Chinese beauty market recovers on back of e-commerce growth

China’s beauty market has been able to rebound quickly from the impact of the COVID-19 pandemic, presenting opportunities for companies that can innovate to keep up with evolving consumer demands, according to a new report from Kantar.

E-commerce is the engine behind the market’s recovery and is growing through a wide variety of diversified platforms, said the 2021 whitepaper on the Chinese beauty market from Kantar Worldpanel and Ocean Engine.

Despite the pandemic, overall skincare market demand, most noticeably for high-efficacy regimens, recorded positive growth last year. Mask, essence and toner are the biggest sales segments in the skincare market, with essence in particular going through an astonishing growth in demand in 2020.

In addition to essence, eye cream is the new popular choice. Further, there is an overall increase in demand for face cream products featuring specialized ingredients or in a more niche essence-infused format.

In the makeup market, lipstick and foundation, the two biggest segments, moved in different directions under the impact of the pandemic.

As mask-wearing becomes a new daily norm, consumers are now more drawn to lightweight foundation and long-lasting powder products, as well as to eye shadows as a way of expressing individuality.

Lipstick, on the other hand, suffered a sharp decline as many consumers dropped lip makeup from their daily beauty routine.

Not surprisingly, women are the key contributors to the cosmetics market, with young women in particular being the driving force in spending. In 2020, young females spent more than CNY1,000 (about P7,700) per capita on cosmetics, and they accounted for nearly 70% of the total market, said the paper.

The report also revealed that e-commerce has become the top choice for promoting bestsellers and new product launches.

Kantar Worldpanel research showed that e-commerce accounted for 61% of the cosmetic bestseller sales in 2020, a significant increase from 53% in 2019.
E-commerce is now also the key to drawing attention to new product launches, contributing to 67% of new product sales in 2020.

Moreover, special occasion-based giftsets and co-branded products are also attracting much consumer interest online.

At the same time, the report found that beauty-related digital content is one area that has seen strong growth as a tool to stimulate consumer interest and interaction. This is a trend projected to continue, which should help boost companies’ sales performance, especially during the online shopping festival periods.

There has been a particularly strong surge in the short video sector, as can be seen in a sharp increase in the number of beauty content search since the first quarter of 2020 on Douyin, a Chinese short video media app that allows users to create, edit, and share short videos as well as livestreams.
“This indicates that consumers are devoting more leisure time to beauty content browsing and consumption, resulting in a health growth of the industry,” the paper added.

According to Douyin’s 2020 Beauty Content Statistics, skincare- and makeup-related contents account for the largest share in terms of beauty content, maintaining a strong growth momentum at more than 50%.

Notably, this growth is driven by skincare, which increased by 3% in share between 2019 and the first half of 2021.

“There has been a strong growth in contents related to more sophisticated lifestyles, featuring niched personal care segments and perfume products. Innovative products such as mousse body wash, scented body wash, and hair loss treatment shampoo are examples of products that reflect overall upgrade in consumers’ spending power and demand,” said Kantar.

The research also found that livestreaming that combines immersive consumer experience, customized product recommendations and content-driven promotions has become a retail disrupter since 2019.

“On Douyin, livestream content created by both KOLs [key opinion leaders] and brand accounts have soared in both the absolute number of viewers and viewing time. Livestreaming is now playing a significant role in raising brand awareness, reaching new customers, and helping business diversify their revenue stream,” the whitepaper concluded.

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