Kline & Co. Reports Growth of Department Stores in China and India

According to Jeanne Huang, industry analyst with Kline Asia, a division of the market research company Kline & Co., new department store doors are opening in China and India, due to the countries' emerging middle classes. Although the department store channel in already developed nations such as the U.S. has suffered in recent years as a result of a downturned economy and the rise of suburban strip malls, consumers in India and China are experiencing growing disposable incomes.

“One particularly attractive aspect of the Indian economy is the large proportion of consumers in the coveted 18-to-35 age bracket, currently at 300 million and expected to balloon to 450 million by the end of 2011,” Huang writes in “Beauty Retailing 2008 Global Series: Channel Analysis and Opportunities,” adding that foreign investment in urban and some rural department stores, especially those in shopping malls, may boom in the next few years.

In China, Huang continues, department stores are receiving facelifts, offering higher-end beauty products and attracting more consumers. “In their new modernized form, department stores command the No. 4 spot in overall sales of cosmetics and toiletries with an 11% share of the Chinese market,” she writes. “Parkson now has 50 stores with an aggressive plan to reach 100 doors by 2012. Pacific is also looking to double its number of doors in China from 12 to 25 by 2012.”

Specifically, the skin care and fine fragrance segments are seeing higher consumer demand in China, whereas in India, cosmetics and fragrances are attracting sales.

“Major brand marketers are offering free samples and providing trained beauty consultants at stand-alone brand counters,” Huang writes. “Retailers have even started pricing products in U.S. dollars in addition to rupees, which previously would have scared consumers away with the price of luxury brands like Lancôme, Shiseido and Chanel.”

“The robust economies in India and China are full of opportunities across the entire cosmetics and toiletries market,” she continues. “With overall growth expected at 6.5% in India and 12.6% in China through 2012, cosmetics and toiletries marketers are looking to get in on the action.”

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