The global economic slowdown has caused the Japanese beauty industry to feel the effects of sluggish sales, despite the general strength of several cosmetics categories (mascara and antiaging skin care, for example) in the face of a recession.
Takashimaya, one of Japan’s largest department store chains, is seeing sales of beauty products that are just barely on par with figures from a year ago. “Integrated large-scale brands are not doing well, but brands that have a strong makeup line, such as MAC and RMK, are faring better. Overall, things are more difficult than expected,” said Sayaka Morikawa, a spokeswoman for the retailer.
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Meanwhile, Mitsukoshi reported a 4 percent drop in beauty sales for the second half of its fiscal year ended March 31, compared with the same period last year. “All department stores are struggling now, but even sales of cosmetics, which are considered strong products in a recession, have come in at less than the forecasts that were calculated last year,” said Yasuo Miyachi, a Mitsukoshi cosmetics buyer.
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The Japanese beauty market is second only to the U.S. in terms of value. It is estimated by Fuji Keizai to generate around 3 trillion yen, or $31.5 billion at current exchange. The market breaks down to 45 percent skin care, 23 percent makeup, 20 percent hair care, 5 percent body care, 5 percent men’s cosmetics and 2 percent fragrances. Japanese women are the world’s biggest spenders on beauty products per capita, and their daily routines often include seven or eight steps.
After many years of flat sales, the total value of the market is expected to decline by about 1 percent in 2009 compared with last year. However, analysts predict sales volumes will remain flat due to the tendency of consumers to trade down from prestige to more mass market brands, rather than dropping their beauty regimens completely.
Retailers are bracing for things to remain tough through the rest of the year, and are focusing on inventive marketing strategies and the strength of newly launched product lines to help boost sales.
“We expect circumstances to continue to be difficult, but by strengthening our strategies, we want to at least match last year’s results,” said a spokeswoman for Tokyu Department Stores, which operates branches in several locations around Tokyo, including two stores in the crowded Shibuya shopping district.
In addition to regular cosmetics promotions and fairs, Tokyu and Takashimaya now publish original editorial booklets highlighting beauty trends and new or popular products. The booklets are sent to customers to encourage people to go into the stores. Many retailers also are teaming up with major cosmetics brands to create limited edition items only available at certain stores or locations, in order to give products a more elite feel and increase desirability.
Retailers are also not holding back from adding brands to their lineups in an effort to lure reluctant consumers. For example, Takashimaya is enjoying success with French body care line L’Occitane, which it launched in stores a year ago, as well as with newly opened eyebrow and eyelash salons.
Tokyu introduced MAC Cosmetics just over a year ago and is continuing to take advantage of favorable initial sales by expanding the brand’s reach. It also remodeled the Dior counter at its busy location attached to Shibuya station, which has resulted in a better performance from the line.
But in tough economic times, it’s basic products that are performing best. All three department stores reported good sales of staple skin care products, foundations and eye makeup. “Skin care items such as cleansers and moisturizers, and makeup items such as foundations, eye shadows and lipsticks, each make up about 40 percent of total beauty sales,” said Morikawa of Takashimaya.
One area in which sales of beauty products are showing more buoyancy is on the Internet. Cosme.com is a beauty-themed e-commerce site, as well as the sister site of @cosme, a word-of-mouth portal where users can rate and post reviews of thousands of skin care, cosmetic and fragrance products. After reading reviews and browsing through product rankings in a variety of categories, consumers can then purchase their favorites at Cosme.com.
“Sales at Cosme.com are showing steady growth despite the global recession. They say that since cosmetics are fast-moving consumer goods, they are not easily influenced by economic conditions, but because of a recent increase in the number of players in online cosmetics sales, as well as intensifying price wars, we can feel the market conditions starting to become more difficult. However, thanks to original merchandising programs, such as collaborations with makers on limited edition items or kits, we don’t feel market conditions have changed completely compared with last year,” said Kei Sugawara, a marketing representative for the shopping site.
Cosme.com’s top-performing brands are often less mainstream ones that customers won’t see on the cosmetics floors of major retailers. These include House of Rose, a skin, body and hair care line that has been one of Cosme.com’s top sellers for some time. Founded in 1978 with a shop in Tokyo’s Aoyama district, the brand is known for its handmade products in a variety of natural scents.
Another line doing well on the online shopping site is Chacott for Professionals. Originally developed as high-quality stage makeup used by theater and dance performers, the brand recently has become popular with general consumers as well. The brand’s flagship loose finishing powder in particular sells well at Cosme.com, thanks to rave reviews on @cosme.
Online shopping is still fairly new in Japan, but is enjoying a recent boom thanks to retailers’ efforts to drastically improve the customers’ buying experience.
“We are now starting to strengthen our customer base much more, and developing services that will eventually increase the number of repeat buyers at Cosme.com. We also set ourselves apart from other companies’ e-commerce sites by carrying limited edition @cosme collaboration items that are not available in department stores or anywhere else,” said Sugawara.
These efforts seem to be paying off, and the future is also looking rosy for other online beauty retailers. “We expect firm growth throughout the rest of the year,” said Sugawara. “Since top-selling lines and categories, as well as consumers’ skin problems and worries, are things that change every season, we think we can guarantee that there is not a large fluctuation in sales at different times of the year.”