The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
China dominates almost every aspect of the consumer market: it is the world’s biggest apparel market; the biggest luxury market; the biggest source of growth for fashion and beauty brands the world over.
But fragrance has remained an anomaly. As of 2017, only one percent of worldwide perfume sales happened in China, and less than one percent of Chinese consumers used perfume daily, according to market research firm Mintel. But that’s changing fast, thanks to a new generation of consumers, who are adopting perfume as a way to express their personal style.
Now it’s obvious that the ones who aren’t using fragrance, just aren’t using it yet.
“The youngsters are all so much about wanting to tell who they are and why they are unique. Fragrance is the ideal way to convey who you want to be in a really subtle way,” said Dao Nguyen, founder of Essenzia, a boutique creative strategy agency specialised in fragrance and beauty. “Now it’s obvious that the ones who aren’t using fragrance, just aren’t using it yet.”
China’s fragrance market was valued at 10.9 billion yuan ($1.7 billion) in 2020, according to data from Euromonitor International, around 5 percent of the global market. It’s expected to surge past 30 billion yuan ($4.7 billion) by 2025.
The Perfume Boom
Nguyen noticed a change in the way young Chinese women were talking about fragrance as early as 2014.
Where earlier in the decade many viewed perfume as a pragmatic tool to mask body odour (largely viewed as a Western problem in China), suddenly the conversation shifted to fragrance as a means to express identity, Nguyen said. She knew a major disruption was on the horizon.
“I was knocking on doors and telling people they should prepare for this,” she said. “At first people were unsure, but now we have reached a point where no one can say that China is not important to the fragrance market.”
In a sign of just how much demand is growing, Tmall Global and its logistics partner, Cainiao, even launched a “perfume route” — a dedicated daily flight to transport fragrances between Europe and China.
But while the market’s growth has proved explosive, so has the proliferation of brands jostling for a slice. Western players that are complacent will miss out, according to Dao.
“What I have observed in China blows my mind,” she said. Almost overnight “they revolutionised how they relate to fragrance, use fragrance, speak about fragrance … and 90 percent of Western brands don’t understand how fierce the competition in this market is going to be.”
To be sure, established luxury giants like Chanel and Dior top the fragrance market in China too, but the most impressive growth is being driven by younger consumers, who are seeking out new brands.
“Generation-Z doesn’t like to follow trends, or to be told what they should purchase,” said Chen Ye, a research analyst at market intelligence firm, ChemLinked. “They are more inclined to take the initiative to try and form their own judgements, they are the main driver pursuing niche perfumes.”
According to data from Tmall Global, the gross merchandise value (or GMV, a measure of total sales volume) of its niche fragrance category witnessed a year-on-year increase of more than 300 percent in fiscal year 2021.
After last August’s Qixi festival (one of China’s multiple version’s of Valentine’s Day), Tmall released a report showing its most searched for fragrance brands included Penhaligon, Maison Margiela, Byredo and Juliette Has a Gun. This week, many are expecting these smaller brands to enjoy a similar bump in sales thanks to 520, another shopping event that falls on May 20 each year and has romantic connotations because the numbers sound much like the phrase “I love you” in Mandarin when said aloud.
Chinese businesses with a lot of firepower are paying attention. In 2019, Chinese brand accelerator Ushopal invested in Juliette Has a Gun (the size of the investment and Ushopal’s stake in the company remain undisclosed), propelling the brand, the brainchild of Nina Ricci’s great-grandson Romano Ricci, to substantial growth.
“When we started working with Juliette Has a Gun, the brand only had 20 posts on Xiaohongshu and there were no parallel sellers on Taobao,” said William Lau, vice president of brands at Ushopal and chief executive of its multi-brand beauty chain, Bonnie & Clyde. In the space of a little over 12 months, the brand surged to snag one of the top three spots in the fragrance category during Tmall’s Double 11 shopping festival. GMV surpassed 70 million yuan ($10.8 million) in 2020, Lau said.
Capturing the Market
Lau attributes the brand’s success to targeted marketing for a youthful audience willing to experiment. He says Juliette Has a Gun’s consumer in China is on average between the age of 22 to 25, almost a decade younger than its key demographic in Europe. The brand has focused on targeting groups often overlooked by conventional campaigns in China.
You have to find the right emotions, storytelling, design, to capture their attention and capture their hearts.
In particular, Juliette Has a Gun has focused on marketing to the LGBTQI community (still a relative rarity in the Chinese market). It’s also engaged with artistic and creative communities, working with tattoo artists in campaigns for the brand’s Lady Vengeance fragrance, for example.
“You have to find the right emotions, storytelling, design, to capture their attention and capture their hearts,” Dao says of capturing market share in China’s increasingly crowded fragrance field.
Crucially, brands must meet consumers where they’re at, rather than making assumptions based on tired tropes or preferences in other, more established fragrance markets in East Asia, such as Japan. How consumers respond to a scent is deeply rooted in culture and experience; the way a scent is perceived in China is likely to be different to its reception in Japan or France.
For instance, while it’s true that many Chinese consumers show a preference for “lighter” scents, the market has also proven fertile sales ground for Yves Saint Laurent’s Black Opium, which would rarely be described as “light” by a Western nose.
Nguyen uses the scent of tuberose as case in point. It’s considered a strong fragrance and used in a lot of “sexy” perfumes in the West. But in China, tuberose is considered a “clean” scent because it has been used in soaps in the country for a long time. That association has lead to the popularity of scents like Gucci Bloom, which features both tuberose and jasmine, two floral scents that conjure nostalgia from a Chinese perspective.
Another interesting trend observed by Tmall Global has been the rise in demand for unisex fragrances among younger Chinese consumers. Products marketed to men, like Bulgari Pour Homme, CK One, and niche fragrance brands like Acca Kappa and Creed have seen proved popular among women, according to Tmall.
“Gen-Z are especially less confined by traditions,” a spokesperson said. “We’ve noticed that they particularly prefer products with woody notes, marine woody notes and rose woody notes.”
Local Competitors Rising
A native nose for how a specific scent will resonate is an undoubted advantage for local brands. These have proliferated in recent years, attracting a growing audience and investment.
“Domestic brands have the advantage of being able to use these traditional scents to create emotional bonds with consumers, and most of them are more affordable,” ChemLinked’s Chen said, pointing to local player Scent Library as an example. The brand had a blockbuster fragrance with a scent that recalled water boiling in an aluminium pot. The unlikely hit reminded young consumers of their childhood, and sold millions of bottles.
To be sure, international brands still dominate the Chinese market. Nearly 87 percent of respondents said they prefer buying perfumes from international players because of their “experience and professionalism,” according to a survey conducted by ChemLinked published this week.
Still, if anything’s certain about China’s young consumers, it’s that they’re a fickle bunch.
“You have to work on your strategy in a way that makes people feel like they are getting novelty, even if you stick with your franchise,” Nguyen said. “Chinese brands are rising and they launch so fast.”
“My advice to brands is not to focus on loyalty, focus on recruiting first,” she added. “Right now your job is to stand out and make people attracted to you and like you and want to buy you. And then, once that’s done, you can figure out how to make yourself a classic.”
FASHION & BEAUTY
Victoria’s Secret Taps Unconventional Influencer in China
US lingerie giant, Victoria’s Secret, has attracted the attention of Chinese netizens with its appointment of celebrity agent, Yang Tianzhen as an official “friend” of the brand. Yang has become a regular on variety shows in recent years and has garnered a reputation for her strong and confident “girl boss” persona. The curvy agent, who revealed that she underwent gastric bypass surgery in 2020 for health reasons, has become an undisputed influencer thanks to her statements about body confidence and feminism, which is likely the reason Victoria’s Secret chose Yang to present its plus-size range of lingerie. (BoF)
Coach Links with Chinese Sneaker Resale Leader, Poizon
Coach has announced a tie-up with Poizon, China’s premier sneaker and streetwear social-commerce player to sell handbags, leather goods and accessories on its platform. The pairing will help Coach better engage with China’s younger consumers, the brand said. Previously disclosed data from Poizon showed its average monthly active user base had reached more than 40 million in 2020, of whom more than 70 percent were post-90s consumers (roughly analogous with Millennial consumers in the West). Most were men. (BoF)
Shiseido Reports China Boost in Q1
The Japanese beauty player saw sales in China surge 41 percent year-on-year in the first quarter. The market is driving growth and becoming an increasingly important part of the company’s business. China made up roughly 20 percent of Shiseido’s global sales in Q1 2020, but now accounts for 27 percent, catching up to the 31 percent of sales generated by Shiseido’s Japanese business. (BoF)
TECH & INNOVATION
Report: JD.com Deepens Partnership with Douyin
E-commerce giant JD.com is set to upgrade its alliance with short video social-commerce platform, Douyin, the Chinese version of TikTok. JD.com will open a flagship store on Douyin, allowing consumers to access JD.com’s entire product assortment without leaving the short-video platform. Douyin is said to have ambitious e-commerce goals, with leaked targets showing it aims to make 500 billion yuan ($77.7 billion) in e-commerce sales this year. (36Kr)
Alibaba Tops Revenue Expectations, But Posts Loss After Anti-Trust Fine
Alibaba Group reported a forecast-beating 64 percent surge in quarterly revenue, but strong sales were overshadowed by an operating loss of 7.7 billion yuan ($1.2 billion) in its fourth quarter ending March 31. The company attributed this loss, its first since going public in 2014, to a $2.8 billion fine for anti-competitive business practices levied by Chinese regulators. (Reuters)
Chinese Luxury Resale Platform Raises ‘Tens of Millions of Dollars’ in New Funding Round
Chinese luxury resale platform, GoShare2, has raised “tens of millions of US dollars” in a Series C financing led by Enlight Growth Partners. The exact amount was not disclosed. The Shanghai-based company was founded in 2016. Its gross merchandise volume grew 300 percent year-on-year in 2020. China’s luxury resale market is still in its infancy, and in total saw 17.3 billion yuan ($2.7 billion) in sales last year, according to data from Bain. (BoF)
CONSUMER & RETAIL
China’s April Retail Sales Rise 17.7%, Miss Expectations
China’s retail sales grew at a slower-than-expected 17.7 percent year-on-year in April, according to figures released by the country’s National Bureau of Statistics. In March, retail sales rose 34.2 percent on the year and analysts polled by Reuters had expected growth of 24.9 percent for April. Online sales of consumer goods rose 23.1 percent during the first four months of the year from a year ago, a slower pace than the 25.8 percent year-on-year growth rate of the first three months of the year. The bureau did not release figures for individual months. (BoF)
China’s Male Beauty Market Reaches $2.6 Billion in 2020 Sales
China’s male cosmetics market has grown over the past four years at an annual rate of 7.7 percent and in 2020 reached estimated sales of 16.7 billion yuan ($2.6 billion), according to a study by the Korea Trade Association’s Chengdu branch. Cosmetics products were found to be most popular among males aged 18 to 25, who account for roughly 60 percent of overall consumption, followed by those aged 26 to 30, who make up 21 percent of the market. (BoF)
POLITICS, ECONOMY, SOCIETY
China Lands Zhurong Rover on Mars
China has successfully landed a spacecraft on Mars. The six-wheeled Zhurong robot was targeting Utopia Planitia, a vast terrain in the planet’s northern hemisphere. Only the Americans have really mastered landing on Mars until now. All other countries that have tried have either crashed or lost contact soon after reaching the surface. Chinese President Xi Jinping congratulated the mission team on its “outstanding achievement” in a special message. (BBC)
China’s ‘Involuted’ Generation
American anthropologist Clifford Geertz’s theory of involution holds that a greater input (an increase in labour) does not yield proportional output (more innovation or higher levels of production). The concept that China is a society beset by involution first gained traction among elite college students online, and has since spread to workers in China’s hyper-competitive tech industry. Like the students, tech workers are resisting an idea offered by the business world and the government: that the technology sector, fuelled by a single-minded will to compete and the relentless hustle of its workforce, will propel China into a future of wealth and ease. (The New Yorker)
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