Taiwanese Ladies still pumping $ into the beauty market
Women worldwide are known for their consumption power, especially when it comes to the name of beauty, and Taiwanese women are no exception. This can be observed through the staggering NT$50 billion Cosmetic market sales contributed by Taiwanese women every year, marking Cosmetic as one of the most influential industry to Taiwan’s overall economy. This strong “lust” for beauty could not be quenched even through the much problematic recent economic events. Through continual monitoring of shopper behavior by Kantar Worldpanel Taiwan’s Beauty Panel, it was observed that even during the most difficult time, Taiwanese women do not cease to spend on these small luxuries, but merely fine tune their selections to adapt to different economic situations, for example stock up during promotion
sales. Therefore, when all else are affected by one of the worst economic recession ever, Taiwan Cosmetic market* continued to thrive, with an annual increase of 10% in sales value, and the department anniversary in the end of 2009 was also an unprecedented success.
Rising Prestige Market! Age 26-35 presents strong opportunity
A very important driver behind 2009 cosmetic market’s growth momentum was the rise of the prestige skincare market. According to Kantar Worldpanel Beauty’s findings, sales of >NT$5,000 skincare moisturizer doubled compared to 2008, a truly phenomenal performance especially during the time of economic difficulty. For 2010, Prestige market continued to show promise with strong anticipation displayed for high-end brands such as La Prairie and Cosme Decorte, strong sales growth from these brands further demonstrated the underlying need for prestige cosmetics.
It is worth to note that not only mature women, but young ladies aged 26-35 are also showing increasing preference towards luxury cosmetics. Worldpanel study showed that the number of Age 26-35 purchasing prestige items have doubled compared to the previous year, indicating high potential to further develop among this age group which has originally contributed the most to skincare market. Therefore, to grow sales, it will be crucial for manufacturers to gain better understanding of Age 26-35’s purchase behaviors, product preference, as well as emotional needs, and then further develop matching product functions, package style, brand positioning and distribution strategy etc. that will stimulate their needs.
Beauty sells: Exquisite marketing important to elevate overall brand awareness and identification
Being an industry related to beauty, overall aesthetics design will be another factor to take into account should a brand wish to gain further growth. Trend towards refined and exquisite marketing was continually observed for Cosmetic market for the past few years, and this trend is no longer limited towards high end brands, but has extended to the management of affordable Mass Skincare also. Take Japanese Mass brands as example, which are well known for their delicate & exquisite marketing, Worldpanel Beauty discovered that the top five brands for Mass segment maintained more than 10% growth consecutively for the past three years. These brands demonstrated high level of sophistication that matches the level of prestige segment, whether for advertising, package design or endorsers. Hence price segment is not the only way to satisfy the exquisite needs of modern women. Even the inexpensive open-shelf brand can help engage consumer’s luxury needs through appropriate design & communication. But the key to victory is still the brand awareness and identification that make your products stand out from the competition.
Diverse distribution strategy is important
Besides marketing and package design, the diverse distribution strategy, in particular how to handle virtual channel, is another important direction that brand manager will need to take into consideration for future growth. Although prestige segment helped elevate overall market sales in 2009, mass channels continued to be an important priority for value shoppers in today’s recession, especially the online channel. Worldpanel Beauty shows that one out of five women in Taiwan have bought makeup and skincare products through internet in 2009, this is a 16% of growth rate compared to last year, and comes out the parity in penetration with the performance of Counter sector, reflecting the high importance of internet for Taiwan’s cosmetic buyers. Furthermore the concept of Online sales is not limited to Internet brands only. Taking counter brand for example, its sales coming from internet in 2009 shot through the roof with a 70% annual growth, demonstrating virtual channel is a pie all must eat no matter what your traditional flavor is designed for.
As for age of the consumer, although the main customers shopping through internet are 15~25 years old, it is interesting to learn that mature women aged 36~45 showed a strong growth at 64% in terms of shopping for beauty online. With shoppers young and old all gradually joining the world of virtual reality, adequate exposure to allow your buyers to easily track, compare and even purchase online is something all manufacturers have to think about when planning their channel strategy.
Cautious Optimism, Encourage Shopper Engagement through creating skincare needs
Despite outstanding performance from prestige beauty market, overall economy downturn and continuous price inflation of leading cosmetic brands have also led to more cautious behavior from end consumers. While research showed Taiwanese females spend more on cosmetic market, it was also observed that they have the tendency to stock up during promotional periods. Worldpanel Beauty found in 2009, Mother's day and Department Anniversary alone occupied almost 60% total market’s annual sale, this trend was even more apparent for Department channel with 70% sales importance, showing that seasonal sales are more concentrated than ever!
From past experience, over-concentrated purchases tend to adversely impact on the market performance in the following periods. Take facial foam market as an example, Worldpanel observed strong growth in 2008 for this market, much contributed by consumers’ strong stock up. However this in turn caused stagnant market growth in 2009, with shoppers holding off purchase while trying to consume current loads. Therefore for the market to enjoy healthy growth, one cannot over rely on price reduction, but rather creating greater consumer needs by building more advanced and sophisticated beauty concepts will be the optimal direction to ensure continual long term performance.
Another much anticipated opportunity was the Male beauty market, while various resources including Worldpanel
all observed guys pumping out more dollars, Taiwan’s market is still relatively underdeveloped compared to Japan and South Korea. However in the past one year, man moisturizer products got double digit growth, with market size valued at close to 2 billion NTD, demonstrating its strong growth momentum and potential as future beauty market driver.
*Cosmetic Industry covers Facial skincare & Makeup, and excludes Suncare/UV products