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Beauty Retailing - China - March 2016

“In China, where national expansion of physical stores is diminishing, mobile is becoming the battlefield for beauty retailers. There is an enormous amount of mobile-centric innovation intensifying competition for consumers' wallets and the O2O movement will continue to boom in order to provide an omni-channel experience.

The rise of cross-border e-commerce will threaten sales of domestic bricks-and-mortar focused retailers. Using mobile-centric technology will help to lessen this trend by creating instant gratification in-store.”
– Wenwen Chen, Senior Beauty and Personal care Analyst

This report examines the following areas:

  • Locating the best resources for facial skincare
  • Creating an irreplaceable in-store experience
  • Innovative mobile payment

Although China’s cooling economy has undermined consumers’ confidence in general, the beauty market seems immune to a market slowdown. Mintel has found that the consumer passion for better facial skincare products is the key driver.

Looking ahead, growth will remain slow, and is likely to be driven by product premiumisation, rather than an increase in volume sales. Mobile-centric innovations will also encourage shoppers to make quick buying decisions.

Beauty products included in this report:

  • Haircare (eg shampoo, conditioner, hair treatments)
  • Facial skincare (eg facial cleaner, facial cream, mask)
  • Feminine care products (eg sanitary towel, tampon, hair remover)
  • Shower and bath products (eg soap, shower gel, bath salt)
  • Oral care (eg toothpaste, teeth whitening products, mouth wash)
  • Men’s shaving products (eg shaver, shaving foam, aftershave)
  • Body skincare (eg body lotion, body oil)
  • Colour cosmetics (eg foundation, lipsticks, nail polish)
  • Hair beauty products (eg hair styling products, colourants)
  • Fine fragrance/body spray
  • Beauty tools (eg fake eyelash, eyebrow razor, fake nail)
  • Beauty supplements (eg oral collagen, whitening pills)

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Table of contents

  1. 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

                                                                                                            Beauty Retailing - China - March 2016

                                                                                                            US $3,990.00 (Excl.Tax)