China marketing latest trends: October 2022
This is a series from our weekly newsletter in which we cover consumers, marketing, platform, economic and tech trends that brands in China need to know. Get the latest TRENDS newsletter edition sent directly to your inbox instead of having to visit our website next time.
Three trends we think you'll find interesting
💋 Didn't see that coming; High-end beauty salons grow against the trend in the era of pandemic
👶🏻 👵🏻 The new target groups; Small-town Youths & the Silver-Hair Generation
📦 You want it, you got it, NOW; Instant delivery optimization may become the focus of e-commerce platform competition in the next five years
High-end beauty salons grow against the trend in the era of epidemic
In August this year, Carita, a French luxury brand under the L'Oreal Group, opened its first boutique in Asia at Nanjing Deji Plaza, and another store in SKP Beijing also opened at the same time. Despite a looming economic downturn and continued pandemic control measures that thwart offline business and foot-traffic, luxury consumers are demanding more premium/VIP in-person offerings. In particular we’ve seen a rise in interest for beauty salons that have facial and body care suites, and can customize the care experience according to individual needs for R&R.
At this stage, Chinese beauty salons are still in their infancy, with huge market potential. According to the "2020 China Life and Beauty Industry Development Report” released by Meituan and the China Chamber of Commerce, the scale of China's life and beauty market (excluding beauty products itself) in 2020 is about 637.3 billion yuan, and it is predicted to reach 837.5 billion yuan by 2025.
Small-Town Youth and the ‘Silver-Hair’ Generation will become the target customers of brands
In 2021, China's urbanization rate was about 65%, and it is expected to reach 70 to 75% by 2030. Therefore, the consumption potential of the younger generation in small towns is huge. Due to the relatively limited offline retail formats and relatively few brands in the surrounding area, the small-town youth (小镇青年) make full use of social commerce platforms and generally follow the consumption preferences of first-tier cities. Due to the social isolation brought about by the pandemic control measures these consumers are more dependent than ever on online channels for information gathering, social interaction, and product purchases.
At the same time, the post-65s or post-70s population, referred to as the ‘Silver-Hair’ generation has an overall population of more than 300 million. While this group previously gathered information and made purchases offline, just like the rural, younger generation they have also switched these activities to online to purchase daily necessities and other commodities. The pandemic control measures will continue to accelerate and consolidate their online shopping habits.
Read more here 🔗
Instant delivery optimization may become the focus of e-commerce platform competition in the next five years
From 3-day express delivery to next-day delivery, and finally 2-hour instant delivery, the optimization of the process of delivering goods to consumers may be developing into a new opportunity.
We've seen more and more large internet companies betting on instant delivery. JD.com (京东) made it clear that "it has decided to design intra-city retail as a new business and service, and there will be more systems, products, and categories to meet the overall planning.” Meituan (美团) adjusted its B&B and transportation ticketing to combine with food delivery, hotel arrival and hotel travel as a unified segment "core local business”. Douyin announced not long ago that it will cooperate with ele.me (饿了么) to jointly expand its home business.
For consumers, the experience change brought by the ‘2-hour delivery’ is obviously huge, but the capital and management costs in this are equally huge as well. Meanwhile, the room for order growth due to this upgraded delivery experience is the main factor that attracts investment from platforms and brands. According to a report from iResearch, between 2021 to 2026, the order scale of the domestic distribution service industry is expected to achieve a growth rate of 28%, and this figure will further increase according to the changes in the domestic pandemic prevention and control. (*A longer delivery time, i.e. more than 24h, means adding an increased risk of being unable to deliver or receive if any emergency lockdown happens.)
