China’s Gen-Z consumers prep for flurry of ‘revenge’ spending, with pent-up demand set to benefit personal-care brands
- Consumers will increase purchases of cosmetics and skincare, categories that saw prices decline in the first three quarters of the year, a report says
- Personal-care brands will be able to raise retail prices to offset cost inflation, says the report from Bain & Company and Kantar Worldpanel
Makers of personal-care products will be top beneficiaries of China’s post-Covid reopening thanks to pent-up demand, according to a joint study by global consultancy Bain & Company and market research firm Kantar Worldpanel.
The cosmetics industry, once a bright spot in the mainland’s fast-moving consumer goods (FMCG) sector, grappled with falling retail prices in the first three quarters of this year as lockdowns and pandemic restrictions deterred Chinese people from buying items such as L’Oreal’s lipsticks, Clinique’s moisturisers and SK-II’s facial treatment masks.
Average selling prices for skincare products slumped 2.5 per cent, said the study, released on Thursday.
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“Those brands were unable to raise [retail] prices even though they were the victims of higher costs amid an inflationary spiral,” said Derek Deng, a Bain partner. “Weak buying interest due to the virus-control measures made it difficult to raise prices.”
Consumer avoidance of social gatherings hurt the personal-care segment overall. Between January and September, total transaction value tumbled 1.9 per cent after gaining 4 per cent a year earlier, ending a four-year winning streak, the study showed.