How do Beauty Brands Face This Year of Uncertainty?
- Chaileedo Press
- Oct 12, 2022
- 4 min read
Under the impact of online channels and repeated epidemics, the growth of offline traffic has been hampered. Cosmetics physical stores have encountered an unprecedented crisis with store closures becoming the only option for most businesses.
So far in 2022, increased international uncertainties and the frequent occurrence of the epidemic in China in many places have brought new challenges full of uncertainties to China's local economic development.
In particular, offline entities have been hit even harder with a trend of store closures. As a result, several major international brands and Chinese head enterprises repositioned online channels, while cultivating internal strength, improving operational resilience, and showing the industry's defiant energy.
The trend of offline store closures
In the 3rd year of the epidemic, the retail industry is still having a tough time. Financing frequency of restaurants, cosmetics, mystery boxes, coffee, and other categories reduced, brand performance declined, and blockbuster beauty products are becoming less and less. Industry players who wildly invest gradually reduced. The trend of store closures intensified.
According to incomplete statistics from the Network Retail Research Center from Linkshop, at least nearly 4,700 offline stores were closed in the first half of this year, including Wal-Mart, Carrefour, and other head brands with strong overall strength.
Among them, only in the beauty industry, there are more than 600 offline stores closed. Customer flow is the cornerstone of the survival of offline cosmetics stores. But with the impact of online channels and repeated epidemics, the growth of offline customer flow has been hampered and cosmetics physical stores are experiencing an unprecedented crisis, making store closures the only option for most businesses.
Not only Chinese branded chain stores and individual merchants, but also a large number of international cosmetic brands have either closed their stores or pulled out from the Chinese market so far in 2021. The shutdown trend swept from color cosmetics to skincare.
For example, at the end of July, Maybelline New York stated that it would close most of its offline stores in the Chinese market. South Korean makeup brand HERA officially announced in February this year that it would close its offline counters and online WeChat mall in the Chinese market. L'Oreal Group's spa skincare brand Saint-Gervas Mont Blanc has shut down the brand's official flagship store on the Chinese leading e-commerce platform Tmall and is rumored to "pull out from the Chinese market", etc.
It can be seen that the epidemic hit the offline retail industry, resulting in the overall operation of the offline channel was "hit hard", Europe, the United States, Japan, and South Korean brands were also affected without exception. At this time, it is natural for brands to tighten their offline investment.
Put more on online and cultivate internal strength
China remains a large market full of resilience and is the most important, or even the number one overseas market for beauty giants in Europe, America, Japan and Korea. As Shiseido said in its first-half earnings report, China jumped to the group's top market with $791 million. Therefore, short-term adjustments like the shutdown of offline stores by brands like Innisfree will not change the fact that international giants are increasing their focus on the Chinese market.
On the contrary, there is still a steady stream of overseas brands and new products coming into China and debuting in the country. For example, L'Oreal introduced Prada Perfume and Beauty to the Chinese market. Aveda, a high-end toiletries brand of Estee Lauder, opened its first store in China. Amore Pacific acquired Tata Harper, and Jinpyo Lee, chief strategy officer of Amore Pacific, said, "With the support of Amore Pacific's R&D capabilities and infrastructure, we expect Tata Harper to achieve significant expansion in the Western European and Asian markets." Although it is laid out in North America, it is likely to be a major increment to China's performance as well.
In recent years, high-end skin care has become an important engine driving the performance growth of cosmetics such as L'Oreal and Estee Lauder. This year, the beauty giants are also still gaining more profits through high premium large single products. It is understood that Estee Lauder Advanced Night Repair has been upgraded to the seventh generation. L'Oreal Paris unveiled its Revitalift Filler [HA] Pro-xylane Pro, etc.. Behind the many new products is the international giant's attention to research and development and is greatly improving the brand layout of the Chinese market, which is undoubtedly an effective path to enhance their own market "toughness", anti-risk ability, and further can also consolidate the brand influence and enhance market share.
In addition to the introduction of new brands, cultivating blockbuster beauty product for new incremental, international beauty groups are also accelerating localization strategy to better fit the Chinese market in terms of channels, marketing and technology.
Judging channels and marketing, the best illustration is the increased investment in live streaming. Estee Lauder, Lancome, L'Oreal Paris, Whoo, Freeplus, Avène have been successfully stationed in TikTok China. They have achieved remarkable results by means of Dabo(live streaming by KOLs) and brand’s own live streaming. They created a benign chain of interest e-commerce of "content-driven goods, goods feeding the brand", and continuously triggering the brand potential.
In the face of challenges, expansion and tightening are just a tactic. A well-known Chinese beauty chain founder have said that: “closing some store that losing money is a very wise approach. When the winter comes, if not hibernate, but also desperately struggling, that may be frozen to death."
Comments