1. Market Structure
1. number of firms
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2. its size and distribution
Cosmetics products are sold through diverse distribution channels in China including department stores, supermarkets and hypermarkets, specialty stores, pharmacies, direct sales and online sales; of which, department stores, supermarkets and hypermarkets take the lion’s share in cosmetics retail sales.
1. Department stores
Long perceived by Chinese consumers to be the right place for genuine, reliable and quality products, department stores are the major retail channel for skin care products, color cosmetics and fragrances in China. For many cosmetics players, department stores are the key platforms to build their brands. For instance, L’Oréal currently sells most of its products in China through department stores and its products are available at over 500 department stores in the country.
Today, competition for counter space in department stores is fierce. Many smaller and less reputable brands, particularly the domestic ones, are forced to move out. This is especially true for department stores positioned at the up market—domestic cosmetics brands are virtually absent.
But as an increasing number of cosmetics players unveil plans to expand retail presences in other channels, department stores as the major cosmetics retail channel are not without challenges. Some department stores have strived to differentiate themselves through offering more personalized services. The yearlong strategic partnership between Beijing Wangfujing Department Store (Group) and L’Oréal formed this April is a case in point. Until the end of September, L’Oréal will provide beauty services for VIP members of Wangfujing Department Store’s flagship stores in Beijing, Chengdu, Changsha and Wuhan. It is hoped that the offering of more personalized services can cultivate customer preference and loyalty....
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