China's post-95 generation is deciding the fate of international giants

Produced | Tiger Sniff Commercial, Consumer and Mobile Group

The author | Miao Zhengqing

Caption image| IC Photo

At Hopson Hui on Beijing's West Dawang Road, international cosmetics brands are staging a "smoke-free competition" around young people. In the middle of the first floor, there are Lancôme, Chanel, Dior, Guerlain, GIVENCHY, Clarins, ANNA SUI, Mac... Starting in 2021, these brands racked their brains in order to attract young girls: Lancôme stores equipped with equipment that can measure skin on the spot, and more frequently launched small mock-up activities; Chanel launched a campaign to give Snoopy's joint red envelopes and increased the delivery of small samples for young users who came to the store; MAC put blackpink member Lisa's joint products in a prominent position and gave lisa photos to some young girls...

As one of the commercial centers with the largest passenger flow in the south of Beijing's East Fourth Ring Road, it has become a key point for gathering post-95s and post-00s consumers after the epidemic. It is not difficult to see the "young taste" here from the brands that have settled in: Bubble Mart, Mo Mo Dim Sum Bureau, DLY Lounge Bar, Quarte Two-Dimensional, Immersive World VR Game Hall, Hippocampus Photo Studio, KKV Trend Collection Store... These new consumption projects around young people have quickly settled here and built a young people's consumption ecology.

The young people who were gathered further ignited the "enthusiasm" of the international cosmetics brands, and the big names were also "changed" by the young people. Dior store BA told Tiger Sniff that the proportion of post-95 consumers in 2021 will increase significantly, and grassroots BA is required to pay special attention to communication with young consumers. "In addition to beauty and skin care knowledge, post-95 consumers will even discuss tide play, anime, and glory of kings with you." The BA even pointed out the quiet change in the "appearance of the store": in order to attract young girls, the store began to add more young and handsome male BA. Mac's clerk said that when The Lisa co-branded products appeared in the store, the post-95 girls arrived at the store, and in order to "form a resonance" with these young people, the clerk listened to the BLACKPINK album overnight and watched the relevant group roundup.

What happened in Hopson Is not an isolated case, after the epidemic, a "key revolution" is taking place in the cosmetics world caused by Young Chinese people, and the world's cosmetics giants have realized that the rules of the market have entered the "Chinese moment": those who win the Chinese market win the world, and Chinese young people are becoming the decisive force.

In the first quarter of 2022, as international giants such as Shiseido, Estée Lauder, L'Oréal, and Procter & Gamble successively announced their 2021 financial reports, the Chinese market has become the most stable and most promising place for growth under the influence of the epidemic. The Chinese market has contributed the most sales increments to the top ten giants in the past year, and has become the fastest growing core market for these giants. Data from the Ministry of Industry, Trade and Resources of South Korea shows that the Chinese market will remain the largest export market for Korean cosmetics in 2021, and the sales volume contributed by the Chinese market is almost equivalent to that of the United States, Japan and the European Union combined. Statistics from the Confederation of French Beauty Companies show that in 2021, China has become the largest export market for French beauty for the second consecutive year, taking lipstick as an example, the Chinese market has almost digested a third of France's export lipstick.

What cannot be ignored is the young people in the Chinese market. Based on the research data of iResearch Consulting, Tmall and JD.com, in the Chinese cosmetics market from 2020 to 2021, the proportion of users aged 18 to 29 has exceeded 50%, of which the post-95 consumers represented by Generation Z have the fastest growth rate. The younger generation also shows more cosmetics consumption than before, with a single purchase frequency of Z generation skin care products and cosmetics as high as 12 times / year in 2021, and nearly 42% of Generation Z e-commerce users have purchased beauty and skin care products in 2021 Double Eleven. (Generation Z: Refers to the group born between 1995 and 2009, and the earliest wave of Generation Z has turned 27 years old in 2022.) The "early" Generation Z, born between 1995 and 2000 in the consumer circle, is regarded as one of the most powerful groups at present.

Many big international brands have gained insight into the market opportunities for young people in China, such as L'Oréal.

In the past 2021, with the high growth rate of the Chinese market and the strong spending power of Gen Z young people, L'Oréal has handed over a report card that has been described as a "historic year": since 1998, L'Oréal has achieved the fastest growth rate and in 2021 will become the top ten cosmetics groups in the world in terms of revenue. In 2021, L'Oréal's North Asia market revenue increased by 18.6% year-on-year, of which the Growth Rate in the Chinese Market was eye-catching - L'Oréal China in the fourth quarter increased by more than 50% year-on-year compared with 2019 before the epidemic. In the financial report of L'Oréal Group released in February 2022, "Double Eleven" was written into the report for the first time - during the Double Eleven period, L'Oréal's online sales exceeded 10 billion yuan. (L'Oréal North Asia market: covering the three major national markets of China, Japan and South Korea, it is known as the "Golden Delta of Beauty" within L'Oréal)

"L'Oréal firmly believes that young people are our future." L'Oréal North Asia President and China CEO Fabriel told Tiger Sniff that China is not only a growing market for L'Oréal, L'Oréal sees more obvious personality characteristics, consumer preferences and lifestyle changes in Chinese Gen Z young people.

95 later

L'Oréal China, Shanghai headquarters.

In early 2022, discussions about the metacosm were not uncommon in the 115-year-old Chinese headquarters of the 115-year-old cosmetics "century-old". You'll even hear a lot of "trendy" topics here: tide play, NFT, national wind two-dimensional, e-sports, only this green...

You'll also meet post-00s here, and as of March 2022, a number of post-00s interns have been working here for several months. Among the international big-name teams in the Chinese market, L'Oréal is the earliest company to "start" the post-00s in batches.

In L'Oréal China, in order to facilitate work, people are accustomed to using "5-year period" to divide consumer groups, such as post-90s, post-95s, and post-00s. When reporting to the international headquarters, the term "Generation Z", which is regarded by international consumer researchers as a "key symbol of Young Chinese people", is used.

After 25 years in China, L'Oréal found itself in need of learning a new "way of dealing with young people". Faberi told Tiger Sniff that the L'Oréal China team is trying to build new resonance through the ways and methods accepted by the young people of Generation Z, "We hope to get closer to Generation Z." ”

Focusing on trending topics and enabling young talents is one of the ways to gain insight into Young Chinese people. Lan Tingyuan, project director of L'Oréal's North Asia Consumer Center, who was the manager of the company's earliest cooperation with post-00 interns, told Tiger Sniff that its team is mainly post-90s young people, and in 2021, the team introduced post-00s interns in order to enrich the "understanding of young groups". "Their views are not the same as mine, we will discuss a lot of things, talk about some hot events or marketing solutions, and the post-00s generation can always bring different ideas."

Lan Tingyuan is the epitome of L'Oréal China at the moment. In the more than ten years of L'Oréal,000 years, she has experienced "multiple generations" of young people, and the current Generation Z consumers represented by the post-95 generation are making her and L'Oréal China feel different.

"20 years ago, it was a thousand faces, when young people pursued the same kind of beauty; 10 years ago, it was a thousand faces, young people began to pursue personalization; today is a person with a thousand faces, each young person has a variety of personalities, want to diversify expression." 」 Lan Tingyuan admits that the "diversity and changeability" of this generation of young people not only increases the difficulty of insight into their needs, but also increases the difficulty of marketing, supply chain, and research and development.

This challenge is placed in front of every brand that is developing in the Chinese market. Some people familiar with Japan's Shiseido told Tiger Sniff that Since 2017, China has been the largest market for Shiseido, and almost from this year, Shiseido has found that the Chinese market has become "more complex" - a group of young people with "stronger purchasing power" but "more dispersed demand" have begun to rise, and they are even subverting the existing channel model: compared with the offline world, this generation of young people is not only more likely to be affected by online content, but also more willing to complete consumption online. The same thinking has appeared in the local brand Perfect Diary, and Lv Jianhua, co-founder of Perfect Diary, bluntly said, "This generation of young consumers is becoming more and more difficult to serve, and their decision-making paths are shorter." ”

Lan Tingyuan's responsibility makes her pay special attention to the post-95 generation - she needs to have insight into market changes in advance and provide key strategies to the company in time, if she cannot share the frequency with young people, the consequences are unimaginable. About 5 years ago, Lan Tingyuan's team began to study post-95 consumers, that is, before the epidemic, the earliest batch of post-95s just graduated from college. At that time, L'Oréal China's task to Lan Tingyuan's team was to make insights and predictions about the market trend in the next 5 to 10 years.

At L'Oréal China, there are multiple teams conducting consumer research or trend insights, some responsible for macroeconomic research, some responsible for specific city research, and some specializing in new trends on Douyin, Station B, and Little Red Book. The core logic behind this is that L'Oréal does not want and does not dare to allow itself to be eliminated by the trend. A key detail is that all L'Oréal China employees can open the smart software provided by the company and search for the hottest keywords in any ingredient, category, makeup or skincare need within 24 hours.

"The market is changing rapidly, and speed is critical." Lan Tingyuan gave an interesting example, in L'Oréal's global scope, the level of "informatization" in China is at the forefront, "in fact, our data analysis, information technology means, market insight strategies in China have adversely affected the group and been introduced to the global market by the group as a new solution." ”

From another point of view, this is also a transformational evolution forced around the "fiercely competitive market" of young people. A management source from L'Oréal China told Tiger Sniff that under normal circumstances, from the discovery of demand to research and development to the final launch of products to the market, L'Oréal China takes 1 to 2 years, which is faster than the Chinese team of some international cosmetics groups, but slower than local new brands. "Because of the size, we have a more complex process system, and the small local team can react more quickly."

An industry insider who did not want to be named told Tiger Sniff that in 2016-2018, some local skin care and beauty brands "exploded" and the core reason behind it was that compared with international giants, these new brands have a faster "turnaround speed" and a more tolerant acceptance of new channel media categories. "The common phenomenon we can see is that local brands first embraced e-commerce channels, embraced new traffic delivery, embraced live broadcast rooms, and embraced new categories, while international giants missed about 2 years because of slower response speed and decision-making mode."

The impact of young people on the skincare and beauty industry is even qualitative.

The founder of a new beauty brand who worked for Procter & Gamble and experienced the golden age of Korean makeup and later started his own business told Tiger Sniff that the "reshaping" of the industry by young people is mainly reflected in the four aspects of channels, categories, consumption power and group changes. "From the channel, e-commerce has become an indispensable port for brands; in terms of categories, some new categories and outlets have risen rapidly, such as makeup, concealer, and men's care; in terms of consumption power, the consumption frequency and purchasing power of young people, especially Generation Z, have increased significantly; in groups, young men have begun to become a key force." Even young people are forcing the beauty and skincare industry to accelerate "technology", Guive Balooch, head of L'Oréal's global innovation technology incubation, told Tiger Sniff that millennials and Gen Z will pay special attention to and consider the technology component when making purchase decisions.

For L'Oréal, this "qualitative change" on the demand side means the adjustment of the supply side and even the evolution of the "skeleton" layer.

A person familiar with L'Oréal who has worked for more than 10 years revealed to Tiger Sniff that from 2016 to 2020, L'Oréal China's revenue in the group continued to grow, which strengthened the group's emphasis on the Chinese market. However, in the growth rate of some emerging categories and new consumer groups, L'Oréal's "intelligence" system found that there is a tendency to lag behind new local brands. "The performance of the China region has been very optimistic over the past five years, but the Group's dependence on the Chinese market is deepening, which means that the Chinese region needs to contribute more and share more growth tasks in a faster time." The above-mentioned person said that around 2020, L'Oréal Group issued instructions for "e-commerce" and "digitalization" in all regions of the world, and the "mining" of emerging groups in the Chinese market is also the core strategy, "Strictly speaking, in fact, it is not only young girls, but also men, the elderly, and more specific needs in subdivision scenarios." ”

The person pointed to a key detail. As early as 2015~2016, L'Oréal has taken the lead in trying to live streaming goods, and even some of the super anchors who have become famous after that are derived from the L'Oréal BA system, but due to the decision-making mechanism at that time, L'Oréal China cannot quickly transform the "market trend" seen, and finally "tastes" the dividend in the first few years of the rise of live streaming.

The "elephant" speeds up

In 2021, L'Oréal China completed a major restructuring of the personnel structure: the Markets of China, South Korea and Japan were unified into North Asia, and the CEO of China was also the President of North Asia.

"The power has been greatly decentralized to the Chinese region, and the needs and insights of the Chinese region can be quickly reflected to the headquarters, and the Chinese region has gained greater flexibility." Lan Tingyuan compared L'Oréal China more than 20 years ago, when China could only follow the global headquarters step by step – from products to marketing, almost everything was stipulated by the headquarters. Around 2000, L'Oréal China began to gain some "localization power", and China set up its own R&D innovation center, which began to be allowed to develop some localized products. Since then, L'Oréal China's "free movement" space has gradually become larger, and its core brands such as Lancôme and L'Oréal Paris have also begun to transfer their core departments to China.

But this is still a "shackled" dancer, whether it is product development or marketing solutions, China needs to report to the headquarters one by one and work according to instructions, some of the unique needs of the Chinese market, even if they are reflected to the headquarters in a timely manner, it also needs a long review and evaluation process to form a plan - which led to L'Oréal China missing some good opportunities.

Two factors let this "shackles" of the negative effect was magnified, after 2018, China's makeup and skin care online market exploded development, and at that time in the European and American markets, not to mention live streaming with goods, even if the common domestic e-commerce model + digital payment has not yet been fully popularized. In addition, the Z generation consumers represented by the post-95 generation have risen rapidly, they have more localized and personalized needs, and have a natural interest in domestic products and national styles, and around them is a group of local brands eager to expand.

As the online market gradually becomes a key channel and the new traffic world begins to become a key "mental domain", L'Oréal China urgently needs to become more efficient and faster. After 2020, L'Oréal China's authority was gradually expanded, until the structural adjustment in 2021, L'Oréal China has become one of the group's "freest" core markets.

It is reported that at present, L'Oréal China can not only design products for the Chinese market, but also plan marketing plans separately, and even "place orders" with the group, and the group will provide customized content for the Chinese market. For example, in the Spring Festival of 2022, L'Oréal Group let international supermodel Miranda Kerr shoot a New Year advertisement according to the needs of China. Lan Tingyuan gave an example to tell the "particularity" of the Chinese market, in L'Oréal's survey, Chinese consumers are the most likely to spend cosmetics at festivals, "Chinese consumers are willing to spend a lot of festivals, and in each festival, they are happy to consume, which is rare in the world." ”

Lan Tingyuan found that since 2021, L'Oréal China's response to the market has been significantly faster than around 2018. "The freedom of permissions allows us to further localize our innovations based on our home market."

The rise of post-95 consumers has gradually changed this "fast reaction mode" from optional to mandatory. Xiao Lan, head of the new Tmall beauty brand, told Tiger Sniff that today's Z generation consumers have become the most important source of consumption power for e-commerce platforms, and they need faster update iteration and more timely demand satisfaction, "If they find that the needs cannot be quickly met, they will quickly turn to other brands, and it is not easy to cultivate the brand loyalty of the Z generation." ”

One detail can be seen in L'Oréal's acceleration. According to people familiar with the matter, before The Double Eleven in 2021, L'Oréal China improved its logistics and supply chain system to ensure that users can receive the goods within 24 hours of placing an order during the Double Eleven period. It is reported that in order to achieve speed-up, L'Oréal China has greatly "upgraded" its distribution equipment to improve efficiency by reducing manpower and increasing intelligent machines.

Speedup is also available in L'Oréal's China store. In 2021, you will be able to see "Skin Diagnostic Fittings" in almost all stores, through which users can complete skin quality tests in the fastest time and get recommendations from BA based on this. Ma Siming, vice president of L'Oréal's R&D and Innovation Center for North Asia and China, told Tiger Sniff that today's young Chinese consumers value efficiency more, and technology is an important means of improving efficiency.

However, in the face of more personalized post-95 consumers, speed alone is not enough. Lan Tingyuan revealed the key to L'Oréal China's strategy: to understand the needs of young people through a variety of insights. For example, after the epidemic, L'Oréal China increased the frequency of online visits - before the epidemic, L'Oréal China would regularly formulate research themes and find corresponding consumers to visit households, and after the epidemic, this form was changed to online. At the same time, L'Oréal's "social listening" system and online library, it is reported that in L'Oréal China, according to different staff levels will match different permissions, and these permissions correspond to different research reports in the "library", which even cover the scope of cosmetics itself, including economic, cultural, urban development and even young psychology.

And, L'Oréal China is trying to make itself younger "formally" as well. Take L'Oréal Paris as an example, the brand has been using Gong Li as a spokesperson for many years, in order to increase the youthful, free and unrestrained tone, L'Oréal China has added the post-00s artist Ou Yanana as a spokesperson. On its Uemura show brand, L'Oréal China specially invited traffic idol Wang Yibo as a brand ambassador.

At present, L'Oréal is considering how to tell a new young story in 2022, and their latest move is to set up a separate team around Douyin and Station B in Guangzhou, and expand the live broadcast lineup. It is worth noting that whether it is a live broadcaster or the "UP master" of B station L'Oréal, it has adopted a first-party model - directly signing contracts and cooperating with the company's employee model, and it is reported that the post-95 employees in the team account for a relatively high proportion.

Technology is also becoming an option for L'Oréal China to rejuvenate. According to Masmin, L'Oréal launched the lipstick printer (YSL ROUGE SUR MUSURE Saint Laurent Beauty Smart Palette) during the 4th CIIE (November 2021) and the core goal of this product is to solve the demand for personalization - intelligently solve thousands of lip colors. At this year's CES, L'Oréal unveiled a product called Cololet – a device equipped with an artificial intelligence hair coloring system.

However, L'Oréal China has not yet reached a moment when it can lie down and win.

Just on March 14, L'Oréal's product spokesperson Deng Lun was fined 106 million yuan for tax evasion, and a day later, L'Oréal Paris withdrew the promotional materials on Weibo. After the release of the february earnings report, L'Oréal Executives expressed cautious optimism about whether the Chinese market can continue to maintain "ultra-high growth": "In the second half of 2021, the strong demand in North Asia, especially the Chinese market, has slowed down. Compared to 2019, China's growth remains very strong and the medium-term outlook is very positive. "It's like a footnote to L'Oréal China's development in 2022: L'Oréal needs to find as much certainty as possible in the midst of uncertainty – such as firmly grasping post-95s youth."