L2’s Digital IQ Index: Japan Beauty, released this week, finds that local brands are dominating Japan’s Beauty industry. Three local conglomerates Shiseido, Kao, and Kosé control 34% of the country’s skin care and 43% of the color cosmetics market. And six of the top ten brands as ranked by L2 are based in Japan.


Japan is a unique market in that color cosmetics are projected to decline by 0.2% between 2013 and 2018 and skin care sales are expected to grow by just 0.1%. The tight competition, along with local brands’ innate advantage, has led global conglomerates to become digital innovators. L’Oreal Groupe and Estée Lauder Companies are leading the pack with the Gifted Digital IQs. Global brands have a higher e-commerce adoption rate than local brands, 71% vs. 56%.

In some aspects – such as search and loyalty – local brands are ahead of their global competitors. Eighty-two percent offer loyalty programs vs. just 47% of global brands. And searches for local Beauty brands topped searches for global. For more on the digital competition between 28 global and 43 local brands, seen an excerpt of the L2 study.

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