Image source @ vision china
Wen | Narrow Broadcasting by Yang Yiqi
Judging from the expansion actions of various brands, this year is a year when beauty collection stores are picking up again.
During the epidemic, many beauty collection stores were affected, even mature brands such as Sephora and Watsons. Because of the weak consumption and loss of cosmetics, many new cosmetics retail stores that were previously optimistic have also been affected to varying degrees.
For example, the colorist adjusted some stores last year; WOW COLOUR’s stores dropped sharply from 300 at the peak to 100+at the end of last year; There are also some brands that close all their stores, such as ONLY WRITE and HAYDON Black Hole.
But by this year, the revenue and profitability of some beauty collection stores have improved.
For example, Yanli increased by 40% in the first quarter; The colorist also turned a profit in the first quarter, with revenue increasing by over 36% year-on-year to 236 million yuan, and the operating profit rate changed from -5.6% to 14.2%. The person in charge of the colorist’s brand told Narrow Broadcast that at present, the single-store data has maintained a double-digit year-on-year growth rate every month.
A number of beauty collection stores have also increased their store expansion and targeted areas outside first-tier cities.
Hi-burning wants to expand to 50 stores this year (there are 22 stores by December 2022) through the parallel mode of direct franchise, and most of the areas open to franchise are Guangdong and second-and third-tier cities in southwest China. The colorist also plans to continue to open 100+ stores nationwide, of which 17 stores opened in the first half of the year are in second-and third-tier cities such as Foshan, Xiamen and Liuzhou.
This year, beauty collection stores have also proposed to upgrade their brand introduction, service and spatial image, showing good expectations for the future. Yanli held its first supplier meeting in nearly three years in April this year and announced a series of upgrade strategies.
Why can the beauty collection shop pick up this year? What are the external factors? What adjustments have been made to the channel itself?
First of all, this is related to the recovery of offline consumption, and the channels such as colorists and burning fans are actively or passively optimized during the epidemic to find an expandable single-store model. Including Huamei closing the Tianmuli store in Hangzhou at the end of July and officially stopping the operation of the Xi ‘an store today, it is also looking for a suitable expansion model, such as being profitable and better matching with the ground. One proof is that Huamei said that she would open upgraded flagship stores in Nanjing, Hangzhou, Xi ‘an and other cities.
The recovery of cosmetics consumption has also played a certain role in boosting. From the macro data, the total amount of cosmetics agencies from January to August this year increased by 7.5% year-on-year.
In addition, one of the reasons why the industry thought that the makeup collection store could not be sustained was that it was not optimistic about the upstream cheap domestic makeup. Although many domestic cheap makeup businesses have fallen or even closed down since 2021, cheap makeup is not a false demand. With the liberalization of the epidemic, the consumption of cosmetics has gradually recovered. According to the data of the solution consultation, the cosmetics category of Tik Tok e-commerce increased by 90% in the second quarter of this year; There are also many domestic cosmetics that have withstood the test of epidemic situation and low tide of capital.
Another important reason is that brands are paying more and more attention to offline.
In the past five years, a large number of beauty brands have risen with the help of online traffic. However, with the online growth and the weaker advantages of traffic cost, some brands think that offline is a more efficient choice; And because of the demand of brand price control, the gap between offline price and online price is narrowing.
This means that the online and offline channel game has entered a new stage in terms of growth, traffic and price.
The ups and downs experienced by beauty shops, especially those represented by colorists, in the past few years are related to consumer demand, upstream supply and the adjustment of channels themselves.
These makeup collection stores came into being with the tide of domestic beauty cosmetics, and innovated on the traditional CS channel model, creating cheap makeup collection, big-name sample sales, no BA and other models to create a store experience that attracts Z generation. This has also led to the iteration of mature brands in terms of brand introduction, store design and experience.
These new retail species are expanding rapidly with the support of capital. A practitioner recalled to us that his brand opened 100 stores in half a year, and basically kept one store for one or two days. "It was crazy, that was really fierce. 」
However, due to the decline in the frequency of consumers’ make-up during the epidemic, and the lack of capital and flow dividends, the consumption of make-up is weak, and many make-up brands have closed down or transformed. As an accompanying channel of domestic beauty products, makeup collection stores were affected. Some investors stopped investing in makeup collection stores after seeing the decline of Tmall makeup market.
The person in charge of the brand department of the colorist believes that the demand for make-up consumption has not changed in essence, but the external factors have hidden the demands in stages, and the cheap domestic make-up is still a sustainable market.
From the consumer side, the makeup crowd is getting younger and younger, and they have demands for cheap goods; From the supply side, cheap make-up is essentially a fast fashion business. The response speed of China brands and supply chains is very fast, and a new product can be launched in two or three months, which is difficult for international brands to satisfy.
Earlier, some people in the industry told Narrow Broadcast, "Many people don’t see domestic cosmetics on Taotian’s list, so they think they are not good. In fact, these brands are on the rise in Tik Tok. 」
In particular, some brands that have crossed the epidemic cycle have become better by optimizing the supply chain, products and operating costs, and are still a stable supply of beauty collection stores.
Although cheap makeup is picking up, these makeup collection stores still need to solve the problems of pattern homogenization and loss expansion buried in the rapid expansion period.
The above-mentioned practitioners said that at that time, everyone was more concerned about the growth of the broader market than the single store. "When you go back to the single store, you will find that many stores are not profitable. Coupled with the impact of the epidemic, the problem was quickly exposed.
In addition to closing unprofitable stores, exploring a single-store profit model is the key.
The relevant person in charge of the colorist mentioned that they have been adjusting the unit yield of stores in 2022, and they have to solve large and small problems almost every week. "It is to do the basic retail skills well and optimize based on efficiency. 」
After adjustment, the colorist’s single shop tends to be standardized, with an area of 100-400 square meters. Xiyan is also making similar adjustments. They control the store to 80 square meters, hoping to speed up the chain through the small store model.
In addition, colorists also systematize brand marketing. Based on different nodes and changes in consumer demand, they formulate appropriate marketing programs to attract users to the store, so that marketing can serve daily innovation and retail, rather than marketing for marketing’s sake.
After a series of adjustments, the sales of colorists improved after the recovery of consumption. "The make-up cabinets we sell are completely out of stock, and it’s all the same wherever you go. The person in charge of the colorist brand said.
KK Group’s prospectus shows that the loss-making stores of colorists are decreasing, from 115 at the end of 2022 to 35 on March 31, 2023. The single store data has also improved significantly. The average monthly transaction volume of a single store has increased from 3454 in Q1 last year to 5065, and the GMV of a single store has increased from 316,600 yuan to 455,900 yuan, both higher than the annual data in 2020.
The person in charge of the colorist brand stressed that these data are also better than before the epidemic. "In our view, the market has returned to normal level. 」
With the recovery of offline consumption, beauty collection stores with expansion conditions began to pay attention to broader market opportunities.
In addition to the colorists and hi-burning mentioned at the beginning, mature brands such as Yanli and Sephora are also actively exploring third-and fourth-tier cities. Yanli will increase the layout of the sinking market in 2022; Sephora entered more sinking cities such as Bozhou and Taian from January to August this year.
This just conforms to a trend-in recent years, large commercial real estate is also exploring second, third and fourth tier cities, and beauty collection stores can sink with real estate companies. Yanli cooperates with regional head commercial real estate and China Resources system to lay out the sinking market; The colorist also cooperates directly with head commercial real estate such as China Resources, Vanke and Wanda. "They take us wherever they drive. 」
The main reason for the sinking of beauty collection stores is related to the gradual saturation of competition in first-and second-tier cities and the rising cost of competition. However, there are still a lot of unsatisfied consumer demand in the sinking market-consumers’ awareness of brands and products accumulated through social media is the same as that in first-and second-tier cities, but it is difficult to experience these products offline, let alone niche brands and emerging online celebrity brands, and many cities have not even popularized counters of mature brands.
Users need a channel to buy genuine products and experience more products.
In the regional markets where these beauty collection stores have sunk, there are long-established regional chain leaders, such as Merrill Lynch Beauty in Anhui and Boyimeihui in Henan, which can meet the above needs of local consumers to some extent.
Some people in the industry also mentioned that after the epidemic, individual beauty shops in some areas "have sprung up like mushrooms after rain." Narrow Broadcast also found a large number of single stores in public comments, such as infini beauty, which opened in Wujiang District, Suzhou, and opened in October last year, specializing in international big-name cosmetics, skin care and perfumes.
The continuous activity of regional brands and single stores reflects the definite demand and opportunity of sinking market, which is the premise of an industry chain.
The opportunity for national chain brands lies in enhancing their local share through branding and standardization, and meeting differentiated needs with their own supply chain characteristics.
Zheng Xuechao, director of Yanli Operation Center, mentioned, "Although there are leading companies in every region, there is a large space in the domestic cosmetics market, and (local) customers have the demand of pursuing genuine products and differentiation, and Yanli can just play its own characteristics. The core feature of Yanli is the professional skin care and the professional service of the store skin housekeeper. On the public comment, some users commented in a store in Yanli Suzhou, and finally found a channel to experience the high-end professional brand Orenassus in Suzhou.
Another example is a large number of emerging cheap makeup brands and products in the colorist’s shop. The person in charge of the brand department of the colorist said that they received unexpected feedback after sinking. "Young people in the sinking market have a better understanding of makeup than we thought. 」
However, there is also objective competitive pressure in the regional market. As the person in charge of the colorist brand said, the industry competition is intensifying. "We have a sense of crisis every day. 」
On the one hand, there are great differences in different regions, and it takes time for chain brands to accumulate their knowledge of the market. Yan Li found that customers in different regions have different needs for skin care and brand awareness, and the pallets of chain brands may not be suitable for all regions and need to be adjusted quickly. Hi-burning cooperation with franchisees is also to better integrate into the regional market.
Moreover, some regional brands are not slower than chain brands in the iterative update of supply and store design, and even some individual stores have more advantages in display innovation because they are flexible enough.
On the other hand, acquaintance society and attention to service are the consumption characteristics of the sinking market, and brands that have been deeply involved in the local market for a long time or have a smaller service radius have closer ties with users.
Zhang Fan, the owner of infini beauty, told Narrow Broadcast that although there are not many new customers in the store every day, they have accumulated nearly 500 members since its establishment, and almost all of them will buy back. "We don’t eat people very much, but mainly buy back from old customers. 」
Zhang Fan believes that service is an important reason for the high repurchase rate. She will patiently introduce and recommend products to customers, remember the products and needs bought by each customer, and bring customers a more intimate experience. Infini beauty’s core customers are mainly women aged 40+. Most of these customers don’t take the initiative to do their homework, but trust Zhang Fan’s service and recommendation, which leads to repurchase and linkage.
Zheng Xuechao also stressed that customers in the sinking market have higher demand for in-store experience and services, and brand salons and brand private enjoyment will be very popular, so they will strengthen such services locally and enhance the user experience.
In the past, beauty brands that relied on online traffic also had the demand of exhausted traffic and fierce competition, and returned to the offline to find increments.
Offline layout is an inevitable choice for the brand to grow to a certain stage, not only for sales, but also for establishing a more specific and three-dimensional brand image and closer user interaction.
Experience-oriented sub-categories also have natural demand for offline products, such as make-up, perfume and beauty instruments. Luo Xiaoman, a new make-up brand, told Narrow Broadcast that they will pay more attention to offline channels this year, provide users with color trials and improve the accuracy of purchase; Yan Li started to create an offline experience scene of home beauty instruments with domestic and foreign head beauty instrument brands last year.
With the change of online traffic environment, offline turns into incremental channels and traffic depressions.
In the past three years, the beauty industry has accelerated its online development, and the growth of major trading platforms has peaked. Only Tik Tok is still growing at a high speed. According to the statistics of 618 this year, the increase of skin care products in Tik Tok has doubled, but Taotian has increased by less than two points year-on-year. Offline has become a way for brands to find increments.
Secondly, online traffic costs are high, even higher than offline costs for many new brands. Some brands believe that the cost of entering the beauty collection store is relatively low and fixed, and there is no need to continuously invest in traffic fees, which is a more efficient channel at present.
Such traffic changes, coupled with the fragmentation of channel layout, brands began to control the price and gross profit more consciously. Therefore, the price gap between offline and online is gradually narrowing. As far as colorists are concerned, apart from broadcasting, colorists are now able to achieve the same price as online, whether in the daily sales period or in important nodes such as 618 and double 11.
Beauty collection stores have overcome the most obvious disadvantage in the past-price to some extent. Especially in recent years, due to the low price brought by frequent e-commerce promotions, "the second 0 yuan" and "buy a formal suit to send a formal suit" have become commonplace, and even some brands are increasing at a broken price.
At this new node, beauty brands enter offline through beauty collection stores, first of all to reduce the difficulty of brand layout offline, and the cost, scale advantage and management difficulty are better than direct sales.
In addition to new brands, many overseas niche brands and cutting-edge product lines of old domestic brands also hope to cooperate with beauty collection stores to enhance consumers’ awareness of brands, and many collection stores have launched relevant cooperation plans.
Moreover, the beauty collection store can play a different value from online at present, such as the difference of goods, marketing and service, which has boosted the restart of offline business.
For example, the off-line pallet is not simply a replica of the on-line pallet, and there are differences between products and packaging. Take a detail, the off-line commodity packaging needs to be coated with oil film, otherwise it will be distorted by off-line spotlights.
Based on the recognition of pallet differences, colorists will help brands incubate new product opportunities offline, and they have created new offline products with brands such as Mistine Mistine and Ke Laqi.
When Ke Laqi launched "Little Paintball" lip paste last year, he provided a full range of products with different color numbers to the colorist’s channel, and discussed the applicable people of different color numbers together. Finally, he decided on a channel-specific color number, and the sales exceeded expectations.
The colorist said that because the colorist provides color test service, it can provide faster and closer feedback to the brand, thus creating new product opportunities. "Some colors may not attract users online, but they sell well offline because they can try colors. 」
Co-creation with brands can improve the competitiveness of channels, achieve exclusive cooperation of brands or brand pallets, and attract more brands. The relevant person in charge of the colorist said that the number of exclusive brands in the colorist field has an absolute advantage in the industry.
At the marketing level, offline is naturally suitable for driving consumers to buy through activity atmosphere and scene marketing, similar to the logic of online content planting grass. The colorist believes that the off-line consumption season and consumption habits are different from online ones. Consumers will go to the store as long as they know that there are new products every month and there are different ways to play every month.
"Narrow Broadcasting" learned that colorists have new products every week and will do joint marketing with brands every month. For example, after starting to apply sunscreen products in March this year, the colorist will start with the location of the store display and sunscreen products to create a sunscreen atmosphere. During the National Day, the colorist also joined hands with Laqi, Grain Rain, Pico Bear ×loopy and Half × Barbie to hold an anniversary flash event to attract users to punch in. Compared with the pre-holiday sales, the colorist’s sales increased by 40% week-on-week.
Changes in online traffic have also made brands aware of the importance of refined operations, which is why beauty collection stores emphasize improving membership services.
For example, Yanli will renew and maintain its members through new product experience, sample presentation, brand flash, high-end member appreciation meeting, etc., and the precipitated members will also be open to the brand and conduct in-depth membership operation with the brand; Members’ private parties will also be held in conjunction with the brand, and members will be invited to experience products and services in VIP rooms of shopping malls or high-end private parties in star-rated hotels. Such activities can reach nearly 2,000 a year.
Zheng Xuechao said that they clearly perceived this trend change in 2022, and more and more brands discussed with them how to strengthen member services. Through the interaction between consumers and brands, on the one hand, customers can choose products that suit them, on the other hand, they can get more refined labels from members to make decision support for product and service upgrade iteration, joint marketing and user experience, so as to better solve users’ pain points.
