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Ruder Finn and Consumer Search Group Jointly Announcing 2020 China Premium Beauty Report

2020-07-13

  • The COVID-19 pandemic has made an impact on purchase channel preferences.
  • Positive outlook for spending through livestreaming channels during the next 12 months.
  • Domestic beauty inspiration is gaining significance.
  • Consumers are still more receptive to word-of-mouth.
  • Purchase decisions of the younger generation are more influenced by KOL/blogger.

The 2020 China Premium Beauty Report was jointly released by Ruder Finn, a global leading integrated communications consultancy, and Consumer Search Group (CSG), one of Asia’s leading market research groups. While conducting an analysis of the impact of the COVID-19 pandemic on China’s premium beauty market, the report dissects consumption habits and patterns, information acquisition preference, and purchasing decision factors over the past year to provide essential insight into the trends surrounding the 2020 premium beauty market in Mainland China.

The basis for the 2020 China Premium Beauty Report is a survey of 1,965 consumers across different regions and cities in Mainland China — from the largest, 1st-tier cities to 3rd- and lower-tier cities. Among those surveyed, the average annual personal income was RMB 394,000.

Market overview for 2019 and the next 12 months.

The surveyed Chinese consumers spent on average 11,272 RMB, 42.3% of which on makeup products, 39.6% on skincare, and 18.1% on fragrances in 2019. The overall spending of the surveyed consumers on premium beauty is expected to remain roughly the same over the next 12 months. While average spending in the next 12 months will be 11,355 RMB, 44.3% of which on makeup products, 38% on skincare, and 17.7% on fragrances. Across product categories, most will not see significant growth or decrease in sales, except lip makeup, which is projected to grow 21% in sales volume in the next 12 months.

The COVID-19 pandemic has made an impact on purchase channel preferences.

Due to the COVID-19 pandemic, more people are moving their purchase to online channels and dedicated beauty stores, possibly to minimize social contact. 49% of the surveyed consumers plan to visit brand online stores more frequently, followed by 45% of the respondents who would visit online platforms more often. Meanwhile, the foot traffic to pharmacies and department stores will decrease, with 36% and 28% of the respondents, respectively, saying they would visit less often or will not visit those stores in the next 12 months.

The largest impact on sales will happen to duty-free stores and oversea stores, which is understandable due to the immigration controls and the significant reduction in international travels. Oversea stores and duty-free shops are particularly affected, with 48% and 36% of the surveyed consumers planning to visit less often, while 15% of them will visit more often after the COVID-19 pandemic.

Positive outlook for spending through livestreaming channels during the next 12 months.

The popularity of purchase via livestreaming is increasing, more than 21% surveyed consumers have made purchases via livestreaming in 2019, and 46% of them are planning to spend more via livestreaming. Brand influence is still the most important factor (76%) influencing the consumer purchase decision during livestreaming, followed by price advantage (58%).


Domestic beauty inspiration is gaining significance.

The surveyed Chinese consumers still look to Japan and South Korea for beauty trends, with 56% and 49% of them responded that they pay attention to the fashion trends in those two countries respectively. A significant number (41%) are also following Chinese beauty inspirations, which is becoming an emerging force in the market. The data also shows that these patterns are more evident among surveyed Chinese consumers aged 18-44 than those aged 45-55. France is falling behind in terms of importance for trendsetting, with 37% of the surveyed consumers still look to France for beauty trends.

“Chinese consumers are increasingly sophisticated and are no longer blindly buying foreign brands. With the proliferation of social media, communication/information platform and e-commerce, there is increasing awareness of local brands. These local brands are creating hyper-targeted products and distributing them locally. These local brands are more focus on targeting their customer segments, they are able to get more direct insights which they use to develop and refine hyper-relevant products. It is this reason why we are seeing significant Chinese influence which is why we see the significance of the Chinese inspiration,” said Simon Tye, Executive Director, CSG INTAGE.

Consumers are still more receptive to word-of-mouth.

Word of mouth is still a powerful influence. Recommendations from friends, professionals, and user reviews are consistently the top three factors influencing the surveyed consumers’ purchases across all age groups. 49% of the surveyed consumers selected “friends’ recommendation” as one of the top three influencing factors for their beauty purchase. In the meantime, 42% of them chose “professional recommendation” and 37% of them chose “User reviews.”

 

“Despite the advanced communication channels, KOLs and Bloggers, the most effective source of information influencing purchase decision is through WOM, especially from friends. It is important for brands to establish strong direct communication with customers especially in smaller targeted social groups to drive strongly focused messages to these groups,” said Gao Ming, Senior VP, Managing Director Luxury Practice Greater China, Ruder Finn.

Purchase decisions of the younger generation are more highly influenced by KOL/blogger.

With the rapid development of the online celebrity economy in China, KOL/ bloggers are playing a greater role in influencing consumers’ purchasing decisions. 24% of the surveyed Chinese consumers’ purchasing decisions are influenced by KOL/blogger recommendations. Among them, 30% of the surveyed consumers aged 18-24 are affected by KOL/blogger in their purchasing decisions, while only 12% of the consumers aged 45-55 are affected.