Dec 9, 2019: Elisabeth King reports on this week’s business news

$685 million expansion of Chadstone shopping centre; the natural look and dermo-cosmetics are key drivers of the APAC beauty market; Ulta Beauty's nine month sales reach US$5.1 billion; and beauty and personal care brands rate highly on Nielsen's breakthrough innovation 2019 rankings.

$685 million expansion of Chadstone shopping centre
Selected beauty editors stayed at the Hotel Chadstone last week following L'Oréal’s Beauty for All event in Melbourne. The $130 million luxury property towers over Australia's largest shopping centre and self-styled fashion capital. But there's more to come reveals Vicinity Centres, which owns and manages 65 retail developments nationally, including Chadstone, Chatswood Chase and the Strand Arcade in Sydney and QueensPlaza in Brisbane.

The property firm boasts $6.9 billion in real estate assets and has announced plans for a $685 million expansion of Chadstone to begin construction in 2021. An extra 43,000 square metres will be added, including an enlarged luxury retail mall and a bigger dining and leisure precinct. The plans still have to gain the approval of the City of Stonnington council but the need to be shovel-ready is pressing. Melbourne is expected to surpass Sydney as Australia's most populous city by 2026.

The natural look and dermo-cosmetics are key drivers of the APAC beauty market
Don't be misled by movies such as Crazy Rich Asians advises Kantar Worldpanel, the global expert in consumer knowledge and insights. Ashley Kang, Head of Beauty for Kantar Asia-Pacific, says that Asian consumers believe that health is almost twice as important to their happiness as having money. "They see what they put on their skin as a health supplement – and this has changed the products and benefits they desire. The wellness trend is also encouraging certain emerging formats to thrive".

Dermo-cosmetic brands, both local and international such as La Roche-Posay and Avene, are fast becoming mainstream reports Kantar. Derma brands have reached 45 per cent penetration in South Korea – up from 25 per cent in 2017 – and 40 per cent in Taiwan. According to the data tracker, dermo-cosmetics are no longer a niche category and developments in retail and distribution are helping to increase the footprint of these products outside drugstores and pharmacies.

Natural glow is the most sought after look in Asia and intensely hydrating products are seen as crucial to achieving this goal, says Kantar. Skincare products with hydration claims have the highest penetration in South Korea – 61 per cent – and the usage of serums in China has increased from 18 per cent in 2017 to 26 per cent this year. Makeup with skincare or medicinal benefits such as toner cream is predicted to be another area of growth in the APAC region, which enjoyed 8 per cent overall growth last year by contrast to just over 4 per cent growth in North America.

Ulta Beauty's nine month sales reach US$5.1 billion
Some analysts are predicting the slowing of the hyperspend trend in beauty in the US. But Ulta Beauty's nine-month 2019 results contradict the pessimistic mood. Following the release of its Q3 results of US$1.68 billion in net sales, the largest specialist beauty retailer in the US has posted fiscal year-to-date revenues of US$5.1 billion.

Over the past nine months, Ulta Beauty has opened 73 new stores, taking its national network to 1241 locations. Makeup sales have slowed but CEO Mary Dillon has fingered skincare – prestige and mass – as one of the leading areas of growth going forward. Fragrance and haircare sales are also on the rise in the US and Ulta Beauty's online sales are on track to expand by 30 per cent for the full year 2019. As is the case in Australia, discounting has become a default position for major beauty retailers and Ulta is also facing the heat of price wars in the US.

Celebrity-led brands such as Kylie Cosmetics are driving younger consumers into Ulta Beauty stores and the company expects its full year sales to be 10 per cent higher than the previous 12 months. Its share price has increased 8 per cent year-to-date and Ulta Beauty has exceeded analysts' estimates for every quarter.

Beauty and personal care brands rate highly on Nielsen's breakthrough innovation 2019 rankings
It's a gargantuan task. Nielsen's annual breakthrough innovation rankings involve reviewing more than 45,000 new products across the consumer packaged goods sector from allergy relief treatments to iced coffee and chocolates. In a world awash with awards, the top 25 winners in Nielsen's innovation list are the gold standard of inventiveness, marketing and global success.

Over 20 per cent of the top 25 winners this year were products from beauty and personal care brands. All of the products are available in Australia, in-store or online.

1. Baby Dove - the new babycare range from Unilever

2. Herbal Essences Bio Renew haircare - Procter & Gamble

3. Just for Men Control GX - the only shampoo for men that gradually reduces grey hairs - Combe Incorporated

4. L'Oréal Paris Voluminous Lash Paradise mascara - L'Oréal

5. Maui Moisture - the vegan haircare range from Johnson & Johnson

Snippets from the Wires

  • Brioni is one of the most expensive Italian menswear brands. Owned by the luxury group Kering, entry-level suits begin at $10,000. The company has signed a fragrance licensing agreement with the Lalique Group to create a collection of upscale men's juices.
  • Lancôme has been a major beneficiary of the Chinese passion for prestige skincare. The L’Oréal-owned brand has opened a new flagship store on the Champs-Elysees in Paris and a second extravagant outlet will open in Beijing next year.
  • Christian Louboutin Beauty was launched in 2012. The brand has an official website for Australia and the iconic British department store, Selfridges, and Net-a-Porter can also arrange deliveries. The French beauty house has launched a flagship store on Alibaba's Tmall to gauge the demand for its lipsticks, nail polishes, eyeshadows and fragrances in China.