Mainstream distribution channels of cosmetics in China
Based on the dynamics of competitive landscape mentioned above, the cosmetics brands could be grouped in three categories: mid- to high-end foreign cosmetics, rising brands with substantial capital support and low-end or lesser-known cosmetics. Each of them has its typical distribution channels.
Generally speaking, the mainstream distribution channels of cosmetics in China include department stores, supermarkets/hypermarkets, professional stores, specialty stores, pharmacies, beauty parlors and internet retailing. According to Access Asia, department stores, supermarkets/hypermarkets and the internet were the most popular distribution channels in the year 2011.
A. Department stores
Department store is the biggest in scale among all those distribution channels. They offer a great variety of well-known merchandise and thus relatively wealthier people are the expected customers. In this way, department stores play an important role in the brand building of cosmetics. The competition over department store counters for cosmetics brands is fierce and the cost is relatively high. For most of the times, only mid- to high-end foreign brands could afford this channel. Sometimes, some rising brands with substantial capital support will also choose this channel. In the department stores, customers can expect service of higher quality and cosmetics of reputation.
Supermarkets and hypermarkets are smaller in scale compared to department stores. People come here to buy everyday things like vegetables and fruits and they do not expect to spend a lot of money here. Based on that, supermarkets and hypermarkets are suitable channel for low-end foreign brands and lesser-known local brands. However, because the price competition is crucial in supermarkets, many lesser-known brands may find it tough to maintain a shelf here and meet its rising costs at the same time. People may expect a frequent change of the cosmetics brands displayed on the supermarkets shelf.
C. Professional stores
Professional stores are the new trend in China’s cosmetics market. They handle the sales of a variety of cosmetics brands in different quality to meet different needs of customers and are building reputation as a reliable cosmetics distribution channel. Those who stand out open up chain stores and begin to promote their own cosmetics brands. Examples include Hong Kong-based Watsons, Sasa and Manning. The cosmetics they handle may range from high-end brands like L’Oreal to low-end brands like Maybelline. Professional stores are developing quickly in recent days and are especially welcomed by people in 10s and 20s.
D. Specialty stores
Specialty stores focus on the sole goal to build brand image, maintain brand quality and ensure standardized price. But the success of this channel relies on the capital support of certain brand. In Korea, specialty stores are among the most popular distribution channel and the brands they promote range from high-end ones like Missha and mid-end ones like SKIN FOOD, the Face shop and Etude. However, in China, those Korean newcomers still need more capital to afford such a store. Specialty stores in China are mainly restricted to high-end foreign brands and rising brands with substantial capital support. Specialty stores are still far from fully-developed and it is expected that they will become more professional and standard in the days to come.
E. Pharmacies and Beauty parlors
Pharmacies and beauty parlors are new channels and they cater to a certain group of cosmetics brands. Cosmetics products sold at pharmacies usually to certain extent function as a medicine and are sold for professional use. For example, France-based Vichy is a premium brand of skincare, body care, make-up and anti-aging products that are sold exclusively in pharmacies. Beauty parlors, which provide cosmetics and treatment at the same time, represent service of luxury quality. Beauty parlors with the name of a high-end cosmetics brand are always regarded as professional and prestigious. However, both pharmacies and beauty parlors are not very popular in China.
F. Internet retailing
Internet retailing includes website that promotes a certain cosmetics brand, website that offer a variety of cosmetics brands and comprehensive on-line shopping websites. Those websites have great potential and are developing very quickly in China. The big advantage for internet retailing is its convenience and it is welcomed by young people especially. However, many people still worry about the quality of cosmetics sold online. Almost all the cosmetics brands are taking internet retailing as an important distribution channel.
We can see that, instead of direct selling, almost all the cosmetics brands in China use intermediaries to distribute their cosmetics products. And the distribution channels are different according to the level, quality and capital support of the cosmetics brands.