Followed by Avalon Revlon , another beauty giant L’Oréal is scaling back its China operations. French Company L’Oreal announced on Wednesday that they are withdrawing their Garnier beauty and skincare product sales from China after sliding sales. However, they will concentrate on more performing brands L’Oréal Paris and Maybelline New York to reinforce its position on the Chinese cosmetics market.
The company said in an email to AFP:
“…the decision was taken to halt the commercialisation of the Garnier brand in China,”
China is the third biggest cosmetic market in the world with the sales of $25.9 billion per year. The leading player in the Chinese cosmetic market L’Oréal said in its third quarter financial statement in October 2013 that the Chinese market was “slowing, although still dynamic,” as a result they will concentrate on its L’Oréal Paris and Maybelline New York products only. Torsten Stocker, said “As growth in China slows brands are starting to evaluate their portfolios in China and to focus on where they see the biggest growth.”
According to Euromonitor:
“The Garnier brand accounted for only slightly more than 1.0 percent of the 1.5 billion euros ($2 billion) in sales that the L’Oreal group recorded in China in 2012, which made the French company the top player on the Chinese market with a 17-percent share. ”
After the holistic assessment, a US beauty brand Revlon quitted last week from the China . L’Oreal and Revlon have not been the only to reposition themselves , another brand Procter & said it’s losing market share in China in its skincare business. In 2012 , Home Depot, closed all of its stores and similarly in 2011, due to poor sales , Best Buy also closed all of its stores in China.
According to analysts , the beauty and skin care products market in China, regardless of all of its potential , slid to 10 % in 2013 compared to the 15 % registered in 2012.According to them the major reason the marketers and manufacturers are leaving China because of slowing demand and rising costs.
Meanwhile, Stacey Cartwright , formerly executive vice-president of Burberry , who will take over Harvey Nichols as CEO from march said “she is considering opening a store in China and wanted to introduce a Harvey Nichols own-brand clothing range, roll out more overseas stores, launch transactional websites and to consider going into China.” It depicts that many western marketers believe that the beauty and skincare still has enormous potential in China .