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HONG KONG — Beauty is showing its true colors here.

Walking down a street in Hong Kong just a decade ago, it was rare to spot women wearing foundation or nail polish. Now though, it’s hard to find a bevy of better-groomed denizens anywhere.

“There have been lots of changes over the past 10 years,” said Esther Kwong, director and general manager of Shiseido in Hong Kong.

For one, the city’s economy rebounded strongly after a series of alarming events. From 1998 to 2003, its business in all sectors was negatively impacted by Asia’s economic crisis. And in 2003, the SARS epidemic virtually cut Hong Kong off from the outside world.

But ever since, sales of beauty products have risen consistently, with many industry executives saying they rang up revenue in the strong double digits last year.

The growth is driven by numerous phenomena.

“Now, consumers are more sophisticated and know more about skin care and makeup,” said Kwong. That includes the increasingly wealthy from Mainland China.

In part, this sophistication stems from the fact that consumers see ever more beauty advertising. According to the Nielsen tracking firm, media spend on cosmetics-related ads in Hong Kong magazines for the first 11 months of last year topped that for full-year 2006 by 25 percent. Further, the emergence of malls (of which Hong Kong has about a dozen) gives shoppers more places to buy beauty items outside the traditional department and convenience store channels.

And given Hong Kong’s free-port status (the city is a largely autonomous Special Administrative Region of China), it has been relatively easy for products from countries spanning the globe to jockey for position on counters here. Skin care generates the lion’s share of Hong Kong’s beauty business, followed by color cosmetics, then fragrance, executives said.

For an additional point of difference and to bolster business even more, beauty retailers are ramping up their new brand offerings — often to include products with a “healthy” bent or with those billed as exclusives to Hong Kong. Stores also are upping their customer service to a greater degree.

Lane Crawford is a case in point. The department store takes a somewhat different approach to how it sells beauty in each of its four Hong Kong locations, which are a 10-minute walk from one another.

This story first appeared in the January 4, 2008 issue of WWD. Subscribe Today.

When it comes to niche skin care, in its Pacific Place store, for instance, there is a Healthy Living beauty concept of some 900 square feet that was created in May around three core brands — Elemis, Dr. Hauschka and Care by Stella McCartney.

“Every brand chosen in this area has to be defined ‘it’s good for me because…,'” explained Simone Pedersen, Lane Crawford’s general merchandise manager of cosmetics. “It’s not just about organic and natural brands.”

Also found in this area are natural and organic products, beauty tonics, beauty juices, oxygen in a can, sunscreen and hair care. Brands include Cor, Lisa Simon, Ole Henrikson, Trilogy, Juice Beauty and Dr. Perricone.

In Lane Crawford’s International Finance Centre location, in lieu of a Healthy Living area is a space dedicated to brands “that are innovative and/or have great technology behind them,” said Pedersen, who has lined shelves with the likes of Amatokin, Strivectin, AR 457, MD Skincare, Dr. Steven Victor and Dr. Sebagh.

“We put strong signage here,” said Pedersen. “It’s like self-education areas. And we sample heavily.

“Four-and-a-half years ago, our cosmetics department had 40 brands. It now has 200,” said Pedersen, who explained that the strategy behind the concept was to build the department on the “core brands” (think Estée Lauder, Shiseido and SK-II, for instance).

To help a person find the products best suited to her or him, Lane Crawford in late 2004 instigated a free Cosmetic Concierge service involving a beauty adviser giving advice, explained Pedersen.

“We’re going to do it in all of the stores going forward. It’s really a great service,” she said.

Another way Lane Crawford looks to service clients is through exclusive offers. So, too, do other retailers, such as Joyce Beauty, whose five locations carry about 40 beauty brands, of which some 60 percent are exclusive to Hong Kong.

Joyce Beauty is, for instance, the only Hong Kong retailer to sell Korean makeup artist brand Vidi Vici. Alice Wong, Joyce Beauty’s division manager, showed the Vidi Vici products, including a lunch-box-like case of color cosmetics, while standing in Joyce Beauty’s flagship on Queen’s Road, Central. In April, it was expanded by 30 percent and refitted alongside the rest of the Joyce store with mirrored fixtures to have an ultraluxurious look, explained Wong.

Other beauty products selling here include Annick Goutal, L’Artisan Parfumeur and Chantecaille.

“We’re kind of a platform for small brands,” said Wong, who added that, over the past decade, Joyce Beauty has brought names such as Laura Mercier and Bobbi Brown to Hong Kong.

Harvey Nichols’ Beyond Beauty department carries numerous exclusives in the city, as well, including June Jacobs, 3Lab, Ren, Demeter Fragrance, Ayurmedic, Le Vin and Olavi, according to Anita Yuen, director of the department store’s beauty division, who explained the retailer has about 30 niche brands in all.

Beauty seller Sasa, for its part, manages in Hong Kong more than 100 international labels, such as Elizabeth Arden, La Colline and Nuxe, said Guy Look, chief financial officer and executive director of the retailer, which operates more than 56 doors here and in Macau, plus five doors in Mainland China and 47 elsewhere in Asia. Such exclusives generate some 35 percent of Sasa’s business, which hit 2.89 billion Hong Kong dollars, or $371.5 million at average exchange, for the fiscal year ended March 31, 2007.

“We try to work very closely with different brands,” he said, explaining that it is not Sasa’s strategy to be purely a discounter. “While working with them, we leverage their marketing and they, in turn, get business.”

Look added that, with its wide product range (Sasa carries about 400 brands and more than 15,000 stockkeeping units), the retailer aims to be a one-stop cosmetics destination for everyone. Sasa’s focus on customer service extends from the selling floor into its treatment rooms found in almost all of the retailer’s locations. Sasa also owns the Philip Wain Fitness and Beauty Club, which has nine locations in the Asia-Pacific region.

In September, Sasa inaugurated a 133-square-foot Spa & Wellbeing section with six natural brands in its Causeway Bay store. A further five, including more brands, are planned in the city.

“It goes with Chinese tradition,” said Look, referring to the belief that beauty comes from the inside out.

Such an emphasis on natural beauty goes hand-in-hand with The Body Shop’s philosophy. The L’Oréal-owned natural retailer and manufacturer has more than 25 locations around Hong Kong.

In all, L’Oréal runs more than 60 stores in the city. Two months ago, with the unveiling of the Elements mall, L’Oréal — which has been in Hong Kong for 25 years and China for 10 — inaugurated six branded stores, including the first Helena Rubinstein door worldwide.

While it is not L’Oréal’s intent to be a retailer (Stephen Mosely, president and managing director of L’Oréal Hong Kong, said the company would “much rather work with retail partners if we can”), such stores in a market like Hong Kong allow the company to express a brand fully.

“We’re following the development of the environment,” Mosely said.

It’s an exciting one in Hong Kong, where the consumer’s appetite for beauty keeps growing.

“We see emerging segments that probably didn’t exist a few years ago,” said Mosely, ticking off the men’s and sun care markets, plus the dermo-cosmetics segment, among others. “We think the trends will continue driving the market.”

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