L′Oreal China Luxury Market Study-Shiseido 奢侈行业研究

UnderstandingShiseido’s‘CosmeticSpecialtyStore’Strategy

High-levelassessmentL’OrealChinaQuestionsAnswersWefoundanswerstomostofthequestionsraisedregardingthe‘Shiseido’boutiqueroll-outSummaryPaceofdevelopmentWhichcitiesaretargeted,instreetsormallsWhatbrandswillbeintheseboutiquesMixedoraloneandwithotherproducts(localorimported)HairWilltheyowntheboutiquesorworkthroughfranchisesWilltheystopdevelopingthedepartmentstoresinChinaFivestoresareplannedforthisyearAllimportantcoastalcities(Tier1)willbecoverednextyearMostof5’000storesareplannedtoberolledoutbyendof2008Thefirstfivestoresplannedas‘flagshipstores’inShanghaiandBeijingTieredroll-out:Tier1(coastal),2,3,4cities,focusseemstobeonstreetstoresMostlycosmetics:targetingyounger,middlemarketwithproductsfrom8lines:ShiseidoUVWhite,Whitia,Asplir,Selfit,PureMildChina,Uno(men)Smallamountofmiddlemarkettoiletries:Aquair,Tessera,andUno(men)Shiseidogroupproductsonly,butonlyone(UVWhite)importedShiseidobrandedAllotherlocalproductsunderFITITbrandumbrellatargetingthemiddlepricesegmentNohigh-end(Aupres,etc.),nolow-end(ZA)PushingprimarilycosmeticsOnlyonthesidesomeUnoproducts(haircareformen)andAquair(shampoo,conditioner)bothsomewhat‘inthecorner’withlowprofileThefirstfivestoreswillbethe‘flagshipstores’andfullyownedTheyseemtobeopentoconsiderfranchises(andhavebeencontactedalready)InadditiontheyplantoworkwithgrowingnumberofprivatemanagedcosmeticsstoresAsstoreswilltargetmiddlemarkettheywillsticktothedepartmentstorestotargetthehigh-endmarket(Aupresandimportedlines)Theyconsiderhigh-end‘AupresStores’wherenodepartmentstoresareavailable2WewillpresentourassessmentreversingtheorderthatwehavetakentoinvestigatetheShiseidocosmeticspecialtystorestrategyDimensionsofassessmentandapproachNote:

Thehigh-levelassessmentisbasedoninternetresearchandtwostorevisitstotheShanghai‘ShiseidoCosmeticsSpecialtyStore’.Shiseido

StoreStrategyChinaGo-to-Market

StrategyTargetCustomersLocations&

Roll-outStoreset-upProducts&

ServicesConclusionPresentationInvestigation3LeveragingtheglobalbrandtotakeadvantageofagrowingmiddleclasswithspecificallypricedandpositionedproductsGo-to-MarketStrategy:Strategicthrust(basedonCGE&Yconclusions)Historicsuccess(selection)EstablishingluxurybrandinChinaEducatingandbuildingit’sownmarketthroughspecialtystoresinJapanBridginggapsinretail‘sophistication’throughownstoresinThailandKeyMarketopportunityGrowingwealthinmiddleclassinChina‘One-child-family’childrengrownupand‘liquid’IncreasinginterestinskincareKeyMarketbarriersLimitedawarenessofskincareandcosmeticsLimitedsophisticationinretailinfrastructuretoattractandservicespecificneedsKeyCapabilitiesProminentbrandimageofglobal‘Shiseido’brandMid-pricelocalandimportproductsavailabletoservetheneedsStorebuildandmarketingknowhowGo-to-marketstrategyHowtoattractandeducate(younger)middle-classconsumersaroundskincareandbuildbrandloyalty?Howtopositionmiddle-priceproductsina‘prestigious’environmentataffordablepricesandavoidDisturbinghigh-endsegmentconsumersbuying‘luxury’brandsindepartmentstoresDrowninginlow-endmassconsumerproductpresentationsofdepartmentanddrug-storesSource:CGE&Yanalysis.Buildadedicateddistributionplatformof‘Shiseido’branded‘cosmeticspecialtystores’forthemiddle-pricesegmentUsededicated‘Aupres’storeswherenosuitabledepartmentstoresarepresent11 ApartfromoneflagshipstoreinBeijingnotyetimplemented.4ShiseidoclaimsthatthenewstoreofferswhatthenewmiddleclassChinesewomenwantTargetcustomers:middle-pricemarketHigh-endMiddle-classLow-endWealthycustomersorbuyingonbehalforasagiftLuxuryenvironment-glamourbrandandhigh-pricearemainreasonstobuyinChinaSomeadvicebutmostlypurchasingforstatusOrbuyingahighlyesteemedpresentGrowinghealthandbeautyconsciousconsumers,mostlybetween20and40PricesensitivebutpreparedtospendonskincareproductsAccordingtoShiseidoresearchChinesewomenarelookingforanenvironmentthatis:“genuine,”“friendly,”“sincere”andprovides“skincarespecialist”knowledgeSelf-selectionbrandsLow-price,high-volumeLimitedadviceSource:,CGE&Yanalysis.5LinesServicesBrandsShiseidoistargetingtheyounger,middlemarketconsumerswithspecificmiddleprice,mostlylocallyproducedproductlinesProducts&Services:middle-priceproductrangeAsplirAsplir

GracyrichAquairUno(men)UVWhite

(imported)WhitiaPureMildChinaSelfitUno(men)TesseraSkinanalysisBeautyconsulting‘Try-out-products’LessonsonbeautytreatmentLinenamesandtheglobalbrandatthestorefront(andontheshoppingbags)aremuchmoreprominentinthestorethanbrandnamesSource:,storevisits,CGE&Yanalysis.CosmeticsToiletriesSkincare6bccaThestoreconceptcombinestheaestheticimpressionofaprestigiousbrandstorewithanopen,functionalenvironmentStoreset-up:prestigiousforthemiddleclassPrestigiousbrandappearanceAccessible,functionalinstallationStorefrontin‘Shiseidored’withwhiteShiseidologo,Chinesestorename,andceilingtofloorwindowsInsidewhitemarblefloorcoveringTranslucentdesignwithamostlyglassyandlightcolourfinishingofwalls,shelves,tables,whiteleatherchairs,white‘beautyequipment’Selfspace(seepicture)7presentationshelves(‘mainlines’)5combinedstorageandmirrorshelveswithintegratedtables2lowerpresentationshelves(‘sidelines’likeAquair,Tessera,andUnoVerybrightindirectceilinglightSkinanalysisandconsultingareaCashierBack-officeSource:Shiseidostoreflier,CGE&Yanalysis.ProductpresentationareaTry-out-product,BeautytreatmentandlessonareapavementApprox.24mApprox.11m7AfterestablishingstoresinthemajorcitiesofthecoastalareaShiseidoisexpectedtomoveinland,largecitiesfirstLocation&roll-out:Tieredapproach,flagshipsfirstAupres

FlagshipBeijingShiseidoShanghai

FlagShipShiseido‘Cosmeticspecialtystores’forthemiddle-pricesegmentOtherShiseidostoresShiseidoBeijingFlagShipShiseido(2)-(5)flagshipsLargecoastal

regioncities20042005-2008ShiseidoRemaining

Tier1citiesShiseidoRemaining

Tier2-4citiesAupres

otherwhenneededApproachnot

disclosedPartneringwithprivatelymanagedcosmeticsstores2003earlierSource:CGE&Yanalysis.Note:Exacttimingnotdisclosed.8Shiseidoisplacingabetonthehealth&careconscious,morewealthyconsumer,eagertolearnallaboutskincareandcosmeticsConclusion:Shiseido‘CosmeticsSpecialtyStore’StrategyDedicatingchannelstowardsmarketsegmentswithdedicatedproductlinesHigh-end(Aupres,importedluxurybrands)LuxurycosmeticssectioninDepartmentStoreBranded‘Aupres’StoresinabsenceofdepartmentstoresMiddle-market(localbrands,fewimportedmid-price)‘CosmeticsSpecialtyStore’->Middle-marketPrivatelymanagedcosmeticstoresLow-end(localbrands)Drugstores,conveniencestoresMassmarketcornersinDepartmentStoresNewconceptforthemiddlemarketPrestigiousshoppingenvironmentwithfocusonconsultingandeducationaboutskincare/cosmeticsProductrangededicatedonmiddle-pricesegment(nohigh-end,nolow-endproducts)The‘CosmeticsSpecialtyStore’as‘nursery’formiddle-marketandfuturehigh-endcustomers?CarryingtheglobalShiseidobrandOfferingdedicatedbrands/productsthatareperceivedhigh-qualitywithaffordablepriceEducatingcustomersthoughvalueaddedservicestowardshealth/wellbeingconsciousbuyingIfsuccessful,thisstorestrategymayallowShiseidotoLimitcannibalisationoftheirhigh-endbrandsGrowtheaccessiblemiddlemarketthrougheducationtowardsusehigh-endcosmeticsIncreaseoverallbrandloyaltyPre-emptcompetitioninthehigh-endmarketthroughnurturingcustomersthatstayloyaltoShiseidoevenaftertheyhaveoutgrownthemiddlemarket9L’Orealhastoassessiftherearepotentialthreatstotheirmiddleandhigh-endmarketpositionsinChinaConclusion:ConsiderationsforL’OrealMiddle-marketHigh-endmarketProductServicePersonnelChannelImageDoweneedlocalproductstodifferentiateANDmeetthepricepointinthemid-market?Arevalueaddedservicesimportantforthebuyingdecisionofthepriceconscious,youngermiddleclass?DoeswelleducatedstaffatShiseidoimpactpenetrationofour‘self-selectionon