European lifestyle cosmetics enjoy the sweet smell of success
Mix some Sweet Lemon and Wild Cherry, add a little Double Happy and Sexy Dynamite and season with Provence Aroma and Immortelle. Voilà, a magic potion that has opened the hearts and wallets of Japan’s female shoppers on their eternal quest for Beauty.
These are products from The Body Shop, LUSH and L’Occitane, three European brands that have carved out a niche in the world’s second-largest cosmetics and toiletries market after the United States – one that was estimated at ¥2,223bn in 2009 by Fuji Keizai, a Japanese business research firm.
The United Kingdom’s Body Shop celebrated their 20th anniversary in Japan this year. From a single Tokyo store, franchisee AEON Corp, Japan’s largest retailer, has expanded to 176 outlets generating annual sales of ¥11.7bn (2009 estimate).
The Body Shop did well to enter the Japanese market with body care first, says Kikuko Fujita, communications manager at The Body Shop Japan. “Japanese women are very nervous about their skincare regime,” she explains, “They believe that their skin is different from [that of people in] other nations and, hence products by Japanese makers suit their facial skin best. However, the skin of the body seems a different matter; for body care they are not that concerned, and happy to try imported brands.”
LUSH, also from Britain, entered Japan in 1999 and now has 140 cosmetics and toiletries stores here. “We differentiate ourselves with handmade products using fresh ingredients such as fruits and vegetables,” says Lush Japan director, Andrew Tone.
“We sell many products by weight, and package them as little as possible, keeping value inside the product, not around it,” adds Fumie Miyairi, PR Manager. “When we entered the market, no one here thought that cosmetics could be fresh, with a sell-by date, and hand-made with a note of who made it for traceability, just like food.”
Japanese people are said to dislike strong fragrances, explains Miyairi. “Many people were shocked by the products at first,” she recalls, “however, research amongst our users showed that the main reason they like LUSH is actually the unique scent.”
“LUSH fanatics promote our products on MIXI (Japan’s main social networking site) and we follow their comments and requests closely. As a result we can create new products and bring them to the shops on a monthly basis.”
Nevertheless, even the best market entry plan and local partner can’t always guarantee success. Boots, Britain’s largest drugstore chain, and Sephora, the French cosmetics retailer, came to Japan the same year as LUSH. Boots opened four stores in Tokyo, and Sephora seven. But within two years, both companies had packed up and left.
On the other hand, L’Occitane en Provence, another French cosmetics brand, entered Japan in 1998 and currently runs 76 boutiques and two cafes in prime city locations. Nikkei Report estimated 2008 sales at ¥15bn.
Cleaning up?
It seems that even in a climate of economic crisis – or perhaps because of it – women still want a little luxury, but at an affordable price. L’Occitane, positioned at the premium-end of the mass market, is taking advantage of that. “I buy L’Occitane products as presents because every woman likes them,” says Ayako, a professional in her 40s. “They are a luxury which makes you feel proud and happy to receive them.”
Nicole Fall, consumer trends analyst at Asian intelligence research and innovation agency Five by Fifty, suggests the clothing retail market may offer hints to European cosmetics retailers. “Japanese people often think of European cosmetics as luxury products that are too pricy,” she says. “If European cosmetics retailers offer a unique product at an affordable price, similar to the trend that is currently experienced in “fast fashion”, then it is likely that these products will be picked up on the kuchikomi (word-of-mouth) cosmetics websites and blogs.”
Online communication and sales are already an important part of the Japanese cosmetics market. While boutiques are still L’Occitane’s main sales channel, 20% of sales are online. A recent study by McKinsey & Company amongst Japanese women who shop online found that about 25% of them had bought health and beauty products, including cosmetics, online in the last six months. And in an ominous trend for the store-based cosmetics trade, about 30% to 40% of online cosmetics shoppers said that they do not even buy at high-street shops any longer.
For the time being, however, The Body Shop, LUSH and L’Occitane are doing well in a vigorously healthy body care category, estimated at ¥114.3bn. The sector experienced growth in 2009 even while the overall cosmetics and toiletries market remained sluggish, according to Fuji Keizai.
“Doing business in Japan is about building relationships with customers over the long term,” says Lush’s Andrew Tone. “Quality in a broad sense of the word is what the customer here wants, as opposed to say low prices or convenience, and that takes time through word-of-mouth.”