricks-and-mortar stores
                                                                      • 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
                                                                      • Figure 27: BPC products purchased in online stores in the last six months, November 2016
                                                                  • Most Visited Bricks-and-Mortar Stores

                                                                    • BPC chain retailers catching up with department stores
                                                                      • Figure 28: Most often visited bricks-and-mortar stores in the last six months, November 2016
                                                                    • 20s have different preferences from the rest
                                                                      • 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
                                                                      • Figure 30: Most often visited bricks-and-mortar stores in the last six months, by tier one cities, November 2016
                                                                  • Online Stores

                                                                    • JD exceeds Taobao in 2016
                                                                      • VIP and Jumei rank before brand’s official website
                                                                        • Figure 31: Most often visited online stores in the last six months, November 2016
                                                                    • Reasons for Purchasing Online/Offline

                                                                      • Clear strengths and weaknesses of each
                                                                        • Convenience is no longer a differentiating factor
                                                                          • Figure 32: Reasons for purchasing online and offline, November 2016
                                                                        • How to retain savvy consumers in store?
                                                                          • 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
                                                                          • Figure 34: Reasons for purchasing offline, by city tier, November 2016
                                                                        • Online price is especially important in tier two and three cities
                                                                          • Figure 35: Reasons for purchasing online, by city tier, November 2016
                                                                      • Purchase Channel of Premium Products

                                                                        • Almost no gap between online and offline
                                                                          • Figure 36: Purchase channel of premium products, November 2016
                                                                        • What drive consumers to purchase premium products online?
                                                                          • Figure 37: Reasons for purchasing online/offline, November 2016
                                                                        • 40s are less willing to buy premium products online
                                                                          • Figure 38: Purchase channel of premium products, by age, November 2016
                                                                        • High earners go to different online channels
                                                                          • Figure 39: Purchase channel of premium products, by age, November 2016
                                                                      • Purchase Behaviour

                                                                        • Most purchases are planned not impulsive…
                                                                          • Figure 40: Purchase behaviour, November 2016
                                                                        • …even for high earners
                                                                          • Figure 41: Purchase behaviour, by household income, November 2016
                                                                        • Much smaller impact of ‘status’ in beauty than in technology
                                                                          • Figure 42: Purchase behaviour, November 2016
                                                                        • Affluent consumers opt for premium and international products
                                                                          • Figure 43: Purchase behaviour, by household income, November 2016
                                                                        • 37% research on mobile when shopping in-store
                                                                          • Figure 44: Mobile usage in shopping, November 2016
                                                                      • Meet the Mintropolitans

                                                                        • Much fewer visits to super/hypermarkets
                                                                          • 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
                                                                          • Figure 46: Most often visited online stores in the last six months, by consumer segmentation, November 2016
                                                                        • Selection and service matter most
                                                                          • Figure 47: Reasons for purchase offline, by consumer segmentation, November 2016
                                                                        • MinTs tend to be sophisticated buyers
                                                                          • Figure 48: Purchase behaviour, by consumer segmentation, November 2016
                                                                      • Appendix – Market Size and Forecast

                                                                          • Figure 49: Total value sales of beauty retailing, China 2011-21
                                                                      • Appendix – Methodology and Abbreviations

                                                                        • Methodology
                                                                          • Fan chart forecast
                                                                            • Abbreviations

                                                                            Companies Covered

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

                                                                            Beauty Retailing - China - February 2017

                                                                            US $3,990.00 (Excl.Tax)