Capital: Tokyo
Largest city: Tokyo
Official language: Japanese
Area Total: 145,883 square miles
Time zone: JST (UTC +9)
Currency Yen: (JPY)
Population: 127,288,416
GDP (per capita): $33,500
Internet TLD: jp
Beauty and appearance play a huge role in Japanese society, and consumers here are the world’s biggest beauty spenders per capita.
Second only in size to the U.S., the Japanese beauty market is estimated by market research firm Fuji-Keizai USA Inc. to be valued at around 3 trillion yen, or $30 billion. Euromonitor International puts this number closer to $35 billion for the cosmetics and toiletries market, with skin care accounting for 42 percent, followed by color cosmetics at 41 percent.
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Clear, smooth, light-colored skin is the oldest and most steadfast ideal of beauty in Japan, dating back to the time when geishas would paint their faces white using rice flour or a leadbased powder mixed with water. These days, whitening is more of a skin care trend. An emphasis on convenience means products are becoming increasingly multifunctional, such as Kanebo’s Akai Bihaku Whitening Conclusion, which offers both antiaging and whitening benefits. Sun care products are also benefitting from the whitening craze. Women here are so adverse to the sun it’s not uncommon to see them slathered in SPF cream despite wearing long sleeves and carrying parasols. Asia is the world’s biggest region for skin care overall, fueled largely by the Japanese obsession with youthful-looking skin. According to Euromonitor, Japan accounts for roughly half of all skin care sales in Asia, and Japanese consumers are the trend leaders, helping the popularity of premium brands spread to other Asian countries.
Domestic brands dominate the market. Shiseido has long been the market leader, but with Kao Corp.’s acquisition of Kanebo in 2006, the number-one place is now up for grabs, creating strong competition between the two manufacturers. According to Euromonitor, Kao owns the top two premium cosmetics brands of 2008, Kanebo and Sofina. These are followed by Kosé, Shiseido and SK-II, a Proctor & Gamble Co. brand.
Despite its size, the market for beauty products is mature and almost completely saturated, meaning manufacturers are having to become even more inventive in order to maintain market share. “After many years of flat growth, the value of the total market in 2009 will likely decline by about one percent versus 2008,” says Avon Japan’s marketing director, Nigel Brown. Euromonitor predicts a stagnant 2010, with slight growth not expected to return until 2011.
Luxury brands are starting to falter, too, and are expected to lose market share over the coming fuel years. “In recent years more somewhat premium products have become available in drugstores, and younger people and those with less money have shifted a great amount of spending to them. Some midlevel products are now even widely available in convenience stores,” says Shirai.
This trading down to masstige and mass brands can be seen across nearly all segments, but that doesn’t mean consumers are willing to settle for less. “Women still expect high quality in product packaging and aesthetics, even if the price they are prepared to pay is somewhat less,” says Brown.
MAC is considered one of the leading midtier brands here. Sold in Japan’s top department stores, including Takashimaya and Tokyu, its prices are 10 to 50 percent less than similar products from other brands.
The single most important demographic factor affecting the beauty market is age. With 22 percent of the population over 65, Japan has the world’s oldest populace. Nicole Fall, trend director at Five by Fifty, a Tokyo-based consumer intelligence agency, says that while talking about age is taboo, manufacturers are starting to respond to the growing demand for products aimed at the silver generation. “Older consumers are not only a lucrative market, but a demographic that is still spending generously, making antiaging products a growth sector,” she says.
One notable example of a brand aimed at this growing demographic is Kanebo’s Chicca, released in March 2008. “Kanebo broke new ground by using an aged woman with gray hair as a model in order to appeal to and create a sense of pride among women in their 50s and 60s,” says Fall.
The Japanese population is expected to continue to age over the coming years. Euromonitor estimates the number of people 65 and over will grow by a further 11 percent, accounting for a third of the total population by the year 2013. The birthrate is also declining, and is forecast to drop to just 7.6 births per 1,000 inhabitants by 2012.
With the recent success of masstige and semipremium brands in Japan, manufacturers are trying to lure older consumers with ‘superpremium’ lines that generally sell for upward of $1,000. Examples include Shiseido’s Clé de Peau Beauté Synergique Cream and Kanebo’s Tawny Century Cell Rhythm Cream, which both retail for about $1,260 for a 40-g. jar. Kosé’s Cosme Decorte AQ Cream sells for about $945 for a 45-g. jar.
But the silver generation isn’t the only demographic for the beauty industry to watch. Younger women are focusing more and more on their careers and staying in the workplace longer before starting a family, meaning they have higher disposable incomes. This is boosting sales of fragrances, as well as value-added color cosmetics, skin care, hair care and sun products.
Young Japanese women have a reputation for being trendsetters in the realms of both fashion and beauty. While some of the more extreme and unconventional trends receive a fair amount of international publicity, they’re not generally indicative of the norm. The majority of young, stylish women these days are more interested in natural beauty than in standing out in a crowd. “The look is known as ‘natural beauty kawaii [cute],’ not ‘glamorous,’” says Fall. “The Japanese beauty market uses a lot of natural or nude makeup. Very basically, makeup is used to cover blemishes and imperfections, but also look very natural.” The emerging younger, more affluent consumeris also fueling growth among masstige and mass market brands, as well as among “collaboration cosmetics.” For example, fashion designer Alexander Wang teamed up with Shiseido to create a line of color cosmetics under the maker’s Maquillage brand, which launched in late July.
Another popular collaboration came from the South Korean brand Missha, designed in conjunction with and endorsed by the popular transgender Japanese makeup artist and television personality Ikko. “Anything imported from Asian countries, and specifically South Korea, is very popular,” says Fall. “South Korean women are perceived as having great skin and good looks by Japanese women.”
Natural and eco products are gaining popularity, as women grow more concerned with the impact that chemicals and processed substances have on the environment and their health. The Natural Marketing Institute reports 61 percent of Japanese consumers choose products from companies whose ecological values are like their own, versus 41 percent in the European Union.
The trend extends to packaging. Refills are very common, especially among mass brands, although with premium lines, this is less common, as excessive packaging is still considered a symbol of quality and luxury.
Although premium brands, which drive much of the market, are sold largely in department stores, Euromonitor notes Japanese women shop for cosmetics and toiletries primarily in drugstores and beauty specialist retailers. Supermarkets and hypermarkets come in third, followed by department stores. In recent years, sales of cosmetics and toiletries at department stores have been slowly yet steadily declining. Internet retailing is slowly increasing, although in 2008 it still only accounted for 4.2 percent of total sales.
MINING THE METROSEXUAL
Beauty in Japan is not strictly for women. “There are still increasing numbers of metrosexual males in Japan, a trend that has reversed in the West but is still a very popular look here,” says Nicole Fall, trend director at Five by Fifty. According to Euromonitor, sales of men’s grooming products fell slightly in 2008 compared with 2007, but are expected to pick up again around 2011, along with the economy and the rest of the cosmetics and toiletries market.
Unlike Japanese women, men here are somewhat reluctant to spend too much on grooming products, although they recognize the importance of looking good. Mass brands dominate the men’s market, but Euromonitor notes men are increasingly trading up within mass products, often opting for more specialized products such as Nivea for Men Revitalizing Cream Q10 or the Gillette Fusion 5+1 razor. Analysts say this could eventually lead to men buying premium brands, whereas right now most premium products are bought as gifts for men, rather than by men themselves.
“The image of preppy guys who look clean or even ‘elite’ is still growing. This trend will continue for some time in Japan and most definitely spread across Asia, too,” says Fall.