The beauty physical retail circle is in the news!
Recently, A.S. Watson Group officially announced that it will invest US$250 million (about RMB 1.81 billion) in the Asian market to open and upgrade 6,000 stores within two years. This means that many Chinese stores will debut with a new look, further upgrading the value of the "five senses" experience.
On June 7th, HARMAY cooperated with 12 stores across the country to launch the Good Life Festival Gbagbo Moment activity to deepen its layout in the lifestyle field. Not long ago, the Beijing Hopson Hui pop-up store, which systematically conveys the concept of "beauty and a better lifestyle", achieved sales of more than 500,000 yuan on the first day of opening on May 19, with an average daily traffic of more than 3,500 people, which has achieved remarkable results in improving customer flow and conversion rate.
In addition, at the end of May, the first store of GINKGO-X Silver Box in Central China, a beauty collection store incubated by Yintai Retail Group, was officially opened in Wuhan. This is the third store opened after Shaoxing and Hangzhou, and will continue to be located in Beijing, Wuhu and other cities in the future.
Towards the middle of the year, well-known chains are making big moves, which has excited the beauty retail market, which has been dull. At a time when industry growth is slowing down, consumption is weak, and capital is ebbing, why are these retail brands still showing vigorous vitality? What are the implications of their ideas for change?
The highest annual target is 80, and the phenomenal chain is still expanding passionately
According to data released by the National Bureau of Statistics, from January to May this year, the total retail sales of cosmetics reached 176.3 billion yuan, a year-on-year increase of 5.4%. From the perspective of time dimension, since 2021, the market has begun to slow down the pace of growth, and this year's weakness is more obvious. Stepping into the era of the stock market, how to break through the strategic blind spot and find a new growth path is a test that all offline beauty retailers are facing at this stage.
The survey of "FBeauty Future Traces" found that the local beauty retail brands that maintained stores in the first half of the year and had a good development momentum include Yanli, Lessaer, LADYTODAY, Fox Demon, Xiran, HARMAY and 1/9 BEAUTY CHOICE, among which there are not only established chains with a store history of nearly 30 years, but also retail rookies that have risen in recent years. Among them, Lesal is expected to expand more than 80 stores in 2024; LADYTODAY, a subsidiary of Tang Sancai, is still racing passionately on the basis of the huge chain volume of 1,200 last year.
There is no doubt that in the current era of uncertainty, the core of the physical retail chain can have the courage to expand, and the core is supported by strong management capabilities.
"Many domestic cosmetics collection stores started in the market dividend period, in fact, there is no gene and foundation of retail management, and the ability to resist risks is naturally not strong. The core reason for the success of a person like Lesal is to develop in a comprehensive way in terms of positioning, product selection, merchandising, promotional activities and other major operations. Some people in the industry said bluntly.
And LADYTODAY is fundamentally different from the starting point of a store starting from scratch. Backed by Tang Sancai Beauty Group, its two advantages of high-quality supply chain and mature franchise experience can easily promote the rapid growth of the number of stores.
Compared with the above two retail brands, Yanli, which adheres to the direct sales model, has a relatively stable store opening speed. At the recent 2024 Supplier Summit, Yanli publicly expects double-digit growth in store size this year. Yanli told FBeauty that 6 new stores have been opened from January to May, with layouts in Southwest, North China, Central China and other regions.
It is worth noting that Yanli, which has been deeply involved in first- and second-tier cities for many years, one of the key words this year is "sinking".
According to reports, since 2022, Yanli has increased the layout of the sinking market by cooperating with regional head commercial real estate and China Resources system. Yanli found that consumers have the need to try out products, experience and buy genuine products offline, and they found that consumer demand shows regional characteristics, and as a national chain, it needs to quickly adjust the pallet to ensure adaptation. In this market with huge potential, Yanli will give full play to the core characteristics of "professional skin care and professional services of in-store skin butlers" to seek further business growth.
Turning its attention to the sinking market, there is also a "mid-range trendy beauty collection store" - H.E.A.T. Xiran.
In 2023, Xiran will open a flagship store 2.0, introduce a cutting-edge product line of classic domestic products, and enter a traditional department store for the first time. In the next step, Xiran will use the flagship store as a sample to intensively penetrate into prefecture-level cities.
After the fox demon disclosed its franchise strategy last year, it has opened more than 20 stores, of which 4 are new stores, 2 are in the decoration fence period, and no less than 20 partners are waiting in line for the right time to negotiate with the mall.
As the industry's first physical beauty store focusing on skin care products, Fox Demon Skincare Select Warehouse anchors the most popular skin care concept of "precision skin care", and has built a set of groundbreaking retail business models, among which the methodology of "skin and age, selection according to skin, no one disturbs, self-testing and self-selection" is refreshing to the industry.
There are also some collection stores that have undergone "rapid store opening - slow store closing" and then determined the adjustment of the operation strategy and set off again. Among them, HARMAY, which created a "warehouse-based new retail brand" and adhered to "one store, one set", is the most typical.
After the successive closure of two stores in Hangzhou and Xi'an in 2023, HARMAY has further implemented the concept of "lifestyle" this year, whether it is the location selection logic, product line, or the creation of the store's internal scene and the theme of the marketing campaign.
As a benchmark in the new type of stores, through the creation of scene content, HARMAY has established a brand image with strong aesthetic power and high-quality original content, and on this basis, it continues to convey the values of retail brands, screen and attract suitable user groups step by step, and gradually accumulate competitiveness that is difficult to replicate.
On the whole, in the accelerated differentiation of the market, these retail brands that maintain expansion and live a sound life have undoubtedly been tested by the market in terms of organizational ability, external expression and overall business ability. Focusing on the details of the operation strategy, it reflects the changes in the current consumption environment and business mentality.
The segmentation of stores has become mainstream, and the physical chain operation is more in-depth and rational
Some studies have pointed out that the changes in the income structure of China's middle class have led to an "M-shaped" development of China's consumption. In this structure, consumers are polarized towards cost-effective and luxury, and there are both opportunities for upgrading and downgrading on the way to consumption.
In the beauty industry, only a small percentage of high-net-worth customers have remained stable in spending, but the trend of savvy, segmented and personalized consumption among middle-class consumers and young people has posed unprecedented challenges to all aspects of retail.
According to the survey of "FBeauty Future Traces", in response to this new consumer trend, the business mentality of store founders and traders is also changing, and one of the obvious points is that the mentality is flattened, no longer putting sales first, and pursuing sustainable indicators such as profit margins and repurchase rates.
"There are opportunities for cooperation in shopping malls with high potential energy, and we will open new stores, and we will not overemphasize the node goal by following the trend." Talking about this year's plan, Wang Pei, the founder of Fox Demon, bluntly said to FBeauty Future Traces that he will not set clear business growth or store opening hard indicators in the past two years, and in the face of the reality that the market trend is not clear, he does not want the team to become too aggressive because of the numbers.
Coincidentally, after a variety of promotional activities last year, HARMAY has also slowed down the pace of marketing this year and paid more attention to the building of its own refined operation capabilities.
Gavin Li Qin, the founder of Qinghe Xinze, who has trained many local CSs, also pointed out that in the future, the business thinking and cognition of collection store owners should change, "rather than store sales, we should focus on the net profit of each month." Sir, let's talk about other things. ”
In fact, the experience of chain brands that have been withdrawn in the market reshuffle in the past few years is also a warning in itself.
The black hole HAYDON, ONLY WRITE, which was once a smash hit and became an Internet celebrity check-in place, and "Pu Li", who claims to be a trinity of e-commerce, live broadcast, and offline stores, have all gradually faded out of the market without exception and become "tears of the times".
"There is a congenital 'sticking point' in these beauty collections: they have a problem with the design of their patterns. So no matter how you manage and operate, you can't save it. Zhu Hucheng, an expert in the operation of imported cosmetics and CEO of Jiayue International Group, pointed out. The second is that the team does not have enough experience in retail management and the team is not professional enough. "For example, supply chain, brand operation, and customer operation are not in place. The faster you open a store, the more problems there are, and the faster it falls. ”
Another senior retail person also expressed a similar view, "The starting point of this kind of store design is 'how to attract customers to the store', but it does not pay much attention to the operational details and transaction focus of retail, and being abandoned is the end." Opening a store is like living at home, and it is difficult to last for a long time without real materials. Rather than a dazzling array of new store names, he pays more attention to those that have lived for at least seven or eight years and still show market vitality.
Judging from the practices of the existing activists, accelerating the segmentation of store types will become a major trend.
On the basis of the renovation of more than 100 stores last year, A.S. Watson launched the 11th generation store at the beginning of the year, which pays more attention to the user's five senses experience in terms of new and exotic product layout, scene creation and the new 10-minute BA "light service". More importantly, in the next strategic layout, A.S. Watson will focus on four core consumer groups for store segmentation: students, young mothers, tourists, and white-collar workers, and achieve more targeted segmentation in store scenes, product displays, and category combinations around their needs.
Yanli also told "FBeauty Future Traces", "Yanli will pay more attention to consumer experience and member interaction, build beauty retail benchmark stores in retail terminals, and explore different offline beauty retail fields, such as flagship stores, Yanli standard stores, Yanli outlets, Yanli concept stores, Yanli brand experience stores, etc., to bring users more diverse experience and emotional value." ”
In addition, digital upgrades have also been put on the agenda by local beauty chains.
As one of the important strategies this year, Yanli plans to meet the shopping needs of consumers with "instant gratification" with a "front-end warehouse store" model. Behind this is the digital upgrade it has completed. It is reported that at present, Yanli has completed the business development and digital upgrade of more than 200 offline stores and online platforms, which is bound to further improve operational efficiency and management level.
According to "FBeauty Future Traces", HARMAY is also building its own digital middle platform, which will not only further clarify user portraits, but also refine and evaluate the conversion results brought by display scenes. These measures are conducive to further improving the accuracy of operations and providing an objective reference for the development of original content.
Break the "impossible triangle" and drive the growth of the comprehensive value of stores
There is a classic theory in economics called the "impossible triangle", which refers to the fact that the choice of economic and social goals faces many dilemmas, and it is difficult to obtain three goals at the same time. This "impossible triangle" has landed in the beauty industry, which is the high cost performance brought by extreme efficiency, the beautiful experience provided by professional service belts, and the continuous growth of business data.
In the wave of accelerated iterative consumption, it is also a powerful time for beauty retail brands to practice "internal strength". Judging from the stores that are still "staying at the table", everyone is trying to amplify their advantages and find their own ecological niche, but looking at the entire market, there are few successful cases that can completely take into account these three corners.
"There are many elements and elements involved in making a store, and the main thing inside is a clear main structure and operational process. But in the past, many stores only focused on procurement, and fought for luck; Now we are facing a series of problems of comprehensive operational capabilities, and we are fighting for technology. A senior retail person believes that in the current environment, the competition of stores needs to return to the essence, that is, to improve the refinement of operations.
Gavin Li Qin also said that nowadays, the most important thing for a collection store is to comprehensively consider factors such as product structure, store atmosphere, operation standards, and store processes, take consumers as the foundation, pay attention to repurchase, do a good job in "customer information", and achieve "ultimate service".
It is worth noting that with the increase in the popularity of "emotional value", retailers have also begun to make a big fuss about "experience".
"In fact, emotional value is experience building, which is not a new concept in the beauty retail world. Beauty is inherently associated with beauty, fashion, and lifestyle, but it takes a lot of effort to bring out emotional value. The above is also a senior retail person bluntly said.
Judging from the content conveyed by Watsons last year, its operation ideas have shifted from operating stores to operators, paying attention to user value indicators such as CLV, and intensively cultivating in many aspects of store management. Sephora is also in the digital and intelligent transformation, emphasizing the use of tools and means to create the emotional fundamentals of the store.
Focusing on local chains, "service productization" is also a differentiation barrier that Yanli is focusing on: continuously developing "beauty service" products around consumer needs, and linking with brands to deepen and refine services, radiating more trial scenarios and personalized needs. It is reported that Yanli has 1500+ "skin butlers" to provide users with one-stop customized solutions such as skin, makeup, and body care. Up to now, the project has developed a total of 26 service products in 11 categories, with a service penetration rate of more than 10% and a month-on-month growth rate of nearly 40%.
Yanli concluded that it will return to the three cores of retail development - supply chain capabilities, service capabilities, and operational efficiency. For the future market strategy, we will continue to make efforts in five aspects: "focusing on core, in-depth service, multi-dimensional reach, comprehensive efficiency improvement, and continuous iteration", and finally build market competitiveness.
It is also worth mentioning that on the basis of this systematic deepening operation, retail brands also need to build their own brand IP to drive the growth of comprehensive business value.
In the case of HARMAY, for example, on the shell, the retail brand wants to convey the idea of a good life. However, this kind of expression ability needs to be supported by the refined operation of these traditional elements of "people, goods, and places". For example, in the selection of goods, compared with market share and popularity, it pays more attention to the tonal matching degree of the brand, attaches importance to the style and personality of the brand founder, and favors the introduction of niche professional brands for cultivation.
"The operation ability of the people and goods yard of HARMAY stores is very strong and has core competitiveness." Wang Pei did not hesitate to express his recognition of the highlights of his peers, believing that HARMAY has the ability to produce fresh content, and strengthens the positioning of "a better life", giving target consumers a reason to choose it.
From the perspective of the industry, HARMAY, which is still small in scale and focuses on young people in first-tier and new first-tier cities, can have more direct and in-depth insight into consumers than other large chains, supplemented by a more flexible decision-making mechanism, and can better express its content and present the consistency of its brand image. As mentioned at the beginning of the article, the HARMAY Moment is not only an exploration of diversified store forms, but also an in-depth emotional communication with consumers.
In 2024, the retail market seems to be calm, but in fact there are undercurrents. The "new species" of the past are no longer new, and in the process of insisting on being themselves, they seek to transform and upgrade with traditional retail methods; For established stores, the reform of the old and the new forces the advancement of the entire organization's operation, which is the basis for survival in the second half.
In the book "The Philosophy of Retail", it is pointed out that "the real competitor is not the peers, but the changing needs of the customer." "Beauty retail brands are facing a long-term battle that requires keen insight and perseverance.
Author/Lin Yu
Editor/Liu Ying
Proofreading/Yangyan