Chanel sends beauty probe into China's smaller cities

French fashion house Chanel has opened beauty stores in malls seated in Baoji, northwest China's Shaanxi Province and Wenling, Eastern China's Zhejiang Province and plans to open in Ningbo in January.

Photo from CFP

Photo from CFP

By CHEN Qirui


Finding the right mall for a beauty store can be tricky for luxury brands. Chanel's triple opening shows a holistic strategy in the battle for smaller cities, but it is hardly the only luxury brand scoping out the market. In December last year, Kering announced plans for 14 boutiques in Dalian, Kunming, Shenyang, Wuhan and Wuxi, covering brands such as Bottega Veneta, Saint Laurent and Balenciaga.

Behind the fashion powerhouse’s development strategy lies the Chinese mainland's share of the global luxury market, already double what it once was, and projected to grow another half in 2020.

A host of cities that are very far from household names in the West are also morphing into the overriding force driving luxury consumption. Products fit the local consumption pattern while maintaining an upscale image has been front and center of the luxury brands' agenda.

Beauty stores seem to be the perfect answer. A classic Chanel handbag will never make it in a small town, but a lipstick or a bottle of No.5 very well might.

Luxury brands already have online stores that reach out to consumers everywhere while maintaining an upmarket image, principally via high prices. Brands such as Chanel enjoy high brand awareness and upscale image. Customers in lower-tier cities purchase Chanel and Dior for an air of luxury.

Makeup is the big draw. In June’s financial report, Chanel's Philippe Blondiaux said that online beauty products sales in April and May doubled, with the total growth in this year adding up to 60 percent. Chanel's beauty business sales settled at 9.8 billion euros, one-third of all sales.

Beauty products impressed during the pandemic, as people spent more time “window-shopping” online; getting to know beauty products. Although luxury brands have the upper hand in all sorts of spheres, in the lower-tier market shopping malls they look somewhat out of place.

Brands need concrete proof to justify their high prices. Before luxury brands opened stores in second- and third-tier cities, various cosmetics collections appeared that relied on word of mouth. Upscale beauty products may be made more appealing by claiming to meet multiple needs with a singular expenditure.