Image source @ Visual China
Text | Guan Tide New Consumption, Author | Kim Mai Mai, Editor | perilla
In 2021, the story of the collection store is particularly exciting.
A variety of beauty collection stores, trend collection stores, snack collection stores are like mushrooms mushrooming, growing stronger and stronger under the nourishment of capital. From Beijing, Shanghai and Shenzhen to Chengdu, Hangzhou and Nanjing, the rhizome of the collection store has spread almost all over the country.
As the year draws to a close, KNOWIN, a trend collection store, has received investment from Alibaba; and KK Group, which has gathered beauty and tide play, has also submitted a prospectus to the Hong Kong Stock Exchange at the end of 2021, or it may become the "first share of trend retail".
"Offline" has become the key word in 2021. After a cold winter, the era of new offline channels has arrived. New brands in both the catering and retail industries are rapidly opening stores, and the collection stores are particularly fierce.
01 10 Billion "Crazy Collection"
From March 2021, the heat of collective store financing began to rise, until the last day of the year, capital did not give up the opportunity to enter the market.
According to the incomplete statistics of public information, there were 14 financing incidents in the collection store industry in 2021, of which March, August and the end of the year were more concentrated.
As the table shows, most of the collection stores are still in their early stages, but the amount of financing up to hundreds of millions of yuan is no longer unique. For example, Poetry and Kaleidoscope was established in April 2021 and received tens of millions of dollars in angel round investment in November; KNOWIN Trend Lab also received two rounds of hundreds of millions of yuan in just 5 months.
Among all the collection stores, the most popular among brands and investment institutions is the KK Group. Over the past five years, KK Group has obtained 7 rounds of financing of more than 4 billion yuan, behind which there are many institutions such as Shenzhen Venture Capital, Matrix Partners Venture Capital, CMC Capital, Wuyue Capital, JD.com, and Black Ant Capital. As of the last round of financing before the listing, KK Group was valued at a valuation of up to 20 billion yuan.
Equally striking is the HAYDON black hole. In August 2021, HAYDON Black Hole announced the completion of a $100 million Series A+ round of financing, with a post-investment valuation of up to $1 billion.
Tomato Pocket, another representative collection store, also received 2 rounds of financing in 2021. It meets the needs of young people who love to shop by creating offline space scenes that better match consumers' personalized expressions. According to reports, the average stay time of customers in the Tomato Pocket Sanlitun store is 30 minutes per day.
Ye Peng, chairman and co-founder of Tomato Pocket, said that China lacks grocery retail formats. Shopping in offline scenes is not the purpose, being able to shop, interact, and socialize is the purpose.
The location of the collection store is usually in the core business circle and is a large area point, which makes the early cost of opening the store high and the investment is large. However, it is such a "gold-devouring beast" that has attracted the attention of more and more capital. In addition to IDG Capital, Hillhouse Capital, Zhen Fund and other leading institutions, industrial capital such as JD.com and Xiaomi have also begun to test the waters across borders.
Even SenseTime, the "first AI share", also set foot in the beauty industry the day after listing, investing in the beauty collection store "B+ oil tank", which drew a successful end to the 2021 collection store format.
Tu Linglin, vice president of Qingtong Capital Investment, once said that the offline channels of beauty products have their irreplaceable advantages, and the annual efficiency of stores with better performance in the industry can reach 80,000-100,000. With the rise of new national tide brands, there is a huge development potential for offline beauty collection stores, and first- and second-tier cities will be the first choice for their layout.
In first- and second-tier cities, young consumers are increasingly preferring the consumption habit of shopping while shopping, while there are more niche brands in collection stores, more abundant selections, and higher gross profits, which not only satisfies consumers but also satisfies the brand side. In the shopping malls of the sinking market, there are also collection stores like V.V.V.
Is the collection store with deep wind and water really a good business?
02 Beauty collection stores: the offline first choice of cutting-edge brands
In 2017, HARMAY's first offline store landed in Shanghai. Natural logs, silver and white shop signs, cement ash shelves, interpret simplicity and high-end.
In cooperation with hundreds of first-line and niche brands at home and abroad, there are as many as 15,000 kinds of SKUs. The opening of HARMAY's meishou store marks that offline beauty channels have entered the era of interactive experience.
In 2019, KK Group's beauty trend retail brand "The Colorist Colorist" settled in Guangzhou and Shenzhen. The iconic color system vision and shocking scale have quickly swept the country and become a holy place for Internet celebrities to take photos and punch cards.
In May 2021, the first "THE COLORIST Colorist" master store opened in Dongguan, which made the store instantly popular, with an area of more than 1500 square meters and more than 5500 SKUs, making it a landmark building in Dongguan.
Minchuang Premium also focused on the "fat meat" of the beauty collection store, and launched the brand "WOW COLOUR" at the end of 2019. WOW COLOUR under the epidemic has opened its doors and become a new retail species that young consumers are flocking to.
Not only that, but in 2021, beauty collection stores will usher in a spurt of growth. Colorists have opened hundreds of stores in Shenzhen, Shanghai, Beijing, Nanjing and other regions; HAYDON Black Hole has also taken advantage of the trend to build a new landmark for urban art trend consumption.
For physical formats, the low price, richness and convenience of online shopping are their biggest threats, which means that if physical stores cannot provide a better consumer experience than online, any offline store will face an existential crisis. But it's also an opportunity for new beauty collection stores like colorists.
Starting from 2020, the new domestic brands will accelerate their running. Perfect Diary listed on the New York Stock Exchange, Winona GEM listing, Mao Geping plans to go to the Shanghai Stock Exchange for listing, Katazai Cosmetics split premeditated listing, and a large number of new domestic cosmetics born online are on the road...
The volume of new brands is not enough, and it is difficult to open offline stores. Anning, the founder of Gu Yu, once said that beauty brands with a scale of less than 1 billion yuan do not have the ability to do offline because the model is "too heavy".
The beauty collection store has opened up a road from online to offline for this group of brands, as well as a window for contact and communication with consumers.
According to the data, the market size of China's beauty collection store industry in 2020 is 41.9 billion yuan, of which new beauty collection stores account for 7.6%. With the transition of the new beauty collection store industry from the embryonic period to the stable development period, its market share is expected to increase to 15.8% in 2023, and the market size is expected to reach 13 billion yuan.
Beauty collection stores have risen with the trend and ushered in an outbreak in the past two years. Cutting-edge brands bring offline makeup trial services to consumers through cooperation with beauty collection stores. Beauty collection stores also provide cooperative brands with omni-channel access, digital operation and other services to help them quickly move offline.
The young people left the Watsons, abandoned the online flagship store, and instead entered a new beauty collection store.
In the view of Zhang Lei, founder of Hillhouse Capital, it is precisely because the aesthetic design of the beauty collection store satisfies people's yearning for beauty. Consumers are no longer in the stage of striving to meet the needs of food and clothing, but have entered a new era of experience service supply, and aesthetic design has become one of the core forces to promote the development of the industrial economy.
Changes in consumer buying habits are also driving changes in beauty sales channels.
03 Trend Collection Shop: Let Gen Z shop
Not only beauty collection stores, but also trendy and good things collection stores are constantly impacting the market, forming a new pattern.
Nowadays, KKV and tomato pockets occupy the core business district, and The Nine Wood Miscellaneous Goods Club and Cool Tide Play can also be seen everywhere in shopping malls. The collection stores are ambitious and open stores in a big way.
It is understood that in 2021 alone, Jiumu Miscellaneous Goods Society added 33 new stores in the third quarter, and the total number of stores reached 436; KKV also added 79 stores in the first half of the year, with 281 stores nationwide; the number of stores of Cool Tide Play exceeded 300, and 28 stores opened in the country from April to May.
Frost & Sullivan's report has pointed out that it is expected that the scale of the trend retail market will reach 475 billion yuan in 2025, and the CAGR in the next five years will be 19.5%, while the market segment, boutique collection, beauty, and trend toy market account for more than 90%, and boutique collection accounts for the first.
The competitive landscape is intensifying, how can trend collection stores improve their upside? For the previous brand collection stores, on the basis of continuously improving brand coverage and mastering limited product resources, launching exclusive co-branded products with artists and trend brands is also a traffic growth password.
Nowadays, the pattern has changed, and like beauty collection stores, the nature of trend collection stores is also very different. Landmark trend consumption scenes and intensive community activities have become the necessary conditions for trend collection stores, and have also brought possibilities for nationwide expansion.
Taking KNOWIN as an example, the scene creation of a very metallic and futuristic sense contains popular culture and elements, which highlights the unique aesthetic compared with the traditional storefront, which also labels KNOWIN as a trend punch card.
The same goes for KKV. From the space layout, color matching, product display are all about "appearance first". The bright yellow container design pursues a minimalist aesthetic style, creating an immersive shopping experience of "step by step".
Trend collection stores are emerging in an endless stream, and they are gradually becoming more subdivided in terms of categories. KKV, Nine Wood Miscellaneous Goods Club and other main lifestyles, in terms of SKUs are also more diversified, headwear, makeup, home, stationery are readily available.
And the "self-pleasing psychology" of the Z generation crowd has also made tide play mainstream. Just after the high-profile listing of Bubble Mart, Minchuang Premium and KK Group could not sit still, following the involvement in the beauty sector, Minchuang Premium launched the tide play collection brand "TOP TOY". KK Group also created X11, two tide play collection stores in full swing, began a new expansion and exploration.
In the X11 Chengdu Chunxi Road store, the technology design adopts the future technology industry style, in addition to blind boxes, handmade, dolls, but also covers the assembly model, BJD dolls, trend jewelry and other categories, the price also ranges from dozens of pieces to tens of thousands of pieces, can meet the needs of players of different levels.
The competition for top toy, X11, tide play planet, 52TOYS and other powerful players not only provides a wider range of retail channels for tide play, but also strengthens brand recognition and brings consumers a stronger sensory feeling and personal experience. Users' punch card grass brings more organic traffic to the store, but also helps the brand to further break the circle.
At a time when fashion play and aesthetics are gradually becoming the new way of life, the story of trend collection stores is related to the future.
04 The "spear" and "shield" of the collection shop
It is no accident that new retail has begun to move from online to offline. Online traffic is becoming increasingly expensive, so offline wars are on the verge of breaking out. Brands that have stepped out of the live broadcast room have gradually entered the Shopping Mall, and the collection store has become a new entrance to carry traffic.
The collection store has become the outlet, and the problem has also been "blown".
The categories are similar, and the store decoration style is similar. "After visiting several collection stores in a row, I found that the goods sold were similar, so I was not interested," said Lily, who came out of the collection store.
There is no shortage of traffic in the collection store, the problem is how to efficiently convert traffic. In addition, there are more and more collection stores, and the store style and in-store SKUs are gradually converging, and the homogenization is serious. Under the price advantage is not obvious, repurchase is also a problem.
Single store income has a ceiling, want long-term development to continue to expand the store, but usually the collection store area is in the hundreds of square meters, and the location is in the traffic, positioning high-end business circle lots, the cost of opening a store is high, rapid store expansion may also become a burden, accelerate losses.
For example, the KK Group, which runs fast. From 2018 to the first half of 2021, KK's stores expanded from 80 to 680, and its revenue also doubled 10 times. According to its prospectus, KK Group's compound growth rate of GMV from 2018 to 2020 is as high as 246.2%. In the first half of 2021 alone, the GMV exceeded 2.2 billion yuan, almost the same as in the whole of 2020.
But KK is not making money at the moment. While revenue continues to rise, losses are also increasing year by year. In 2018, 2019, 2020 and the first half of 2021, KK Group's losses were RMB79.485 million, RMB514 million, RMB2.017 billion and RMB4.397 billion, respectively.
While opening stores quickly, collection stores are also under pressure from all sides. It's easy to fire a store, but not every one of them can make a quick profit. Even the outstanding representative HARMAY Mei has also embarked on a cross-border, opening a lemon tea shop and acquiring beauty brands. Increase gross profit through other channels and establish new barriers to differentiation.
Overall, the collection store is redefining people, goods, and fields. Not only is it a diversified experience space, the collection store has gradually become a landmark of Internet celebrity punch cards in major cities. New domestic products are also rapidly multiplying under the outlet of collection stores, and the proportion of domestic brands and niche brands is rising.
Consumers will never be satisfied, and new demands will continue to arise. For the collection store, after fun, shopping, shooting, and buying, it also depends on whether it can catch and keep up with the needs of Generation Z users and the changes in demand.
20 years ago, the vast majority of brands were born offline; 10 years ago, a large part of the brands were born online; and today, the offline scene is reshaping the brand value, and the integration of online and offline points to the endgame.
Channel reform brings innovative models, brand parties and collection stores achieve each other, and the entire new retail format is undergoing a century of great changes. There are already too many players and too many competitors in the collection store. Instead of thinking about how to go faster, we should think about how to go farther.
In 2022, will the collection store continue to meet the imagination of consumers and capital?