Consumption Upgrade Brings New Opportunity to the Beauty Industry

FMCG and Retail | 02-14-2019

With the upgrading of consumption, people's pursuit of beauty is also on the rise. The Nielsen data shows that in the past 12 months, the penetration rate of shoppers to personal care shop was 43%, that of beauty shop shoppers was 29%, and that of shoppers going to both channels was 17%. Supermarkets/shopping malls (36%) are still the channels with the highest penetration rate for purchasing personal care and beauty products, while online shopping platforms (16%) and cosmetics specialty stores (15%) are growing rapidly.

"The personal care products and cosmetics market in China, known as the ‘beautiful economy’, has made unprecedented achievements after more than 20 years of rapid development. At present, the cosmetic market has shown the best development momentum. The study of consumption behavior both reflects the trend of consumption choices under the influence of the prevalence of attractive appearance and concretely shows the upgrading of consumption brought about by economic development, providing an important reference for the cosmetic and personal care industry to grasp the development opportunity to win market choices.” Brady Ni, vice-president of Nielsen said.

Nielsen's research found that personal care and beauty shop shoppers have higher academic qualifications, while beauty shop shoppers are relatively younger, with a prominent number of student shoppers. The choice habits and preferences of the consumption channel vary depending on the level of the city and the age.

Development opportunities: beauty stores are developing rapidly and consumption channels are diversified

Nielsen research shows that the development of personal care stores has remained stable in the past 12 months, while the penetration rate of beauty shops has increased by 6 percentage points over the previous year. Nielsen data shows that among the respondents, more senior executives and highly educated talents (university or above) have become frequent customers of personal care stores and cosmetics shop. 85% and 83% of the respondents with a college degree or above, indicating that they have patronized a personal care store or a beauty shop in the past 12 months. Education and rich working experience make this group of people pay more attention to the promotion of self-value. Besides professional improvement, exquisite appearance has gradually become an important component of quality life.

From traditional supermarkets/shopping malls, personal care stores, department store counters, to micro-businesses and overseas shopping brought by the Internet, consumption channels are becoming more and more diversified. However, Nielsen research found that traditional shopping channels are still the main way for consumers, with 51% of respondents saying they buy oral care products in hypermarkets and only 6% saying they will buy such products online. 32% of the interviewees would buy cosmetics in supermarkets, but only 7% said they would buy such products online and 2% at convenience stores. At the same time, online shopping platforms and cosmetics stores have shown strong growth momentum. Good product quality, variety and convenience are the main selection criteria for consumers to choose personal care/beauty products. In addition, consumers prefer comfortable shopping environment when choosing personal care store, and enjoy professional help provided by the staff in cosmetics. Nielsen research found that the post-1990s have higher acceptance of emerging channels and are also the main force of online shopping, with micro-businesses accounting for 10% of the post-90s’ consumption channels, which is the highest among all age groups.

Integrated Marketing: Online and Offline

Nielsen found that the most common promotion methods are “member special offers” and “buy one and get one free”. In addition, “money off” and “buy products and get samples free” are also very popular. Consumers in first-tier cities, especially in personal care store, prefer “member special offers”; Shoppers of beauty shops in second-tier cities prefer to “buy one and get one free”; Shoppers in third-tier cities have a higher acceptance of the “money off”.

Judging from the influence of publicity materials, “posters/display” (58%) have the greatest influence in the shopping process of shoppers in first-tier cities. “Yellow special price label” (38%), “hot product label” (37%), “store manager recommendation label”(35%) and “advertising product label” (35%) have important influence on customers in third-tier cities.

Judging from product information channels, customers in first-tier cities are more affected by SMS. Customers in second-tier cities have more access to information and are most affected by in-store promotions and shop assistants. In third-tier cities, information channels are relatively limited, and the recommendation of relatives/friends/colleagues has a greater impact.

In Nielsen’ s study, 77% of facial skin care product buyers had a certain consumption plan. Temporary emergency purchasing replaced seasonal purchasing as one of the main purchasing purposes of shoppers. Consumers’ purchasing decisions have greater freedom and flexibility than before. Even in the face of different product categories, the most important factor affecting purchasing behavior is still consumption habits. Most consumers' first choice is the brand they used to use, so the sales records in different regions still have significant reference value for store inventory management.  Consumers also mainly consider the composition and efficacy of the product, and the marketing department should also take this as an important part of product positioning and publicity.

Nielsen found that in the traditional marketing methods, counter jumper still plays a positive role for the shoppers of beauty makeup/personal care stores. Nielsen’ s data shows that about 50% of the interviewees believe that the counter jumper have a positive impact during the shopping process, and the interactive experience of the shopping process cannot be replaced by the Internet for the time being. While using social networks and media online for marketing, it is still necessary to do well in the preparation of publicity materials and personnel training.

Traditional Retail Trade vs Overseas Online Shopping: the War of Quality Goods

The pattern of various factors affecting the retail brand value has changed greatly in the past 12 months. “Diversified brand choices” have replaced “product price” as the first factor affecting the brand value of stores, “guaranteed product quality” and the importance of “easy access” of stores have greatly increased. Retail stores with high brand value can get mutual recommendation from consumers and attract consumers to pay higher prices.

Nielsen data shows that in the past 12 months, the penetration rate of online shoppers was 35%. Among them, shoppers aged 18-24 and 35-45 are the main group of online shopping. Relatively speaking, online shopping customers are younger and more educated.

“Time-saving” (40%) and “home delivery service” (38%) are the main reasons for choosing online shopping. At the same time, “online shopping habits”, “easy to find goods” and “strong promotion” also make online shopping channels have unique attraction. More than 90% of consumers have used mobile phones for online shopping.  The mobile phone is also far ahead of the most frequently selected way to purchase personal care and beauty products online. The average frequency of online shopping by these interviewees is more than 2 times per month, and the average single spending is around 250 yuan, up slightly from last year.

Compared with the spending spree brought about by several online shopping activities, overseas online shopping is still in its infancy. Only 3.4% of the interviewees have bought personal care products and beauty products in the past 12 months, and 60% of people have chosen to buy them through overseas direct mail on domestic websites. “Quality goods guarantee” (42%) and “you can buy goods that are not available in China” (41%) are the main reasons. Overseas online shopping also attracts consumers with “high cost performance” (38%) and “good quality” (34%). No matter which purchase method is chosen, the balance of consumer demand is gradually shifting from “low price” to “good quality”.

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