The main factor behind this drop has been the reduction of tourism and related spending on beauty by visitors from mainland China, the firm explains, stating that this had a “major negative impact” on the market.
Tourism has decreased to Hong Kong from mainland China as a result of recent political and social tensions.
“The image of Hong Kong as a shopping paradise has diminished in recent years, with many mainland Chinese seeing Hong Kong as a place of political instability,” Euromonitor analysts explain.
Those brands which are performing well are those which meet local demand for mass products, along with smaller, more niche brands and international players.
Hong Kong consumers are particularly enthusiastic for Japanese, Western and Korean beauty and personal care, according to the report, which notes that well-established product lines tend to be the most trusted.
But increasingly, Hong Kong beauty shoppers are now looking to innovation, particularly in the masstige tier. Euromonitor notes that brands are responding to this, which is helping to keep the market afloat.
“Brands often introduce the latest innovative products first in Hong Kong as a testing ground for the Asian market,” explains the report. “Retailers introduced a variety of mass beauty products to keep the market competitive and to offset the negative impacts in the market this year."
Riding the wave
Along with masstige, K-beauty is the other key area singled out by Euromonitor for steady sales growth.
“Korean beauty products are well perceived by young women in Hong Kong due to the popularity of the “Korean wave” trend,” the firm asserts, noting that Korean brands are “becoming increasingly popular.”
With tourism from mainland China set to remain low, the industry must now turn to the domestic market for growth opportunities moving forward, the firm concludes.