A look at key industry categories

Skincare, which accounted for 67% of total prestige beauty e-commerce sales in China, was the leading category in 2021, and remains the leading category year to date 2022 (Jan. – June). It has a high market share in the country, mainly because of the importance of skin health to Chinese consumers. A large percentage of consumers in China do not wear makeup, but they do invest in skincare. The hair category also performed well, increasing 65% in 2021.

While sales for both makeup and fragrance categories were impacted by COVID-19 in 2021, all segments in the makeup category managed to experience growth except for lip products, which declined. As a result of wearing masks, consumer demand shifted from lips to face and eyes. Fragrance sales experienced more growth than makeup. This isn’t surprising given the fact that fragrance is less affected by mask wearing.

Unfortunately, year-to-date 2022 sales followed the same trend we saw in the first quarter of the year. Lockdowns in China’s major cities (including Shanghai) combined with lower-than-expected sales during the country’s June 618 shopping festival led to value sales declines for skincare, makeup, and fragrance. Hair was the only category that experienced sales growth, increasing 10% vs. the same time period last year.

It’s worth calling out the fact that niche brands in China’s fragrance segment are becoming increasingly popular among Generation Z, who seek unique scents to reflect their different personalities. This indicates that although fragrance is a smaller beauty category compared to skincare and makeup for the moment, there is a lot of potential for the category in the future.

Regardless of the category, local brands tend to ‘play’ in the lower-price tier, a much different strategy from international brands. International brands usually leverage brand reputation and classic positioning, and local brands leverage social media exposure to increase their brand awareness. For example, Boitown uses platforms such as Red to emphasize its brand story and implement cross-category collaboration to promote its product, and the company regularly invites women to share their stories related to fragrance in popular online forums.

This is a lesson for the larger well-known prestige brands. They should take heed of their lesser-known counterparts and target the youth market. Establishing brand recognition among younger consumers today will pay dividends in the long run.