Five opportunities to grow the makeup market in China
According to Kantar Worldpanel China, China urban makeup market witnessed a significant 12% growth in the latest 52 weeks to March 20, 2015, with annual sales value standing at RMB 10.5 billion.
The double-digit growth was driven by strong performance of BB/CC cream as well as lip products. Aside from the booming e-commerce channel, accounting for 12% of value share compared to about 3% of total FMCG, overseas purchase has become increasingly popular, given the substantial price differences for imported brands. In the latest year, lower tier cities2 in general enjoyed much higher growth compared to key cities and provincial capitals, especially county level cities.
A promising market naturally brings more competition. 253 new brands entered the makeup market in 2014 compared to 70 new brands a year ago. Chinese brands stand out in this intensified competition, contributing 72% of the market growth. Leveraging their advantage in lower tier cities, more than 3 quarters of Chinese brands’ growth came from tier 3 to 5 cities .
Makeup is still a developing category in China. In the 12 months up to Q1, 2015, only 43 out 100 Chinese urban families purchased on average 2.7 items of makeup products in a year. The numbers are almost unchanged compared to 2 years ago. This shows great potential compared to the other mature markets – 61% in France and 85% in Korea in terms of penetration. Increasing buyer base is the key to further drive makeup market growth.
Another key area to grow is the makeup routine. Chinese makeup shoppers buy 2.7 makeup items a year; but they use even fewer products in their weekly makeup routine. Kantar WorldpanelUsage3 observes that among weekly makeup users in tier1-2 cities, about 60% only apply 1 product in their makeup routine, mostly BB/CC cream or Lipstick.
By studying the dynamic purchase and usage behavioral changes over past years, Kantar Worldpanel reveals 5 opportunities for makeup brands to grow further in China:
1. Flawless skin with perfect coverage leads the trend
“Bi-Dong”, a term originated from Japan to describe when a woman is trapped by a man against the wall and stared at from close range; this concept was presented in various Korean TV dramas and also became trendy in China. The concept is now frequently used in advertising to communicate a common wish of Chinese women: perfect skin. 2 years ago, facial makeup with flawless effect only took 15% of volume share, but increased to 22% in 2015Q1. In terms of usage, perfect coverage, beautiful and radiant look are key benefits that users look for when using BB/CC cream. Korean brands, such as Missha, Laneige and Mamonde, are perceived to out-perform in these benefits.
2. Satisfy consumers’ care needs when making up
Makeup brands should strive to satisfy Chinese consumers’ skincare needs when applying makeup. In 2015Q1, BB cream with skincare benefits grew 61% compared to 2 years ago. Whitening and hydration benefits together took more than half of BB cream volume share, reflecting the increasing needs when applying BB cream. Pechoin, a typical Chinese skincare brand, leveraging its skincare brand equity and emphasizing botanical ingredients and skincare benefits, tripled its makeup buyer base in 2 years and became the ninth largest BB cream brand. Similarly, KanS’s hero item, white BB, enjoyed 220% growth in 2015Q1.
3. Innovate to excite your consumers
Product innovation is essential to category development, and especially important for makeup brands to bring excitement and inspiration to consumers. Cushion products, a new type of compact which contains a specific sponge soaked up with liquid foundation, provides users the convenience and ease of applying and reapplying foundation during the day. By applying more or less pressure on the sponge, users can also create the makeup coverage or effect of their preference, e.g. nude or dramatic look.
Facial cushion products have reached 8.6% penetration and taken 29% of value share in South Korea in 2014, growing by 26%. Influenced by Korean trends, Chinese consumers have embraced the product easily. Thanks to the promotion by the popular Korean TV drama “My Love from The Star”, Amore-Pacific’s IOPE is the brand benefiting the most from this fashion trend, rocketing to 9th biggest makeup brand in 2015Q1. Increasingly, brands try to capitalize on the wave by adding cushion products to their product portfolio, including western brands like L’Oréal Paris and Lancôme. As cushion blush, cushion eyeliner and lip cushion have also started to appear in the market, “cushion” seems like a panacea for makeup brands. However, manufacturers should bear in mind that product innovation should always be user-centric and able to create satisfying user experience.
4. Engage consumers through e-commerce and digital channels
Since 2012, the Double-11 event engages an increasing number of consumers to buy online year after year, especially for makeup. Online traffic boosted makeup sales significantly. Given the high involvement nature of the makeup category, education and experience are key to ensure category adoption and loyalty. There is potential for makeup brands to utilize the interactivity of digital marketing to engage makeup consumers.
Multinational brand L’Oréal Paris launched a smartphone app called “Makeup Genius” in 2014, aiming to enrich consumers’ shopping experience by showing makeup looks via augmented reality technology. Sephora introduced in-store technology “Skincare IQ” to assist consumers in finding suitable products for their skin types. Through various digital technologies, the shopping experience became more fun and educational, encouraging consumers to “play” and “share” with their friends while the direct linkage to online shops increases the chance of purchase conversion.
In addition, digital marketing and E-commerce can bring brands closer to young consumers. Compared to all female consumers, online makeup shoppers tend to be younger, especially between the age of 16 and 35.
5. Start consumer education early on, while they are in universities
Build up brand awareness in young consumers’ mind and educate them early on. According to Kantar Worldpanel Usage, university is the crucial stage for makeup brands as many girls start using makeup products entering college. Post-90’s girls are sensitive to fashion trends around them and actively lead makeup fashion. For example, they are the main group who pushed up lip fashion in 2014 and 70% of lip makeup growth was attributed to 16-25 young women. Makeup brands ought to continuously communicate with these trend setters and bring aspiration and excitement to the upcoming young consumers.
China urban makeup market witnessed a significant 12% growth, with annual sales value standing at RMB 10.5 billion.
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