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Beauty Retailing - China - February 2018

“Providing personalised designed products is perceived as an upcoming trend, and is especially an area needing most attention in bricks-and-mortar stores. This approach can help to win back lapsed offline buyers and differentiate from online offerings. Online channels should explore beyond price competition by incorporating new techniques such as AR make-up trials, to facilitate a convenient shopping process.”
– Jessica Jin, Associate Director of Research

This report looks at the following areas:

  • Evolving shopping habits in offline stores
  • Fierce online competition
  • Expectation of an in-store beauty advisor

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Table of contents

  1. Overview

      • Covered in this Report
        • Channels covered in this Report:
          • Subgroup definitions (by Monthly Household Income)
          • Executive Summary

              • The market
                • Figure 1: Best- and worst-case forecast of total value sales of beauty retailing, China, 2012-22
              • Companies and brands
                • Figure 2: Change in retail sales, store numbers and sales per store of the top five beauty retailers, China, 2016-17
              • The consumer
                • Gap of purchasing from online and offline is shrinking
                  • Figure 3: BPC products purchased in the last six months, December 2017
                • A red alert for supermarkets/hypermarkets
                  • Figure 4: Most often visited bricks-and-mortar stores in the last six months, 2017 vs 2016
                • JD is chasing after Tmall
                  • Figure 5: Most often visited online stores in the last six months, 2017 vs 2016
                • Differentiating product priorities for online and offline channels
                  • Figure 6: First choice of purchasing each of the selected BPC products, December 2017
                • Emerging trend of using AR make-up trial online
                  • Figure 7: Activities taken part in in the last six months, December 2017
                • Customised advice is more adoptable
                  • Figure 8: Ideal BA expertise, December 2017
                • What we think
                • Issues and Insights

                  • Evolving shopping habits in offline stores
                    • The facts
                      • The implications
                        • Figure 9: Birchbox first standalone pop-up store, UK, 2017
                      • Fierce online competition
                        • The facts
                          • The implications
                            • Figure 10: JD AR make-up trial to try coloured contact lenses and blusher, China, 2017
                          • Expectation of an in-store beauty advisor
                            • The facts
                              • The implications
                                • Figure 11: Innisfree beauty class, US, 2018
                                • Figure 12: Estée Lauder Augmented Reality Training (ART) platform, US, 2018
                            • The Market – What You Need to Know

                              • Growth driven by Cosmetics Stores (CS) channel
                                • Embracing new retail
                                • Market Size and Forecast

                                  • Boosted growth in the market
                                    • Figure 13: Best- and worst-case forecast of total value sales of beauty retailing, China, 2012-22
                                  • Enhanced attention to Cosmetics Stores (CS)
                                    • Figure 14: Store number of beauty retailer outlets, by segment, 2015-17
                                    • Figure 15: SeeYoung Flower Young product range, China, 2017
                                • Market Drivers

                                  • Online sales thrive continuously, especially buy on mobile
                                    • Figure 16: Shopping channels of beauty and personal care products, April 2016 and May 2017
                                  • More international brands enter the China market
                                    • Figure 17: Hourglass opened up Tmall store, China, 2017
                                  • Consumers buy more imported products…
                                    • Figure 18: Customs data of the top five import source countries for cosmetics and skincare, 2017 Jan-Oct vs 2016 Jan-Oct
                                  • …and local brands as well
                                    • Figure 19: Top beauty brands ranking, by sales value on Tmall platform, China, November 11, 2017
                                  • New retail emerges
                                    • Figure 20: La Roche-Posay and Lancôme vending machine, China, 2017
                                • Key Players – What You Need to Know

                                  • Open stores to compensate declining sales per store
                                    • Derma skincare is an essential part of store upgrade
                                      • Spotlight on personalised products
                                      • Market Share

                                        • Overview of top five beauty retailers
                                            • Figure 21: Retail sales, store numbers and sales per store of the top five beauty retailers, China, 2017
                                          • Top five retailers’ performance in 2017 vs. 2016
                                            • Figure 22: Change in retail sales, store numbers and sales per store of the top five beauty retailers, China, 2016-17
                                          • Watsons
                                            • Figure 23: Watsons’ new service announcement on Weibo, China, 2017
                                            • Figure 24: Watsons ‘ask me’ on app, China, 2017
                                          • Sephora
                                            • Figure 25: 3CE enter into Sephora store, China, 2017
                                          • Gialen
                                            • Figure 26: Gialen’s fourth generation of store prototype, China, 2017
                                          • Mannings
                                            • Figure 27: M-Studio of Mannings, China, 2017
                                            • Figure 28: KissHop launch event, China, 2017
                                          • Sasa
                                          • Competitive Strategies

                                            • Store upgrade to introduce derma brands
                                              • Figure 29: Derma Skin Care in Watsons, China, 2017
                                              • Figure 30: Dr. Wu experience centre in Watsons, China, 2017
                                            • AR make-up trial
                                              • Figure 31: Watsons’ ‘Style Me’ AR make-up trial in-store, China, 2017
                                            • Personalised product
                                              • Figure 32: Kiehl’s apothecary preparations, China, 2017
                                              • Figure 33: Lancôme personalised engraved lipstick, China, 2018
                                          • Who’s Innovating?

                                            • Make it mine
                                              • Figure 34: Sephora Mix and Play vending machine, Singapore, 2017
                                            • Collective intelligence
                                              • Figure 35: YourGoodSkin community, US, 2017
                                            • Unmanned beauty store
                                              • Figure 36: Unmanned beauty store, China, 2017
                                            • Expert at home
                                              • Figure 37: Estée Lauder Nighttime Expert, US, 2017
                                            • What’s next after Magic Mirror?
                                              • Figure 38: Beauty Hub in Sephora, France, 2017
                                          • The Consumer – What You Need to Know

                                            • Weight slightly moves to online, but offline still the mainstream
                                              • Super/hypermarkets lose visitors
                                                • Online key players retain the same rank
                                                  • Specific designed products are most wanted in-store
                                                    • Only 18% have visited brands’ offline pop-up stores
                                                      • 25-29-year-olds are most opinionated
                                                      • Products Purchased

                                                        • Oral care sees the largest gap between online and offline shopping
                                                          • Figure 39: BPC products purchased in the last six months, December 2017
                                                        • Not necessary to buy colour cosmetics offline
                                                          • Figure 40: Ranking of BPC products purchased in bricks-and-mortar stores in the last six months, 2017 vs 2016
                                                        • Haircare takes over first place in online shopping from facial skincare
                                                          • Figure 41: Ranking of BPC products purchased in online stores in the last six months, 2017 vs 2016
                                                        • Consumers in their early twenties switch to buy haircare online more
                                                          • Figure 42: Change of purchasing haircare in online stores, by gender and age, 2017 vs 2016
                                                      • Most Visited Bricks-and-Mortar Stores

                                                        • Super/hypermarkets are of less importance than 2016
                                                          • Figure 43: Most often visited bricks-and-mortar stores in the last six months, 2017 vs 2016
                                                        • The likelihood of choosing brand counters is on par with that of super/hypermarkets
                                                          • Figure 44: Most often visited bricks-and-mortar stores in the last six months, December 2017
                                                        • Brand counters earn increased appeal to young women
                                                          • Figure 45: % of visiting brand counters at department stores/shopping malls most often, by gender and age, 2017 vs 2016
                                                      • Most Visited Online Stores

                                                        • Top four online stores remain unchanged over 2016, not the fifth
                                                          • Figure 46: Most often visited online stores in the last six months, December 2017
                                                        • JD strengthens its influence further
                                                          • Figure 47: Most often visited online stores in the last six months, 2017 vs 2016
                                                        • Men aged 25-49 contribute to JD’s growth most
                                                          • Figure 48: % of visiting JD most often, by gender and age, 2017 vs 2016
                                                      • Preferred Channel of Products

                                                        • Classic products are not most wanted in-store now
                                                          • Figure 49: First choice of purchasing each of the selected BPC products, December 2017
                                                        • Online stores are more suitable for following trends and saving money
                                                          • Figure 50: First choice of purchasing each of the selected BPC products, December 2017
                                                        • Collaborations are not must-haves either online or offline
                                                          • Figure 51: First choice of purchasing each of the selected BPC products, December 2017
                                                      • Marketing with Technology

                                                        • 20% of consumers have already used AR make-up trials
                                                          • Figure 52: Activities taken part in in the last six months, December 2017
                                                        • 20-24-year-olds are not core visitors to pop-up stores
                                                          • Figure 53: Have visited brands’ offline pop-up stores in the last six months, by age and monthly personal income, December 2017
                                                      • Ideal BA Features

                                                        • Mature BAs are more ideal than early twenties
                                                          • Figure 54: Ideal BA profile, by gender and age, December 2017
                                                        • Elegant workplace make-up is most preferred style of BA
                                                          • Figure 55: Ideal BA make-up style, December 2017
                                                        • Early twenties have different style preference by gender
                                                          • Figure 56: Ideal BA make-up style, by gender and age, December 2017
                                                        • Product recommendation ranks second to suggestion on skin issues
                                                          • Figure 57: Ideal BA expertise, December 2017
                                                        • 25-29-year-olds are comparatively more independent from BAs’ advice
                                                          • Figure 58: Ideal BA expertise, by gender and age, December 2017
                                                      • Meet the Mintropolitans

                                                        • Gift sets attract Mintropolitans to spend money in-store
                                                          • Figure 59: First choice of purchasing each of the selected BPC products in bricks-and-mortar stores, by consumer classification, December 2017
                                                        • Seasonal product can be a differentiating driver of online shopping
                                                          • Figure 60: First choice of purchasing each of the selected BPC products in online stores, by consumer classification, December 2017
                                                        • Retailers’ and brands’ apps are not dispensable for Mintropolitans
                                                          • Figure 61: Activities taken part in in the last six months, by consumer classification, December 2017
                                                      • Appendix – Market Size and Forecast

                                                          • Figure 62: Total value sales of beauty retailing, China, 2012-22
                                                      • Appendix – Methodology and Abbreviations

                                                        • Methodology
                                                          • Fan chart forecast
                                                            • Abbreviations

                                                            Beauty Retailing - China - February 2018

                                                            US $3,990.00 (Excl.Tax)