Savills plc

12/03/2021 | Press release | Distributed by Public on 12/03/2021 02:58

China's cosmetics brands make up sales with bricks-and-mortar strategies

Among the 14,000 who queued for the opening of cosmetics retailer The Colorist's Shenzen bricks and mortar store, there must have been plenty who had never known life without ecommerce. But physical stores of cosmetics brands have found their place in the shopping habits of China's Generation Z.

Over the course of 2020, The Colorist opened more than 50 stores across 20 Chinese cities, while competitors Wow Colour established nearly 300 offline shops. These strategies seem a reverse of everything we have come to expect from retailers lately. But brands are increasingly using online businesses as a stepping stone to a store presence.

Perfect Diary launched online in 2017 and has since become one of the most well-known beauty brands in China. Then it opened its first physical store in 2019 - the forerunner to a 200-strong portfolio of stores across the country today. Other online-only retailers - both domestic and international - now have similar strategies.

Harmay, which launched online in 2010 and now has a top-rated Beijing store, cited growing costs of online retail as a factor in its drive to bricks and mortar. Co-founder Jason Ju told Jing Daily in 2020: 'I started to realise that the cost of operating Harmay online had actually been increasing since 2015, especially in China, where social media plays a key part if you want to make profits.' Now the buzz around Harmay's bricks and mortar stores are doing the heavy lifting on social media.

Shoppers reflected in another article in China Daily that the relaxed shopping experience at some of the new stores, freedom to try different product shades, and non-pushy staff who approached them only when help was requested were among the attraction of fresh cosmetics stores. While Generation Z are digitally savvy, these consumers are focussed on the product itself, which is where tangible brand experiences - such as events and launches - can help drive sales on all platforms.

Made in China products have become a priority for young buyers. This is down to the guochao (national tide) phenomenon, whereby home-grown names are in favour among a culture of national confidence and pride, and is why domestic cosmetics brands are expanding their market share. Home-grown brands took a 25 per cent wedge of cosmetics sales in 2020 - a stake in the market that has, according to Euromonitor, been rising since 2016.

In a break with tradition, these cosmetics and skincare brands do not open in department stores, but prefer to have retail units in shopping malls to provide consumers with better services. For a first store, brands typically consider prime retail areas in tier one cities like Shanghai and Beijing. But for mature cosmetics retailers, as they already have presences in tier one and tier two cities, they have been, in the last few years, spreading to lower tier cities.

Now eyes are fixed beyond China's borders. Exports of Chinese make-up are growing, now around more than $3 billion a year, and sales on international platform Tmall are surging tenfold. Well-developed cross-border distribution channels will support overseas strategies. Perfect Diary is now operating in Singapore as it hones attentions on the Southeast Asian market.

C-beauty is going global, bricks and mortar will be a part of that story.

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Contact Kelly Cheng

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