Total Retail Sales of Cosmetics in China Hit a 10-year High in June
- Chaileedo Press
- Jul 18, 2023
- 6 min read
In terms of the consumer goods sector alone, the cosmetics market still shows strong market resilience and room for growth.
Yesterday (July 17), the National Bureau of Statistics (NBS) released data on retail sales of consumer goods in the first half of 2023. Among them, retail sales of cosmetics amounted to 207.1 billion yuan ($28.9 billion), up 8.6% year-on-year. In terms of growth rate, the year-on-year growth rate of retail sales of cosmetics in the first half of the year was slightly higher than that of the entire consumer goods, outperforming the broader market. Meanwhile, the total retail sales of cosmetics in June this year hit a nearly 10-year high. This also shows that the cosmetics industry may overcome the "darkest hour" of last year and ushered a long overdue rebound step by step.
The cosmetics sold 207.1 billion in H1
According to the latest data released by NBS, it shows that in the first half of this year, the total retail sales of consumer goods was 22.76 trillion yuan ($3.2 trillion), an increase of 8.2% year-on-year. In June, the total retail sales of consumer goods was 3.995 trillion yuan ($557.2 billion), an increase of 3.1% year-on-year. Among them, the total retail sales of cosmetics in the first half of the year amounted to 207.1 billion yuan ($28.9 billion), up 8.6% year-on-year. In June, the total retail sales of cosmetics amounted to 45.1 billion yuan ($6.3 billion), up 4.8% year-on-year.
In terms of growth rate, the cosmetics category is ahead of the broader market compared to the overall retail performance in June and the first half of the year.
However, from the point of view of the overall growth rate in the first half of this year, the overall growth rate in June this year is not as good as the performance of the first two months. Especially in April this year, the total retail sales of cosmetics realized a high increase of 24.3%, which is a super strong recovery after 2022 negative growth. However, since April, total cosmetics retail sales growth began to gradually slow down. Even though June was boosted by promotions such as Chinese Shopping 618 Festival, growth continued to shrink to 4.8%, only slightly higher than the January-February level this year.
It's worth noting that the continuant shrinking is keeping ahead. Through total cosmetic retail sales data in the last 10 years of June, CHAILEEDO found that although the total retail sales of cosmetics in June this year hit a new high in the last 10 years, the growth rate has also hit the lowest growth rate in the last 10 years. The market performance is obviously not as good as in previous years. It is important that even in 2022, when the overall market downtrend, the total retail sales of cosmetics also achieved the highest annual growth of 8.1% in last June.
Not only this year, CHAILEEDO analyzes the data in the last 10 years. The total retail sales of cosmetics have been slowing down continuously since the highest growth rate of 22.5% was recorded in June 2019 and fell off a cliff after the pandemic in 2020 and hit a 10-year low in 2022. This year, it is once again at a record low. However, compared to last year's overall negative growth, cosmetic retail sales this year still maintain the growth trend for six consecutive months but also can bring some confidence to the industry.
The weakness shows in imported cosmetics and exports are rising steadily
Actually, the slowdown of cosmetics retail sales is not only reflected in the Chinese market. In the first half of this year, beauty cosmetics and toiletries imported amount and number showed a downward trend.
According to customs import data, in the first half of this year, the cumulative amount of imports is 66.19 billion yuan ($9.2 billion), down 8.7%. The cumulative imports are 182,213.6 tons, down 10.7% year-on-year. And in June this year, beauty cosmetics and toiletries imported 30359.7 tons, down 9% year-on-year. The import amount is 9.29 billion yuan ($1.3 billion), down 21.79%. Up to now, the customs import amount has declined for three consecutive months.
The weakness of imported cosmetics is also reflected in the sales of international brands in the first half of this year. CHALEEDO data shows that the market size of foreign brands in the first half of this year amounted to 177.638 billion yuan ($24.8 billion), down 3.8% year-on-year. Among them, only the Douyin (Chinese version of TikTok) platform rose 44% year-on-year, and the rest of the platforms declined to varying degrees, such as the Alibaba-related platform declined by 14% year-on-year. Kwai declined 14.6% year-on-year. JD.com declined 18.7% year-on-year. A slight decline in sales of cosmetics store channel by 0.6% year-on-year.
However, cosmetic exports have risen steadily. It is worth mentioning that in the first five months of this year, in addition to the apparently poor performance in February, the number of exports of beauty cosmetics and toiletries has maintained a certain increase. The amount of only small fluctuations. From this data, the international market may still have some room for growth. It is the right time for Chinese beauty brands to go global.
Overall, compared to the epidemic before, in the first half of this year, the data in various related fields did not show a more obvious recovery and growth, which also affects the cosmetics investment and financing market to a certain extent.
Through incomplete statistics, in the first half of this year, the number of Chinese domestic investment and financing in the field of beauty was only 6% of the same period last year, or even less than the second half of last year level, while the cosmetic market is in a downturn. From the breakdown of the month, only April was a positive growth trend, the rest of the months are less than the same period last year and even plunged nearly 80% in June.
In addition, in terms of financing amount, there has also been a sharp decline. During the same period last year, there are 12 funding that are over 100 million yuan, including Harmay, gaining 1.4 billion financing, WOW COLOUR, gaining 680 million yuan, Winkey, gaining more than 200 million yuan, Y.O.U, gaining 280 million yuan. In the first half of this year, there are only 5 funding over 100 million yuan, including Yuanyi Biological, PAML Biotechnologies are synthetic biology enterprises. Unicon, 4inLOOK is contact lens. Only by Perfect funded the 471 million yuan acquisition of Weimeizi is a brand side.
It can be seen that cosmetics investment and financing have become more rational since this year. One of the more significant changes is that the upstream enterprises and segments gain more attention, but the investment in beauty brands significantly reduced.
Market recovery depends on the second half of the year
In addition, according to CHAILEEDO data, in the first half of this year, the size of the beauty market was 407.2 billion yuan ($56.8 billion), an increase of 3.5% year-on-year. The online channels accounted for 44.76%, up 1.36% year-on-year.
Among them, the GMV of the Alibaba-related platform in the beauty segment declined by 8.6% year-on-year. Kwai grew by 15.9% year-on-year. Douyin rose by 54.5% year-on-year. JD.com declined by 14.5% year-on-year. The sales of cosmetics store channels rose by 1% year-on-year.
It can also be seen from the market scale data that the overall recovery of the cosmetics market in the first half of this year is still not obvious. Previously, a number of industry insiders told CHAILEEDO that "in the first half of this year, most companies may still be in a wait-and-see situation. The real industry recovery may have to wait until the second half of this year." And after the release of the latest total retail sales data in the cosmetics category, there are also testing organizations practitioners telling CHAILEEDO that "In the first half of this year, the enterprises launching new products is not much. At present, many companies are preparing to carry out the testing and filing. They are preparing for the next year."
In addition, there are ODM/OEM business leaders expressed the same view as CHAILEEDO, many companies are currently quite conservative, "the first half of the year is still difficult for everyone. Small businesses fell quite a bit, and medium and large enterprises are basically on a downward trend." “In the second half of the offline channel should usher in a recovery." He further said, "Affected by the crackdown on new regulation, the online channel may still continue the decline in the first half of the year."
The statement is not unreasonable. CHAILEEDO noted that some brands that used to focus on online, began to vigorously deploy offline channels. In the past three years, more than 20 online-based brands such Florasis, BIOHYALUX, C+ and others announced their entry into the offline. Even a number of brands have announced specific business objectives.
Of course, although the overall growth of total retail sales is weak, the cosmetics market is still very promising. Particularly noteworthy is that, CHAILEEDO found that as of now there are 18 cosmetics-related companies are in the process of IPO. Some companies are in preparation of going listing. To some extent, that also reflects the industry is full of confidence in this year's beauty market.
"This latest data is reassuring." The head of the above ODM/OEM enterprise told CHAILEEDO. Overall, the performance of the cosmetics market in the first half of this year was not that good, but not that bad either. And there is no doubt that the industry recovery does not necessarily mean that all companies or brands will recover. Only in the process of gradually restoring confidence in the cosmetics consumer market and maintaining the strength of their own business or brand advantages, then it is able to truly invincible in the market.
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