‘High-prestige’: Kosé aiming to capture China’s travel retail market with skin care brand Decorté

Last year, sales were firm in China’s travel retail space despite the negative effects between July and September because of pandemic travel restrictions.

The company is expecting its travel retail sales to grow over the coming year by around 10% on the back of the overall growth of the market, primarily in Hainan, where competition is expected to intensify.

“In Hainan Island, which accounts for a large portion of sales in the company's travel retail business, the company has been working to raise awareness of Decorté as a high-prestige brand by stepping up promotions to coincide with the global launch of Liposome Advanced Repair Serum in January,”​ said Kazutoshi Kobayashi, president and CEO of Kosé.

During the firm’s latest full-year earnings conference held on February 14, Kobayashi said Kosé is scheduled to unveil a SEKKISEI counter and two new duty-free Decorté store in Hainan in 2022.

The firm is particularly focused on building up Decorté, its prestige beauty brand, in China

Last year, the company renewed Decorté’s Liposome Advanced Repair Serum for the first time in almost three decades. The product has helped the performance of the brand recover steadily in Japan.

Last year, while China was hampered by the COVID-19 infection, demand for cosmetics remained high, with Decorté performing well in both the online and department store channels.

“The product has been highly acclaimed for its enhanced ability to address ageing concerns and moisturising effects and has been featured extensively in various media and has won numerous best cosmetic awards. This product made a significant contribution to our company's sales in FY2021, and we were able to attract new customers in Japan as well,”​ said Kobayashi.

Decorté net sales in were up to JPY89.5bn (U$778m) from JPY79bn (U$686.8m) in the previous year. In Japan, sales increased from JPY 20.7bn (U$180m) to JPY 22.1bn (U$192m).

Overseas, it increased to JPY 67.3bn (U$585m) from JPY 58.3bn (U$507m) thanks to growing sales in the US and Europe.

According to the company, the launch of Liposome Advanced Repair Serum attracted as many new customers to Decorté in one month as compared to a typical year.

In addition to travel retail, the company said it will continue to strengthen its online efforts. The company had previously invested into live commerce.

“We are using our own beauty consultants as well as KOLs to promote sales during live commerce so that we can more accurately convey the quality of Kosé products to our Chinese customers,” said Kobayashi.

In September last year, Decorté launched an online counselling service.

“We have received positive comments from our customers about online counselling, such as the efficiency of not having to travel, and the ability to receive counselling at home without worrying about being seen,” ​said Kobayashi.

Furthermore, Decorté is set to launch Hydra Clarity, a new skin care range developed to target new consumer segments and reinforce the strength of the brand.

According to Kobayashi, Hydra Clarity was developed as a gender-neutral brand and is targeted at consumers in their 20s and 30s.

In its 2021 fiscal year, Kosé net sales were up 4.8% to JPY10.2bn (U$88.7m) and operating profit was up 14.1% to JPY2.3bn (U$20m)

Its cosmetics business, which houses brands including Decorté, Addiction, Jill Stuart and Tarte, recorded sales increase by 7.2% to JPY189bn (U$1.64bn)

However, operating profit decreased 2.7% to JPY22.7bn (U$197m) due to higher selling, general, and administrative (SG&A) expenses, the firm claimed.