12 Predictions For The China Beauty Market In 2023

by Azoya

This article was firstly released by Beauty Matter.

As China transitions from a zero-COVID policy, there may be light at the end of the tunnel to finally move past the pandemic-induced market uncertainty. Financial markets have mainly predicted a tough quarter or two for China, citing the experience of overseas reopenings.

The Office of the Central Financial and Economic Affairs Commission (CFEAC) said of the transition from China's strict zero-COVID policy, "This will unleash huge vigor and ensure that economic activities continue to circulate and reach their full growth potential. We must have good management for the transitional period. The finish line is now in sight."

Navigating the market will require foreign brands to have the agility to navigate political, business, and cultural shifts as China reopens. BeautyMatter reached out to four of our China beauty experts for their predictions. Their responses represent the complexity and nuance of what will drive the beauty sector in 2023.

Franklin Chu, Managing Director – US at Azoya International

The rebound of global duty-free business: Chinese consumers have been the key factor in driving the growth of the duty-free industry in recent years. International duty-free retailers will continue to suffer from the inability of Chinese consumers to spend abroad. However, we noticed that Global Blue released a monthly update that travel retail in Europe is nearly back to 2019 levels. If China actually relaxes outbound travel restrictions in 2023, we expect global duty-free sales to return to 2019 levels or even exceed them in 2023.

Digital technologies transform omnichannel and immersive shopping: The uncertainty of offline traffic accelerated the pace of digitalization, as companies from different industries are forced to embrace online sales channels. During the post-COVID era, many consumers may continue to remain active in online shopping as one of their daily habits. Brick-and-mortar is witnessing foot traffic rebound back to pre-pandemic levels, even as online shopping continues as an essential alternative for consumers. Moreover, digital consumers will engage in new technologies when they browse products or consume entertaining content. For example, AR/VR, virtual try-on, AI, livestreaming, and other innovative technologies are transforming the customer experience.

Supply chain and inventory management remains a challenge: Due to a sharp drop in sales in 2022, global retailers are leveraging methods to reduce inventory levels. In the short term, the market is facing a huge amount of unsold stock, which could impact the profitability of retailers and brands. Read the full article at Beauty Matter.