Fabrice Megarbane: Opportunities in the Chinese Beauty Market
- Chaileedo Press
- Apr 21, 2023
- 3 min read
Updated: Apr 23, 2023
In uncertain generations, seek stability.
L’Oréal China today (April 21st) presented its new development strategy at the 2023 Annual Results Press Meeting themed “Beauty Beyond @ the Dawn of New Era” in Shanghai. Fabrice MEGARBANE, President of L’Oréal North Asia and CEO of L’Oréal China, was joined by other Group’s strategic committee members to share L’Oréal’s latest results, market insights and strategic plans in China.
Three years ago, an epidemic disrupted everyone's lives, and the beauty industry grew tenaciously amidst the turmoil. The total retail sales of cosmetics in 2022 were 393.6 billion yuan, a decrease of 4.5% compared to the previous year. Among them, the retail sales data in December was 29 billion yuan, a year-on-year decrease of 19.3%.
Despite strong headwinds, L’Oréal China marked its 25th anniversary in China in 2022 by posting a remarkable 5.5% like-for-like growth in China, and also demonstrated its leadership in the market in 2023 Q1. Among then, LUXE Division building the most diverse and balanced portfolio with over 30% market share in China.
From VUCA to BANI, complexity and uncertainly when world population reached 8 billion. As we move towards our 26th anniversary, what new beauty insights has L'Oréal brought to the table?
Physical and Digital
Traffic is gradually returning, and the economy is gradually recovering, Fabrice state when talking about the Chinese beauty market in the post-epidemic era. What is L’Oréal's new plan for China's offline market?
Fabrice said in an interview with CHAILEEDO that L’Oréal has never stopped investing in the offline channel, mainly in two aspects. One is to keep opening stores and the other is to focus on new-tier city.
L’Oréal has observed new-tier city upgrade and opportunities. It is expected that China's urbanization rate will reach 70% by 2030. Besides, narrower gap on desire for beauty between new-tier and high-tier city, and new-tier citizens still hunger for accessibility.
Fabrice found that post-epidemic consumers want to socialize again and decide to come back to offline. In this process, consumers used to just want convenience, but now they want more new experiences.
L’Oréal's new offline stores in China are focused on the consumer experience. Fabrice said that now online and offline are inseparable, and L’Oréal's sales model is omnichannel. What L’Oréal wants to do in the future is PHYSICAL+DIGITAL, more intelligent offline and more digital online, which also shows L’Oréal's digital transformation.
Universalisation to singularisation
According to Mackinsey 2023 China Consumer report, huge middle class in China show rising consumer demand. It is expected that the middle class population in China will reach 550 million by 2025. “This is definitely a huge engine for the future consumption in China.” Fabrice said.
L'Oréal believes that digital boom with continuous new tech investment. This means that consumers in this era are more personalized and individualized on consumers’ need.
Fabrice said that three years ago L'Oréal had noticed that the Chinese beauty market has a trend of personalization, and now L'Oréal believes that beauty is diverse and respects the diversity of beauty.
Fabrice shared L'Oréal's initiatives to address the development of personalized beauty in the market. The first is L'Oréal's provision of beauty services. For example, L'Oréal trains hairdressers so that they can provide personalized services to their customers. The second is the hope that the effect of beauty products can achieve personalized needs. L'Oréal now has 22,500 possible colors for its makeup. Thirdly, L'Oréal wants to provide personalized beauty tools to meet the needs of different consumers.
Invest in sustainability is the new destination
Speaking on the new consumption of today's consumers, Fabrice state that 49% of them prefer products with functional superiority, 24% want emotional fulfillment and connection and 27% want the world to be a better place. Sustainability is a part of that.
China's sustainable development is backed by policies and will likely achieve carbon neutrality before 2060. Fabrice believes that China already becomes one of the fastest country in the world developing and utilizing new energies.
L’Oréal China and Alibaba launched the “First Digital Circular Economy Model in Beauty” project, which was signed during French President Emmanuel Macron’s state visit to China in early April. It is not only a China-France strategic partnership program, but also a ground-breaking initiative for the Chinese beauty industry on the sustainability front.
The two sides also kick off the cooperation on “The 1st L’Oréal Group 88 Decarbonization Day” with theme of “Circular Beauty · New Singularity”. L'Oréal China and Alibaba are both core initial members of “Decarbonization-friendly Actions”. As part of consumer-facing activities under the Actions, the “88 Decarbonization Day” aims to offer low-carbon products and promote low-carbon concept with corporate actions. By promoting reduced, replaceable and recyclable L'Oréal products developed based on sustainability principles, “88 Decarbonization Day” will drive more people to join the transformation journey that protects their shared future.
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