Chinese travellers: a new key to cosmetics growth

Related tags Cent Cosmetics Personal care

The phenomenal boom in the number of Chinese nationals traveling
the world could be key to increasing future revenues for the global
cosmetic travel retail sector, reports Simon Pitman.

According to AC Nielsen China​ CEO Glen Murphy, Chinese travelers represent an 'unprecedented opportunity' for travel retailers and brands.

Speaking at a TFWA Asia Pacific seminar, Murphy highlighted the company's latest report finding for this sector, which indicates that the growth would be mainly triggered by female travelers, which in view of the fact that 69 per cent of all outbound travelers from China are actually female - 65 per cent of whom are under 40, should provide plenty of marketing opportunities.

The gender skew is believed to be partly caused by the huge number of women crossing the borders into Macau and Hong Kong, where many women work in the domestic and service sector to support families back in the mainland. However, with salaries for this kind of work constantly rising, so to is spending power.

Each traveler is calculated to have an average of $546 spending money, which is primarily spent on fashion items such as clothing and shoes. However, coming in a close second is expenditure on cosmetic and personal care items.

Approximately half of all travelers are estimated to spend money on cosmetics items, accounting for 14 per cent of total spend, AC Nielsen estimates. The figures also reveal that 18 per cent of purchase fragrance, accounting for 5 per cent of total spend and the ninth biggest purchase category.

Proportionally expenditure on cosmetics items is much higher than other categories, too, with some 54 per cent of all purchases being made in this category. The fact that normally only 17 per cent of cosmetic sales in the domestic market account for luxury products indicates both the spending power and the importance of the duty free sector to premium cosmetic and personal care manufacturers targeting Chinese consumers.

The most popular cosmetic brands include SKII, accounting for 9 per cent of sales, Dior, which also accounted for 9 per cent, Estee Lauder, with 6 per cent of sales and Clinique also with 6 per cent.

But the AC Nielsen data does not only indicate good news for the duty-free sector. Its data revealed that of the travelers surveyed, 59 per cent of cosmetics and 49 per cent of fragrances were purchased in stores on the mainland.

Looking at purchase decisions, the figures also reveal that two thirds of the travelers had already made their purchase decision before reaching the store, with 62 per cent making that decision through using the internet.

Currently the market for cosmetics in China is valued at €3 billion, but with GDP running at over 8 per cent annually and consumer sales following very strong growth patterns, industry analysts estimate that this figure could increase ten-fold by the year 2010.

Murphy said that AC Nielsen's findings indicate that to be a part of the exploding cosmetics market in China, cosmetic companies should be targeting consumers prior to shopping; watch prices carefully; take note of new travelers' needs and adjust their product offerings according to the needs of Chinese consumers.

Related news