Survival of the prettiest: Cosmetics put a glow on Hong Kong's pallid retail scene

It's amongst the three sectors that survived the retail slump.

Last year, big brands such as Ralph Lauren closed down in Hong Kong, a clear casualty of the tough retail times that have gripped the territory as mainland Chinese tourists opted to visit and shop in other countries. But this year, not all retail segments seem to be sinking: cosmetics, in particular, is glowing bright amidst the general gloom of retail, as seen in the rise of cosmetics pop-up stores like Armani Box.

In the first three weeks of September, Italian fashion house Armani set up Armani Box in the IFC mall at Central Waterfront and used it as a platform to launch new makeup products in Hong Kong like the My Armani to Go cushion foundation and Ecstasy Shine lipstick. Popular stars and beauty influencers such as Shu Qi, Kary Ng and Janet Ma were tapped to help promote the pop-up store, which was patterned after an initial concept launched in Paris last year.

Cosmetics brands are making quite a splash not only in beauty blogs but also in Hong Kong’s attempts to recover from its retail malaise, according to analysts.

Cosmetics and skincare is one of three retail segments in Hong Kong, along with food and beverage and lifestyle apparel and premium accessories, which have been able to withstand the decline in tourists and shopping, said Cynthia Ng, director at Colliers Hong Kong.

“Cosmetics and skincare have been the most sustainable in sales during the retail market slump as it’s almost a necessity to stay youthful and beautiful, affected by the social perspective in Hong Kong,” she said.

The value of sales of the medicines and cosmetics segment grew 12.7% in September from the year-ago month, the second-highest increase among retail category types, just behind jewellery, watches and clocks, and valuable gifts, data from the Hong Kong Census and Statistics Department showed.

Wide demographic appeal
Analysts expect cosmetics to continue to perform well in the near term since makeup and skincare products hold a wide demographic appeal — from increasingly price-sensitive tourists, more of which are starting to come back to Hong Kong, to image-conscious local consumers.

“Hong Kong is a city with most of the renowned cosmetic brands easily found everywhere. In this city of shopping centers and department stores, cosmetics still dominate the most prominent locations,” said Joe Lin, executive director, advisory and transactions services at CBRE Hong Kong.

He reckoned mainland Chinese tourists are a key customer base for beauty and skincare retailers, but the local Hong Kong populace have also become a strong segment for this business, with the latter group preferring to patronise more affordable cosmetics lines.

“Given their prices are mostly not expensive, especially the Korean brands, all age of ladies (and men) can find what they want easily and affordably,” said Lin.

Alicia Guerrero-Herrera, chief economist for Asia Pacific at Natixis, holds a sanguine outlook on cosmetics given expectations of a further strengthening of Chinese tourist numbers.“The Chinese tourist numbers are doing quite good in recent quarters. With the recent political turbulence and terrorist attacks in Europe and United States, and the missile threat in Korea and Japan, more Chinese tourist come back to Hong Kong, when most of the anti-Mainlander protest disappeared. Jewellery retail, coupled with medicines and cosmetics, should be particularly benefited from the comeback of Chinese tourists,” she said.

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