Many leading FMCG brands are facing growth challenges in China. eCommerce and Chinese young consumers (Millennials and Generation Z) are re-shaping the China FMCG market. Many "traditionally" leading brands (both western and Chinese local) are facing the challenge of channel shift from traditional offline channels to ecommerce, and the category innovation to meet young consumers' fast changing needs.
In such a context, L'Oreal's partnership with Watsons to launch the Colorlab in China is an interesting attempt at a potential solution. Colour cosmetics is one of the fastest growing categories in personal care in China, driven by the demand from the new generation of consumers ("older" Chinese consumers focus much more on skin care rather than colour cosmetics). Colorlab potentially provides a new growth channel for L'Oreal Paris and Maybelline, who have been suffering from the channel shift from traditional hypermarkets to ecommerce. The new store format and in-store experience could potentially provide the surprise and delight which strengthens the brand appeal to young Chinese consumers -- to differentiate from up-rising local brands with increasingly competitive product concepts, packaging and communication. With the prevalence of social media and short video, the in-store experience is increasingly shareable via social platforms in China, augmenting the brand impact.
Will more FMCG brands explore the opportunity of retail innovation to rejuvenate the brand and growth in China?
A.S. Watson, the world's largest international health and beauty retailer, has teamed up with L'Oréal to launch Colorlab by Watsons, a new concept makeup store in China. The striking black interior signals the modern vibe of the store. These new stores offer customers a fashionable and trendy experience-led makeup space, with access to on-hand makeup artists who can offer advice and expertise, as well as the opportunity to try out different looks and play around with colour cosmetics. One of the most eye-catching areas in these stores is the makeup counter of L'Oréal Paris and Maybelline, two of the most popular makeup brands under L'Oréal. The number of their products displayed in store occupies over 30% and such arrangement is exclusive to Colorlab only.