Retail innovation as a new growth lever for FMCG brands in China?

Wednesday, 5 September 2018


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?

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