SKIN SHOP: We Getting Better after Closing 70 Stores

Chaileedo Press
Oct 4, 2022
2 min read

Because when the economic slump and industry winter come over at the same time, this shrinking action facilitates hibernation.

The beauty industry has encountered various challenges this year. The total retail sales of consumer goods in China for cosmetics was 245.3 billion yuan(about $34.1 billion) from January to August 2022, down 6.4% year-on-year. However, China's efficacy skincare market has been growing rapidly in recent years, with a compound annual growth rate of 23.4%, and is expected to reach 41.1 billion yuan(about $5.7 billion) in 2022. CHAILEEDO invited Liu Chuangao, founder of Sichuan Skin Shop Enterprise Management Co. to share with us the cosmetic trends in China.

CHAILEEDO: What is the rule of survival for offline cosmetic stores in the future?

Liu: There are too many uncertainties in the economic environment now. Although the whole environment is not good, SKIN SHOP is living quite well this year. Because we have made some shrinking actions: Firstly, we have shut down more than 70 stores one after another, leaving nearly 200. Secondly, we have cut some positions that do not produce direct output, saving tens of millions yuan. Thirdly, we have cut off more than 10 million yuan of advertising expenses. So this year's profits are a little better than in previous years.

As far as I know, many peers are also doing some shrinking action. They have closed some loss-making, ineffective stores, which is a very wise approach. Because when the economic slump and industry winter come over at the same time, this shrinking action facilitates hibernation. If we don't hibernate but struggle desperately, we may be frozen to death. But winter may also be the wolf's spring. Those who do relatively well and have sufficient cash flow have the possibility of low-cost expansion at this time.

In addition to shrinking, offline cosmetic stores must also do a good job of experience and customer maintenance, and strive to build their stores into a good brand in the minds of consumers. In the future, companies that have a better grasp of the fundamental logic of business, such as brand, quality, price and service, will go farther.