BW Confidential - Issue #10 - May/June 2012 - (Page 57)

Prestige retailing Changes in store How department stores, cosmetics shops and Sephora are faring and adapting to the market’s growth by Raphaëlle Choël nalysts now define three main retail channels for beauty in China: department stores, supermarkets and cosmetics specialist stores. Although, given the growth in internet sales, especially in 2010, many are now widening the scope to include the web as the fourth major channel (see article p.61). Each of these channels is seeing their fair share of changes as the market develops. Department stores, of which there are around 6,000 in the country, are said to be performing best, but are predicted to see a decline in the future. There is a certain amount of polarization happening in the channel, with the high-end stores in the A first- and second-tier cities getting better and the rest facing challenges. “The department store business is still booming, especially during weekends and holidays. There is a trend for a big number of department stores to upgrade and seek a prestige positioning; however, the primary focus is still on promotional activities, which is kind of a double-edged sword,” comments local group Shanghai Jahwa svp Zhou Wang. He adds that this trend for premiumization among department stores means they are increasingly giving preferential terms to the big global brands, while setting various barriers to entry for smaller players. Indeed, the channel is seen as extremely difficult to penetrate for brands that are not “tierone” prestige. Department stores beyond Shanghai However, these improvements, whether in terms of in-store environment, service or CRM programs, are largely focused in the main tier-one cities. Elsewhere the picture is quite different, with some brands reporting that in smaller cities the offer looks nothing better than a mix of brands lumped together with little thought for merchandising, concept or similarity of product. This is largely because the assortment decisions in these stores are left to the ‘leasing n n n s Sephora’s flagship store at the Super Brand Mall (above) is one of its top stores in China; the retailer will open another flagship this year. MyLohas (right), which launched at the end of last year, is looking to cater to demand for natural and organic products May-June 2012 - N°10 - BW Confidential 57

Table of Contents for the Digital Edition of BW Confidential - Issue #10 - May/June 2012

- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Clinique global brand president Lynne Greene
Insight: Skincare
- Category overview
- Retail technology
- Retail viewpoint
- The latest trends
- Spas & healthcare
- Spa case studies
- Inspiration from Apple
- Store concepts
Market watch: China
- Country overview
- Industry viewpoint
- Prestige retailing
- Taobao & the internet
Digital focus Social media strategies
Strategy spotlight Case studies to inspire
Travel retail: Asia Pacific
- Regional overview
- India
- Interview: Delhi Duty Free Services coo Arun Barathi
Radar Six up-and-coming beauty brands
- Make-up packs
- Innovation showcase
Last word Metis Insights director Stéphanie Morou

BW Confidential - Issue #10 - May/June 2012