The Cosmetics Industry in Singapore
Beauty is big in Singapore. According to research company Euromonitor, the Singapore beauty and personal care market will be worth US$1.74 billion by 2021. This is because Singaporeans have the disposable income.
The average wealth per adult in the country is an astounding US$283,120, making Singapore the ninth richest country in the world and the only Asian nation to make the top 10 list. This was revealed in Credit Suisse Research Institute’s 2018 Global Wealth Report. More importantly, Singaporeans are willing to spend that wealth on perfecting their appearance.
Market growth & potential
Revenue in the beauty and personal care market for 2019 in Singapore is estimated to reach US$1 billion at a CAGR of 1.7%. The cosmetics segment will likely amount to over US$180 million at a CAGR of 1.8%. This is a conservative estimate. According to a Research and Markets forecast, Singapore’s cosmetics market can see a CAGR growth of about 5% between 2016 and 2020. What these numbers tell us is that the Singapore market has tremendous potential for growth.
Singaporeans are eager to invest in their appearance. Premium products, mass skincare and colour cosmetics rank top among their buys with American, French and Japanese brands leading the pack. What draws them to these suppliers is their reputation as market leaders in the cosmetics industry. Despite new entrants, most notably Korea, the share these three countries have of the Singapore market has remained largely constant over the years.
The Singapore appetite for cosmetic products have proven resilient in the face of economic cycles as well. In addition, Singapore consumers are adventurous and open to giving new beauty products a try. This has encouraged new brands to enter the country. Up to 20 new brands are introduced every year. In 2018 alone, multi-label store Sephora brought in 10 new beauty brands. While this means that shoppers have more choices, it does not translate into a wider consumer base. The same willingness to test new products mean there is less brand loyalty. As a result, brands have to continually strive to remain relevant by having better products, smarter advertising and more attractive promotions.
The Singapore consumer is also discerning and varied. Admittedly, the local population is small. But the country has a significant expatriate community as well as millions of tourists. In 2018, a record 18.5 million international travellers visited the island-nation. Well-informed, price sensitive, with a penchant for premium, high-quality products, they present as much a potential as they do a challenge to beauty brands.
There are two possible avenues for further growth in the future. One is through e-commerce. Singapore has 3.12 million e-commerce users. By 2021, another nearly one million more will join the digital brigade. If brands can reach this new breed of buyers, they can tap on the Singapore market without ever setting foot on its shores.
The other growth possibility is the male consumer. According to a survey by e-commerce platform Shopee conducted in 2019, there was a 33% increase in makeup orders by men compared to the same period last year.
Singapore vis-a vis the region
Singapore is important to beauty brands not merely because of the potential its consumers offers. It is crucial to the international cosmetic scene also because its multi-cultural society presents an ideal testing ground for companies who want to understand the beauty needs of the region. Its proximity to other Asian countries adds to its attraction as a platform for launching new products.
In addition, the Republic is an easy place to do business. The World Bank ranked the country second among 190 in its 2019 Doing Business report because of its tax jurisdiction, pro-business policies and professional workforce. Brands face few entry barriers when they want to set up shop in Singapore.
Non-profit professional organisations like the Society of Cosmetic Scientists Singapore (SCSS) and the Cosmetic, Toiletry and Fragrance Association of Singapore (CTFAS) contribute resources and expertise to the industry as well. This creates a dynamic ecosystem that helps the cosmetics industry grow.
Little wonder, then, that the island-state is a favourite among global cosmetics players. Nine of the world’s top 10 fragrance and flavour multinationals including IFF, Symrise, Takasago and Firmenich are located in Singapore.
In 2013, Unilever invested $56 million in a state-of-the-art training facility in Singapore. Dubbed Four Acres Singapore, it has training capacity for 2,800 people and is the first leadership development facility of its kind outside of the United Kingdom.
Procter & Gamble opened its $250 million Singapore Innovation Centre in 2014 to develop products across their brands. Its Pantene 3 Minute Miracle Conditioner was developed in Singapore based on insights gained from Asian consumers. The new conditioner was formulated to allow users to wash their hair more frequently and to satisfy their desire for a product with a stronger fragrance. The Miracle Conditioner has since been launched worldwide. Another product developed in Singapore is SK-II’s Masterpiece Pitera Collection.
Major cosmetic brands & product trends
There are over 70 companies that import and manufacture cosmetics and toiletries in Singapore from luxury brands to mass-market products. Among the high-end brands are:
- Estee Lauder
- Christian Dior
- Dr. Jart
Those in the niche market of cosmeceutical brands include:
- Perricone MD
- Murad, Inc.
- Obagi Medical Products
- Allergan, Inc.
- SkinMedica, Inc.
Mass market brands are:
- Hada Labo
French brands are a favourite with local consumers. In 2015, they made up 22% of cosmetics imported into Singapore. Americans brands are a distant second. In that year, they made up just 11% of cosmetic imports.
Counters at department stores are the major source of sales, making up nearly 31%. Standalone stores are also where premium brands are retailed. Multi-brand chain stores are popular avenues for the sale of mass-market brands. These include:
- Watsons (104 stores)
- Guardian (124 stores)
- Sephora (12 stores)
- Sasa (21 stores)
- Beauty Language (28 stores)
- Venus (18 stores)
Then, there is the multi-level marketing segment (MLM) which makes up less than 3% of the market. Online beauty platforms are gaining popularity. The e-commerce market in Singapore is set to grow by 48% to nearly $10 billion by 2022.
Because of the country’s wealth, luxury beauty products are in demand. The retail market for such products is estimated to be worth $120 million annually. Skincare products take up 40% of this, makeup accounts for nearly 35% and the rest comes from perfume sales. Singapore ranks behind only Japan in per capita spend on cosmetics and toiletries, ahead even of known Asian beauty capital South Korea.
Laws governing the cosmetics industry
In Singapore, cosmetics are any substance or preparation intended to come in contact with external parts of the human body for the purpose of cleaning, perfuming, changing their appearance or odour, protecting or keeping them in good condition.
The authority regulating and licensing them is the Health Sciences Authority (HSA) which comes under the Ministry of Health. Companies must comply with the Health Products Act and its Health Products (Cosmetics Products – ASEAN Cosmetic Directive) Regulations administered by the Cosmetics Control Unit. No license is required for companies to sell cosmetic products in the country nor do they need to be assessed or approved by HSA before they are sold. Companies, however, are required to file a product notification with HSA.
The Regulations are in line with the ASEAN Cosmetic Directive (ACD) which was implemented in 2008 to enhance cooperation in the region to ensure the quality and safety of cosmetics. The ACD is closely aligned with the European Cosmetic Directive.
There are no import or custom duties on cosmetics, toiletries and fragrances. Instead, there is a 7% goods and services tax (GST) imposed on all goods and services sold in Singapore. While imports are subject to GST, the payments are refunded if the products are re-exported.
Japanese and Korean Beauty Brands – Battle for the Singapore Consumer
It does not look like much – a slim bottle of colourless liquid. It does not demand much – simply pat a little of it over your skin twice a day. Yet SK-II sells one bottle of its Facial Treatment Essence, also known as miracle water, every 22 seconds. This single product encapsulates the essence of Japanese beauty (J-beauty) products – simplicity.
Korean beauty (K-beauty) products, on the other hand, is all about dedication. Their multi-step skincare regime, each with its own product, certainly requires that and a fair amount of discipline. For those who believe that if less is more, then more is better, K-beauty is the height of dedication to external perfection.
Beyond this difference, how else does Japanese cosmetics differ from Korean ones? Which of these two East Asian cosmetic giants has a firmer hold on the Singapore market? How else can the Singapore consumer be wooed?
Entry of Japanese and Korean cosmetics in Singapore
Japanese cosmetics has had decades of influence in Singapore. It grew to prominence in the 1980s with brands like Shiseido, Shu Umera and SK-II as the island-nation rode the J-culture wave with the surge of Japanese drama and pop music. Considered premium for its quality and dedication to innovation, Japanese cosmetics won a generation of consumers.
Like its East Asian counterpart, Korean cosmetics gained a foothold in the country through the influx of Korean popular culture. From the 2000s, K-drama and K-pop streamed into Singapore. With it, came the Korean emphasis on beauty and skin care. A new generation of consumers was wooed.
Because J-beauty products entered the local market in the 1980s, most of its loyal customers are, by now, much older than the K-beauty proponents who are primarily Millennials in their 20s and 30s. This has given the impression that Japanese cosmetics has stagnated.
Japanese vs Korean beauty products
Despite the obvious rivalry, Japanese and Korean cosmetics have much in common. Both subscribe to strict rituals, both emphasise protection and both focus on skincare. This might have to do with the fact that both cultures value pale skin and have access to much of the same ingredients such as fermented rice water and seaweed.
Yet, the two have distinctive features that set them apart.
J-beauty is minimalist with a strong slant towards sustaining natural beauty. Simplicity is key. The Japanese skincare regiment, for example, has only a few, carefully curated products mostly for hydrating and moisturising the skin.
Because of this approach to beauty, Japanese cosmetic products tend to rely on only a few key ingredients like rice extracts, shiso (a plant from the mint family). green tea and SK-II’s famed PITERA from a humble strain of yeast. They also contain fewer chemical additives. The look they promote also leans towards natural, neutral tones.
3. Old school tradition with new technology While Korean cosmetics is known for its innovation, Japanese beauty products are no less innovative. Their brand of creativity, however, is anchored in perfecting age-old traditions and formulae with extensive research and technology to ensure top quality.
As result, J-beauty products often come off as less dynamic. But there is little doubt about Japanese ingenuity. This is the country that gave the world double cleansing, added essences to skincare and made cleansing oils the norm in beauty rituals.
4. Selling timeless beauty
With their complex formulae from deep research, Japanese cosmetics place a premium on timeless beauty. This echoes the serenity and sophistication of the Japanese culture.
1. Trend-setting Korean cosmetics has a reputation for being trend-setting. K-beauty fads are myriad and they keep coming. Take the glass skin craze, a reference to dewy skin so clear and luminous it looks almost transparent, that took the world by storm in 2018. This year, it is the “barely-there” look which encourages women to throw out their eyeliners. This means that products can rise in popularity as easily as they lose favour.
2. Innovative The Korean’s propensity to start trends stem from their drive to innovate, bolstered by investments from their government in R&D and new businesses.
They were the originators of new products such as splash masks, rubber masks, and pressed serums. AmorePacific’s innovation, the cushion compact, allowed women to touch-up their make-up while on the go with no fear of spillage. They are also the creators of sleeping masks that do not need to be washed or peeled off.
The Koreans are innovative when it comes to ingredients used as well. They dared to include deer antler, wild thyme, donkey milk, snail and snake venom in their products. They also came up with new looks including the gradient effect for eye and lip makeup.
3. Banking on the New & Funky
Korean products sell fun. This can be seen in their trends as much as in their colourful packaging – hand gel in gummy-bear like containers, face masks in milk cartons and water gel tints that look like mini popsicles. All this is a reflection of the Korean society’s predisposition towards the fun and funky.
Singaporeans care about how they look. Euromonitor International reported that the market value for premium as well as mass skincare and colour cosmeticsin the country amounted to US$694.5 million in 2014, a 5.3% increase from the year before. In 2019, revenue from cosmetics alone is expected to reach US$180 million and the market is set to grow by a CAGR of 1.8% between then and 2013.
Japan remains the market leader despite the hype of Korean cosmetics. Japanese products rank third behind French and American ones, making up 5% of the local market share. Korean products, coming in at 10th, amount to 2% of market share. They are expected to catch up though. K-beauty products enjoy strong brand recognition and are among the top in brand recall.
Their respective holds on Singapore buyers mirrors their global performance. According to Goldstein Research, Japan’s cosmetics market was valued at over US$24 billion in 2017 and set to grow at a CAGR of 3.41% between 2017 and 2025. Japan’s economic downturn and Korean’s advancements may have eclipsed the allure of J-beauty products for a while but the country and its cosmetics still have international sway.
Meanwhile, the Korean pop culture – drama, movies, music, food and cosmetics – is so prevalent that there is even a name for it. Hallyu or Korean Wave refers to the rising popularity of all things Korean. It is thanks to hallyu that the Korean market is among the top 10 in the world. According to global market intelligence agency Mintel, sales in 2018 were estimated to be worth over US$13.1 billion. Facial skincare products alone made up half of that with sales expected to hit US$7.2 billion by 2020.
Not only are the Japanese and Koreans wooing local consumers, they are using Singapore as a testbed for their cosmetic products as well. East Asian beauty product conglomerates like AmorePacific, Shiseido, and Procter and Gamble which owns SK-II have established headquarters in the country to give them greater access to customers in the region.
Wooing the local consumer
J-beauty products have a larger share of the Singapore consumer pie because they had a head start. But Korean brands are proving to be worthy competitors. Here is a look at the marketing techniques and how both countries measure up.
1. Celebrity Clout
Japanese and Korean cosmetics both won strong followings in Singapore because of the J- and K- culture that flooded the country in the 1980s and 2000s, respectively. Using celebrities to sell their products simply leverages that popularity.
The Koreas are particularly adept at this form of marketing. Innisfree’s ambassadors are actor Lee Min Ho and singer-actress Im Yoona. The face of Laneige is actress Song Hye Kyo while The History of Whoo uses actress Lee Young Ae. Japanese brands are fast catching on. SK-II has an entire campaign fronted by its ambassador Kasumi Arimura and comedian Naomi Watanabe.
K-beauty brands appeal more to the younger set because of their lower prices. A stick of lipstick from The History of Whoo costs about $38 but Shiseido charges $46 for theirs.
Adding to the appeal of K-beauty products is their packaging that is aimed at the young or young at heart. Vibrant colours and imaginative packaging – lip and cheek tints in containers that look like macarons, makeup sets in miniature suitcases complete with stickers to decorate, and skincare sets in bamboo steaming baskets - all add to the youthful vibe. That said, the classic look of Japanese products is what the mature buyer gravitates towards because it exudes sophistication. Targeting older customers has its benefits because with age comes better buying power. This allows the brands to charge premium prices.
4. Standalone Stores
Korean brands have something Japanese ones in Singapore do not – standalone stores. The History of Whoo, The Face Shop, Innisfree and Etude House are among the Korean brands that have their own stores instead of just counters at malls. This gives the brands greater visibility, and allows customers to browse and try products on their own, an experience the DYI younger generation appreciates.
Digitalisation has erased borders, allowing customers access to indie brands that do not have brick-and-mortar shops. Korean cosmetics benefit more from this because there are more small K-beauty brands that can now reach Singapore consumers. Japanese brands tend to be more established and while e-commerce adds to the convenience, it has less of an impact on sales.
K-beauty products is nipping at the heels of their Japanese counterparts. However, it remains to be seen if they can grow with their young customers and engender loyalty. Japanese cosmetics has stood the test of time. But unless it can cultivate a new generation of customers, they may not be able to renew their client base.
6 Ways Cosmetics Companies are Reaching Consumers in Singapore
The Singapore consumer presents an attractive conquest for cosmetics companies. They are affluent, educated and adventurous, with an appetite for the fresh and inventive. Little wonder, then, that so many new brands have been introduced to the local market. In 2018 alone, Luxasia brought in four beauty labels; Japanese department store Takashimaya introduced three new brands while multi-label retailer Sephora imported 10.
In addition, the Singapore consumer lives at the crossroads of Asia, a region that garnered US$164 billion, a 6.4% increase, in beauty and personal care sales in 2017, according to Euromonitor. This is almost twice the value of the US$86 billion US market.
The value of the Singapore consumer cannot be under-estimated and these are some ways cosmetics brands have used to woo them.
1. Social Influencers & Social Media
Singapore has one of the highest digital consumption rates in the world. Over 3 in 4 in the country use the Internet regularly. 83% are on social media and nearly 1 in 4 using Instagram daily. The volume of usage puts the country at number three in the world in terms of Instagram penetration. The problem is that the connected generation is also a savvy one. 1 in 5 say they will actively ignore social posts or content from brands.
That is why social influencers make better avenues for advertising. There is no shortage of YouTubers reviewing beauty products which come second only to gaming as the most reviewed topic on YouTube.
International influencers are well known and the local consumer is familiar with them. But Singapore bloggers should not be ignored because they have faces and experiences that Asian users can easily relate to and recognise.
Perhaps the most visible of Singapore online faces in the beauty scene is Wendy Cheng aka Xiaxue with over 400,000 followers and 40,000 views daily. Certified makeup artist Roseann Tang is another. She provides makeup tutorials and tips, partnering big names in the print business like The Straits Times, CLEO, Her World and Designaré. Cheryl Chio runs her own beauty and lifestyle blog beautifulbuns that provides reviews of beauty products. Then, there’s Mongchin Yeoh who has her own television travel show. She is an active Instagrammer, with nearly 200,000 followers, who posts about beauty and fashion.
Thanks to these very vocal and visible personalities, social media has become the new platform for advertising. This has led to companies like Sephora experimenting with Instagram shopping where users can view Instagram Stories which turn into shoppable posts. With a few clicks, users can be redirected to the website to make purchases.
2. Authentic Stories
What makes social influencers so powerful is that they are authentic. They do not simply pop up to tell their followers to buy a product. They share their lives and daily routines candidly, engaging with videos, livestreams and stories of the products as they are being used. They are also consummate story-tellers. Being able to emotionally connect with their viewers makes them all the more compelling. Local skincare brand Skin Inc understands their power and sends out complimentary products to both the media and influencers whenever there is a new launch.
3. Celebrity Power
Social media has redefined the meaning of star power. Instead of perfectly turned out models, the new celebrities are influencers. Beauty brands have partnered with some local influencers to ride on their followers for greater visibility.
Yina Goh, for example, has nearly 60,000 followers. The blogger has collaborated with the likes of Lancôme, L'Oréal, Garnier, L’Occitane and The Body Shop. Karen Ashley with 30,000 followers has partnered major brands Dolce & Gabbana, Lancôme, Clinique and IOMA Paris. In comparison, Hannah Chia’s clout seems modest. She has 16,300 followers but even she has worked with Sofina, Kosé, SkinCeuticals and IOMA.
4. Tailored Experiences
Today’s consumer wants to be engaged, treated as individuals and respected for their uniqueness, which is why influencers who speak to their needs with authentic stories are so alluring. This has led to a desire to try products on their own terms (or vicariously through influencers when that is not possible).
Brands have, therefore, redesigned their stores to meet these changing needs. Sephora’s ION Orchard outlet debuted the interactive Make Up For Ever studio space. Drawing inspiration from the Japanese kaiten-sushi (sushi train) concept, customers pick makeup from conveyor belts to fill their boxes designed to look like bento boxes, giving ownership and control over to consumers in an innovative way.
5. Unique Packaging
With so many beauty labels and thousands of products, differentiation in packaging is yet another marketing tool that consumers, particularly local Millennials, appreciate.
It is not just Korean brands with their cutesy, candy-coloured products that are catching consumers’ eyes. Western brands are getting into the game as well. American brand Pretty Vulgar’s mascara stick shaped like an elongated bird cage is beautiful and elegant. Another US label, Tarte Cosmetics launched a set of brushes that look like flamingos and pineapples. The Body Shop’s mascot Olivia the Owl has been made into a stylish purple tin with six strawberry and coconut scented products.
6. Male Advertising
Men are a growing market. One way brands has been reaching them is through subscription commerce. This works like magazine or newspaper subscriptions of old. The difference is that now the product in question has to do with men’s personal care. The Dollar Shave Club delivers razors and personal grooming items to its subscribers every month. American company Harry’s offers the same service.
Another way to reach men is through social media. GLAMGLOW which is owned by Estée Lauder uses the hashtag #menwhomask with photos of men wearing the company’s products.
Potentials and Pitfalls in the Singapore Cosmetics Industry
The Singapore cosmetics industry is growing. Beyond the well-heeled, well-informed consumers the country offers, the island-nation is also attractive to global players because it is an ideal springboard from which to reach the rest of Asia and its more than three billion potential customers. That is why estimates put the CAGR of the local beauty and personal care market at as high as 5%. In fact, Euromonitor forecasts the market to be worth US$1.74 billion by 2021.
But, resilient as it is, there are fears that the cosmetics market may be reaching saturation point. More players are entering the market from indie brands to established fashion labels like Hermes announcing its move into beauty and skincare. Countless products continue to flood the scene. This has raised the question: Can consumers sustain a big enough appetite for long enough to stomach the deluge?
Boom or bust, much of Singapore’s cosmetics industry will depend on how the potentials are harnessed and pitfalls managed.
Potentials in Singapore’s cosmetics industry Singapore’s cosmetics scene has much going for it, lending to the optimism.
Here are some potentials to take note of.
1. Rising cosmetics segment
The demand for colour cosmetics – any makeup that adds colour – has been growing exponentially, outstripping all other categories worldwide. By 2025, the global colour cosmetics market is expected to reach US$51.38 billion, growing at a CAGR of 3.7% from 2018 to 2025.
Bolstering sales are a combination of factors – hype drummed up by social influencers proffering makeup tutorials, growing willingness to experiment with self-expression, and demand from China’s immense market which is poised to replace Japan as the second largest colour cosmetics market after the US by 2022.
This global trend is something players in the cosmetics industry in Singapore can leverage. The country’s highly connected consumers are natural digital citizens open to beauty trends on social media. Being highly influenced by Korean-beauty (K-beauty) concepts that are innovation personified is a bonus.
2. Possible new products
Multi-functional, time-saving products is another area that has potential for great growth in Singapore where people are busy and constantly in search of time-savers. The Koreans are particularly adept at this. Just look at South Korean cosmetics brand Etude House. It is the label that gave the world a lip pencil, lip colour, sculpting pencil, highlighter, eyeshadow, eyeliner and blusher in a single pencil, proving that time-savers can be space-savers, too. This might be one of the reasons why K-beauty has caught on famously in the Republic.
Tech-smart beauty products will take hold in Singapore as well. Beauty products paired with digital diagnostic tools is the next new thing and the tech-savvy citizens of the nation are bound to be interested in them.
Some examples of such products include Shiseido’s skincare system Optune. This personalised app modifies and adapts itself to the skin environment of each user, allowing it to choose the best conditions and tones of skin to help the user achieve an optimal moisturised state. Then, there is ModiFace’s Skin AI which detects and quantifies even the smallest of changes in the skin, and visualises the changes before and after the use of any beauty product.
3. New consumer sectors
Men get it, too. In Singapore, as in the world, male consumers are rising to the fore and they will be the new market to woo. The potential is likely among the male Millennials. They are the generation most willing to move beyond shaving and hair products to embrace makeup. This can be seen in the 2019 survey by e-commerce platform Shopee which reported a 33% increase in makeup orders by men compared to the same time last year.
4. New ways to reach consumers
Social media is the disruptor of the marketing world. The fact that it transcends borders only adds to its power. In Singapore, more than 80% of the population are on social media and the numbers have been growing. In 2017, there were 4.4 million users. By the next year, the number had increased 9%.
The sway social media has on the younger users is clear. Out of the 38% of Singaporeans who use Instagram daily according to Global Digital Report 2018, more than 1 in 3 is between 25 and 34 years old.
Influencers will be the new way to reach consumers of this generation. Consumers no longer trust brands alone to tell them what is good. Instead, it is authentic stories that well. In Singapore, the top beauty influencer is Nicole Chang Min. A blogger, YouTuber and Instagrammer who reviews makeup products, almost half her followers is from Singapore.
Pitfalls in Singapore’s cosmetics industry
Rosy as the Singapore’s cosmetics industry is, there are challenges. Not properly managed, any one of them can be a roadblock to the growth of the industry.
1. Continual entrants to the scene
New, independent brands have been entering the market at an incredible rate. In 2016, while traditional makeup dropped 1.3%, independent brands enjoyed a 42.7% spike.
What has contributed to the appearance of these young labels is the lowering of barriers to entry. These is an increase in tolerance amongst consumers for the novel. More are willing to try new products and new brands. Trust in society and, by extension, established brands is eroding, leading to a desire for greater authenticity. Social media is rife, transforming the way the public can be influenced and levelling the playing field.
So, young brands have thundered onto the scene. Kylie Cosmetics, started by reality tv star and model Kylie Jenner of the behemonth Kardashian-Jenner clan, is one stunning example. Riding on Jenner’s huge following, the company made US$420 million in sales in just 18 months. Today, at 21, she has been crowned the youngest, self-made billionaire, a spot once held by Mark Zuckerberg. Even a country as tiny as Singapore has seen more than a dozen fresh local brands come on board the cosmetics industry in recent years.
This has shaken the pedestal on which major beauty brands have long perched. In 2014, Elizabeth Arden Inc dropped products, slashed jobs and closed units while Avon Products laid off 600 employees after reporting a net loss of US$168 million in the first quarter.
Big brands are the ones that would enter Singapore with brick-and-mortar shops or counters at department stores. They are also the ones that would set up research centres or headquarters in the country with an eye on conquering the region. If these giants are shaken, Singapore’s cosmetics industry would be affected as well.
Singapore has 84% Internet penetration or 4.83 million Internet users. As one of the connected countries in the world, social influencers present new opportunities to reach the local consumer. However, social influencers also present pitfalls.
With the Internet, the mass market has grown. This has encroached on the premium segment, making it harder for luxury products to be priced sky high. The days of 10-time mark-ups may be over. So, sales may soar but profits many not.
With more information made available, customers are also looking for innovation to capture their attention. Big brands - Shiseido, L'Oréal and Estee Lauder — are acquiring and partnering tech companies to gain expertise in new technologies like Artificial Intelligence (AI), Augmented Reality (AR) and the Internet of Things (IoT). Customers may be harder to impress and the well-informed, well-educated ones in Singapore might present a greater challenge.
3. Eco- & social consciousness
Another result of better informed customers is their demand for better products. In this age of transparency and healthy, ethical living, there will be an increase in demand for beauty products without harmful chemicals or cruelty to animals. The cosmetics industry, largely unpoliced by authorities, is now being held accountable by its customers who are demanding a change in what gets sold.
This may be harder on established brands than on the new ones that have come onto the market. In Singapore, there are already several natural cosmetics brands available such as vegan skincare brands Sigi Skin and 100% Pure; natural skincare brand The Herb Farm, Re:Erth, and Forest Rhapsody; and cruelty-free brands Olive Natural Skincare and Sen Natural.
8 Must-knows about the Singapore Cosmetics Consumer
One woman spent $40,000 on makeup over two years. Another racked up a $30,000 cosmetics bill in three years. While not every Singaporean spends as lavishly on beauty products, the average local consumer is willing and able to pay to look good. That is why research company Euromonitor estimates that the Singapore beauty and personal care market will be worth US$1.74 billion by 2021. This is no small sum.
The beauty brand that wants a share of that needs to understand who the Singapore shopper is and what she, or he, wants.
1. Young & adventurous
The Millennial consumer makes up a good part of the Singapore market. The largest generation in the workforce, the Republic has 1.25 million Millennials with women making up a little more than half of that number. They have either just started working or are striving to reach the crest of their careers. Putting their best faces forward is important to this crowd.
Because they are young, they are also adventurous. They have yet to settle on a brand and are less inclined to do so. What would sway their product choices are beauty trends and price.
On the down side, these young adults are not the most loyal of customers. In fact, in a survey by Singapore-based beauty magazine Daily Vanity in which 80% were under 34, almost all the respondents – 97% - said they would try new beauty products. On the up side, this means they are more easily wooed and won over.
2. Money in the ageing market Singapore is an ageing population. The median age of the nation is 40.8 years, almost a decade older than the global median age. While there may be more young people working, there are actually more people over the age of 45 in Singapore.
Here is where the disposable incomes are. By this age, the consumer would be more established in her career and would have more to spend. For example, the median wage of an accountant in Singapore in her 20s is about $3,900. But by the time she is in her 40s, her salary would have risen to about $4,600.
3. Men buy cosmetics, too
Men in Singapore want in on beauty as well. The demand for male grooming products - cleanser, toner, moisturiser, eye cream, and even mask packs- in Singapore is expected to bring the value of the market to $141 million by 2021. Multi-brand beauty retailer escentials notes that while women spend about $250 to $400 with them, their male customers are not far behind. Their purchases come up to between $150 and $250. Korean brand Etude House reported a 10-fold increase in their sale of men’s products in just four years between 2013 and 2016
4. Discerning and well-informed
The Singapore consumer is well-educated and well-informed. This makes them more discerning. Showy advertisements no longer suffice. What they count on are word-of-mouth recommendations and authentic reviews. In the same Daily Vanity poll, 94% said they would search for reviews before a purchase. 77% said they would not buy a product if it did not have a review.
Brands will have to reach consumers in more creative ways. L’Oreal, for example, has resorted to story-telling. Its Beauty Squad campaign involves short videos and articles about beauty trends posted on social media by influencers. This taps on the influencers’ combined reach of some 5.5 million followers.
escentials counts on providing immersive experiences to draw customers. At their stores, shoppers can try new products or brands. When they return home, there is post-visit personal research in the form of online reviews and offline recommendations. Others like Sephora offer online Skin Inc diagnostic tests to help customers find out their skin type and concerns.
5. What Singapore wants
Age & gender specifications
Millennials want trendy products, prettily packaged and competitively priced. Those in their 40s and above want skincare products that protect the skin, and slow down the ravages of age. Men want grooming products. According to a 2019 survey by e-commerce platform Shopee,the number one product men want is concealers. Base products like powder and foundation are next. Then, comes hair wax.
Because they are better informed, the local consumer is also more selective. One-size-fits-all no longer appeals. Instead, they want products customised to their skin type, beauty and lifestyle needs. This means more varieties of products. For example, one type of lip balm alone will no longer do. There needs to be a pink-tinted balm, a plumping and hydrating glow, an overnight lip mask and even an exfoliating sleep lip mask.
There is a rise in demand for colour cosmetics as well. This has led brands to go beyond counters at department stores to standalone outlets. These are growing in popularity and numbers.
There is still plenty of optimism amongst consumers. Nielsen’s 2018 Changing Consumer Prosperity report noted that nearly half of Singaporeans thought they were better off than five years ago. This has led to a healthy appetite for premium goods. As a result, premium women’s fragrance dominates overall fragrance sales.
Being well-informed also means that Singapore’s consumers prefer natural and organic products. According to research organisation Future Market Insights, organics cosmetics is projected to be worth US$66 billion in ASEAN by 2020.
6. Favourite brands
Key players in Singapore’s cosmetics market in luxury products include L’Oreal, Shiseido, Estee Lauder and LVMH. The mass market brands that are big in the country are Beiersdorf and Procter & Gamble. Overall, French, US and Japanese beauty brands are the top choices amongst Singaporeans. According to the Global Trade Atlas, France dominated with 22% of local market share in 2015. The US followed with 11% while Japan had 5%.
However, the allure of Korean products among the younger shoppers is clear. In the Daily Vanity survey in which respondents were predominantly under 34, Korean beauty products reigned supreme. More than 30% picked Korean brands as their top choice.
Source: Daily Vanity
7. Spending more and more
Singaporeans are spending more. BMI Research forecast a 6.5% increase in total household spending every year between 2018 to 2022, growing from US$$124.4billion to US$174.5 billion. Of this, 58% will be spent on non-essentials.
There will also be more wealthy people. The majority of Singapore households in the upper-income segment with disposable incomes of US$75,000 and above are expect to account for 66% of total households in 2022, compared to 53% in 2018.
Given this outlook, there is definitely a lot of room for luxury brands to grow and new brands to be brought into the country.
8. Shopping online on the rise
By 2021, there will be well over 4 million e-commerce users in Singapore. They present tremendous potential for brands to tap on. Thanks to the country’s push to be a Smart Nation, online shopping will only increase as going digital becomes easier. Already, shoppers are turning to online platforms to buy products not found in Singapore. American brand Huda Beauty has not launched in the country. However, Singaporeans are already enjoying its products. A large number of its website sales come from Singapore.
7 Trends to Watch in Singapore’s Cosmetics Industry
Beauty may be an ethereal, tough-to-grasp concept but the beauty industry is hard as nails. Even in the worst of times, it has proven quite impervious. In fact, during the 2008 economic recession when even banks were brought to their knees, the beauty industry enjoyed a profit. Chairman of beauty giant Estee Lauder, Leonard Lauder, dubbed the phenomenon – the increase in cosmetic sales during downturns - the “lipstick index”.
This resilience, however, does not mean the industry is not subject to trends. It does have trends, and plenty of it. Watching them can be an excellent way for a beauty business to get ahead. Here are some beauty trends in Singapore to keep an eye on.
1. Male cosmetics
Women have traditionally been the target market for cosmetics. Now, men are being drawn in as well. Beyond the usual grooming products, male makeup has been inching towards the mainstream in the last few years. As a result, the global men’s beauty industry is expected to amount to US$60 billion by 2020.
This trend has caught on in Singapore as well. Korean cosmetics brand Etude House reported a 10-fold increase in their sale of men’s products between 2013 and 2016. According to a 2019 survey by e-commerce platform Shopee, there was a 33% increase in makeup orders by men compared to the same time last year.
Whether male makeup will become a new niche market or merely a passing fad will depend on the popularity and power of its strongest proponents – social influencers. YouTubers like Patrick Starrr, James Charles and Jeffree Star have over six million subscribers. 11% of them are male, 20% are under 17. If the influencers pursue this, they may just grow a new generation of male makeup users.
Meanwhile, beauty brands are already jumping on the bandwagon. Chanel’s first makeup line for men, Boys de Chanel, was launched in Singapore in early 2019. The set includes lip balm, foundation and eyebrow pencil. Others brands are offering male-focussed beauty products as well – SK-II Men, Clinique for Men range, Tom Ford Beauty for Men and Laneige Homme are but the tip of the iceberg.
2. Online shopping
Singaporeans are tech-savvy, connected and busy. These make for the perfect formula for online shopping, which is why revenue from e-commerce is expected to hit US$6 billion by 2020. E-commerce user penetration is set to reach over 74% with cross-border purchases making up 3 out of every 5 online transactions. This is particularly ideal for beauty brands which have yet to have footprints in Singapore.
Some of the sites local shoppers turn to for their beauty needs include:
- iPrice Singapore
- iHerb Singapore
- Lookfantastic Singapore
- Beauty Expert
- Beauty Bay
- Althea Singapore
- Cult Beauty
- Glow Recipe
- Soko Glam
- Peach & Lily
3. Local brands
Global brands have always dominated Singapore’s beauty scene. In the last few years, however, local players have been making ripples, led by success stories like Skin Inc. In 2013, Skin Inc became the first local skincare label to be stocked in multi-brand, international store Sephora.
More than a dozen Singapore beauty brands have since come to the fore, all eager to meet the demand for products that cater specifically to Asian skin and climate. Alexiares & Ani, for example, is a botanical skincare label with products for the tropics.
Others offer clean products that appeal to a generation interested in organic, environmentally-friendly everything. Coat is a nail polish brand that boasts a formula without conventional chemicals common in such products. Mmerci Encore has roll-on perfumes that are made with 100% pure, therapeutic grade essential oils while 13rushes is all about cruelty-free, synthetic makeup brushes.
Making it easier for these Singapore brands to reach the local market is the fact that large retailers are willing to take them on. Sephora put its faith in Skin Inc. Other labels like Faux Fayc, Katfood and DrGL can be found in major department stores like Robinsons, Tangs and Isetan.
4. Natural products
The call for Singaporeans to live healthily has seeped into their beauty choices. As local consumers become more informed and aware, the demand for natural, organic, ethical beauty products will increase. There is already an interest as evidenced by the rise in the variety of such beauty items.
In the years to come, expect to see a market for beauty brands that look to more natural ingredients such as fruit-dyed lipsticks and fruit-pigmented foundations. Tata Harper’s all-natural luxury skincare line is already a best-seller at Sephora.
Organic products may become more popular as well, driven by reports of the harm chemical ingredients can do to the human body. Even established brands like Estee Lauder is turning to natural ingredients. This bodes well for Japanese and Korean brands which have always relied on natural ingredients like yeast, green tea and seaweed.
Bio-engineered beauty ingredients may also find traction amongst those who want ethical products. Already there is unicorn start-up Ginkgo BioWorks that developed genetically engineered fermentation of yeasts to produce rose oil without using rose petals. Geltor produces vegan gelatin for cosmetics.
These beauty products do not come cheap, however, because of the research and technology it takes to make the ingredients available and because, being natural, they have a shorter shelf life. The Singapore consumer with strong purchasing power would have no issues affording such products, though.
5. Technology & innovation
The Asian beauty industry is full of innovation, many of which led by Korea. They were the ones who gave the world snail cream, BB cream and the 10-step beauty regime with accompanying products for each step. Their appetites whetted, Singaporeans will continue to demand products that show creativity.
One area that presents plenty of opportunities is products that have multiple functions. The busy Singaporean with little time to spare but beauty needs to meet appreciates such products. This is precisely why BB creams and cushions that are moisturisers, foundations and sunblock rolled into one have caught on so quickly in the country.
Another area for growth in Singapore is wearable beauty solutions. Persistence Market Research forecast that the global beauty devices market would reach US$54.2 billion by 2020 with Asia set to be the fastest growing regional segment. L'Oréal has a battery-free wearable electronic UV sensor that is powered by the wearer’s mobile phone. Called UV Sense, it is worn on the thumbnail for up to two weeks. UV Sense uses the data collected to offer skin protection tips.
Skin Inc is an another early-adopter of technology in the beauty industry. It launched Skin Identity, an online questionnaire that allows people to diagnose their skin concerns that comes with a hand-held face-sculpting device called the Optimser Voyage.
6. Customer-centric experiences
Related to technology and innovation is customer-centric experiences. The sophisticated Singapore shoppers wants to be wooed. The total customer experience is very important. Cosmetics brands grasp this and are working hard to offer in-store, and pre- and post-sale experiences that wow.
Some innovations that Singapore would look forward to would include Sephora’s digital, interactive screens that suggest products and teach users new makeup techniques. Its Colour IQ that scans faces to find the perfect skin tone match and lets customers smell scents of fragrance at a touch would be a hit, too. There is also SK-II’s pop-up Future X Smart Store with personalised self-shopping experiences. Augmented Reality (AR) features are trending, too. There is the Meitu Magic Mirror at DFS and Watsons that uses AR to provide skin analyses, and L’Oréal’s Style My Hair app to help customers visualise different hair colouring treatment.
The local consumer also wants customised products. Beauty brand LOLI understands this and launched a blending system of bases, mix-in ingredients and beauty recipes that allow users to mix their own beauty products. Romy Paris has the Figure Formulator that includes a daily personalised serum and a mobile app that provides customers recommendations every day and regular reports based on environmental factors, sleeping habits and the person’s routine.
Brands should also make provisions for crowd-led feedback that allow customers to be included in the creation of products. L’Oréal has patented a connected 3D printer which can capture visual data from shoppers at home, identify skin tones and print custom makeup blends.
7. Rise of J-beauty
Korean-beauty (K-beauty) is a hit in Singapore but it has not entirely supplanted Japanese- beauty (J-beauty). Japanese brands have been upping their game and may yet strengthen their hold on the Singapore consumer.
Part of J-beauty’s ability to remain competitive has to do with the country’s reputation as a place with strong beauty tradition and simple regimes with multi-purpose products. These appeal to the Singapore buyer who wants easy-to-use, reliable beauty products that fit in well with their busy lives. Then, there is the Japanese propensity for natural ingredients – seaweed, green tea, rice and more – that the Singapore consumer welcomes. Finally, the Japanese are known for their technological innovations which they have also brought to the beauty industry. Shiseido, for example, acquired two AI start-ups – MatchCo and Giaran, that can selfies and offer personalised products and tips.