Attracting Traffic With Exhibitions, S'Young Plays a New Offline Retail Pattern

With an investment of over 70 million yuan ($10.095 million) in a single store, is it an opportunity or a challenge?

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On August 31, S'Young International officially announced the launch of a new high-end beauty digital retail collection store - Shuiyangtang.

In recent years, new beauty collection stores such as HARMAY and THE COLORIST have become popular among young Chinese consumers. Compared with traditional beauty collection stores like Watsons and Sephora, new beauty stores have become a new consumption and social place for young people by creating an instagrammable-style shopping scene.

In these years, China's beauty collection store market is accelerating the reshuffle, what are the advantages of S'Young international entering at this time?

Bubble on one side, prosperity on the other

Although it caters to young users and development speed, the new beauty collection store is slightly better, in the most fundamental source of goods, they are less advantageous than the traditional stores. According to an industry report by iiMedia, for price control, avoiding direct competitors, and other considerations, the international brands usually do not supply directly to the new beauty collection stores, which leads to new collection stores’ unknown sources of goods.

Many new beauty collection stores, including HARMAY and THE COLORIST, need to use big brand samples for traffic. HARMAY CEO, Ju Chunmao, said in an interview by 36Kr that the sourcing channels of big brand samples sold by HARMAY are mainly from counters and trading companies. However, in February this year, Harmay was also fined 887,000 yuan($127,900) for 35 fake big brand samples.

It's not the only case, according to public media reports, in January 2021, Only Write, a beauty collection store in Hangzhou was reported by consumers, and the local administration for market regulation contacted the customs department to assist in the investigation and seized nearly 3,000 pieces of cosmetics suspected of being smuggled into the store, most of which were samples of big brand cosmetics. The sample business of beauty stores is obviously risky, and the future of this type of business is hardly bright.

Furthermore, offline retail stores have not had a good time affected by the pandemic in these two years. In the first half of 2021 alone, THE COLORIST franchise closed 59 stores. And according to news, WOW COLOUR also shut down 60 stores in 2021, and HAYDON's two stores in Hangzhou and Xi'an officially closed in 2022.

Even though many beauty collection store brands have started to downsize their stores in recent years, and the media has previously claimed that the bubble of beauty collection stores is about to burst, its market is still looking good from the data of financing and market research.

It is worth noting that the potential space for beauty collection stores in China is still large.

According to a report released by iiMedia, the market size of China's beauty collection store industry will be 41.9 billion yuan ($6.043 billion) in 2020, of which new beauty collection stores will account for 7.6%. As the new beauty collection store industry transitions from the budding stage to the stable development stage, its market share is projected to increase to 15.8% in 2023, and the market size is expected to reach 13 billion yuan ($1.874 billion).

In summary, S'Young international still has great potential to enter the beauty collection store industry.

Relay on S'Young, attracting traffic by the exhibition

Major capital entry, making the beauty collection store area gradually crowded, then, how does Shuiyangtang stand out?

First of all, Shuiyangtang relies on S'Young, and S'Young international is an independent brand operation platform under S'Young, providing multi-dimensional solutions for partner brands in China in terms of marketing, sales, and channels. Its cooperative clients include overseas brands such as mesoestetic, KIKO, Dr.Ci:Labo, and Neutrogena. It is worth mentioning that in July this year, S'Young international acquired EDB, a French high-luxury anti-aging brand, and completed its investment in PierAuge, a French light luxury brand, and acquisition of its Chinese business. Therefore, owning the resources in terms of channels, supply chain, and capital, the competitiveness of Shuiyangtang is evident.

In addition to the strong capital strength, S'Young also pioneered the "one show, one store" new retail model in each city, showing a new pattern in the scene.

For a long time, scene marketing is the new retail brand "standing out" tip. HARMAY and HAYDON, which also position themselves as high-end beauty collection stores, have turned themselves into "big brand sample collection stores", with big brand samples becoming the main attraction. At the same time, they use the design style of "one store, one theme" to strengthen their own popular attributes, attracting young consumers to have a visit.

Shuiyangtang, on the other hand, takes a different approach by using exhibitions to attract traffic and stores to convert, introducing consumers to the unique concepts, stories, and product advantages of global beauty brands, creating a high-end brand tone and a rich brand image. This will attract beauty and art lovers in each target city and more precisely target high-end Chinese consumers.

Although the construction of the consumer scene brings customers to the store, how to keep them is the most important, which requires abundant and unique products to enhance competitiveness.

From the current product side, Shuiyangtang selects high-end niche beauty brands from around the world that balance efficacy and storytelling, and selects 999 high-end niche salon fragrances globally, in addition to creating 9 high-end beauty brands’ exclusive cooperation models for the global debut.

The Fragrance Product Insight Report 2022 released by CHAILEEDO shows that the Chinese fragrance market is expected to reach 16.9 billion yuan ($2.437 billion) in 2022, and by 2025, the retail sales revenue of the Chinese fragrance market is projected to be 30 billion yuan($4.326 billion), which is expected to become the second largest market in the world. It is worth noting that the report mentions that nearly half of the consumers prefer salon fragrances. Thus, it seems that Shuiyangtang also has a lot of advantages in terms of goods.

In the future, in the general environment of the beauty collection store market, whether Shuiyangtang owned strong capital can stand firm in the beauty collection store area, still need to be tested in the market later.