Japan’s annual beauty and personal care market is about $50 billion in size, second only to the United States (which is about $70 billion), according to Euromonitor International. Although the cosmetics market in Japan is one of the most competitive in the world and is largely dominated by domestic manufacturers like Shiseido, Kanebo, Kose, Kao and Pola, these companies and consumers are still actively seeking innovative products from overseas. In fact, certain imported brands from France and the United States have traditionally enjoyed a strong position in the Japanese market. Recently, however, due to diversification of consumer needs, other overseas suppliers, including even small and mid-cap companies from Asia, have been able to carve out a position for themselves in the market.
With respect to imported brands, retail channels in Japan are generally split into two segments:
- High-end brands (expensive and luxurious): These are generally found at the beauty counters in popular department stores and retail cooperatives, sometimes accompanied by free product demonstrations from reputable make-up artists or professional cosmeticians. The department stores generally provide space to selected brands and the brands that choose to install a sales counter are responsible for paying rental expenses. The aesthetic of high-end brands generally tends toward simplicity, although some brands do work to stand out through the use of gold-colored or reflective packaging.
- Lower-end brands (less expensive and targeted at mass consumers): These are generally found at drugstores, supermarkets, cosmetic stores, and convenience stores. Some brands targeting younger mass consumers focus on establishing a cute and Japanese “pop” aesthetic, which is reflected in their packaging. Many brands strive to be perceived as helping their consumers to achieve a “kawaii” (“cute”) look. Maintaining this image is the key to success for many mass consumer brands.
In the Japanese cosmetics market, even inexpensive, domestic brands are held to high standards of quality, which occasionally causes price wars and generally means that foreign brands face fierce competition in terms of product cost performance.
In the Japanese cosmetics market, even inexpensive, domestic brands are held to high standards of quality, which occasionally causes price wars and generally means that foreign brands face fierce competition in terms of product cost performance. This feature of the Japanese cosmetics market is one of the reasons that overseas cosmetics brands tend to focus on the high-end market where they can leverage their research, knowledge, unique packaging, and ingredients as competitive advantages. Furthermore, certain foreign brands have been able to achieve an image of luxury, exclusivity, and exoticism beyond what they enjoy in the U.S. or European markets, allowing them to realize higher profit margins on products sold in Japan.
Of course, in a market this competitive, simply being a respected foreign brand is not enough. Japanese consumers are extremely discerning; as in any other luxury market, your brand needs to establish an story and image attuned specifically to the Japanese market, built and refined as part of an ongoing process to solidify your presence in target market segments. Celebrity promotion is always an option, but selecting the right celebrity who conveys the right image to Japanese consumers is extremely important.
You’ll likely have to customize your products to adjust for consumer tastes and expectations, such as using higher-quality packaging in Japan compared to what you use in the United States or Europe.
Additionally, consumer preferences in the Japanese market are different from those in other developed nations. You’ll likely have to customize your products to adjust for consumer tastes and expectations, such as using higher-quality packaging in Japan compared to what you use in the United States or Europe. Japanese consumers are used to using different product ingredients on their skin, so achieving the right balance of ingredients will be important to your success. On top of it all, you’ll be working with Japanese distributors and advertisers, and perhaps manufacturers, all of whom will be used to an entirely different business culture and may not speak English well.
The reward for successfully establishing your brand in such an enormous market can be huge, and the fact that your brand is foreign will work as a strength rather than a weakness if your market entry is managed properly. Given the difficulties involved, however, it’s crucial that you work with a professional liaison on the ground in Tokyo to help you establish the right business relationships, manage market research and advertising, and manage your corporate affairs.
If you would like to exhibit and to meet new buyers or distributors directly, joining the Cosmetic Tokyo Fair is a good option. The fair has a “special exhibit plan for overseas exhibitors who do not have importers in Japan.”