Sankei reported that| foreign beauty brands such as Innisfree Fengyin and Itti's House have reduced their stores, ushering in a new transformation in the domestic beauty market pattern

Xu Yuting/Wen

The Innisfree sign was removed and replaced by bubble Mart's sign. The Innisfree store on Nanjing Road in Shanghai did not escape the fate of closure.

Recently, Korean makeup brand Innisfree Fengyin in Shanghai closed its store on Nanjing Road, according to media reports, since the end of 2021, Innisfree's stores in China have shrunk by nearly 80%, from more than 800 at the peak to about 140.

Not only in Shanghai, but also in Beijing, there have been cases of Innisfree yin closing stores. A clerk of Watsons in Beijing Chaoyang Joy City told Caijing That in the store's Innisfree Products are only loose powder, other products are not sold, and the nearby Innisfree Boutique store has been closed for half a year.

In addition to Innisfree, in recent years, foreign beauty brands such as Itti's House, Fitch Shop, and Kate have also gradually reduced the scale of stores or counters in the Chinese market. With the decline of the Korean wave, Korean makeup brands are no longer the first choice of consumers, and the preferences of young consumers are quietly changing.

The domestic beauty market is being redistributed.

The Korean Wave in China is receding, and the performance declines and stores shrink

The last time Li Jing bought a Product of Innisfree was during college.

"The price of the counter is very high, not cheap." Li Jing, a 26-year-old consumer, said she was still a student at the time and had limited living expenses. I chose to buy Innisfree because of my idol Lee Min-ho as its spokesperson.

Consumers like Li Jing, who pay for idols, are not in the minority. In fact, under the sweep of the Korean Wave, the Korean makeup brand was once hot.

Founded in 2000, Korean makeup brand Innisfree Is a case in point. As one of the Korean makeup brands of the Amorepacific Group, Innisfree is positioned as an affordable skincare makeup for students and young women aged 20 to 26.

According to reports, in 2012, Innisfree entered China and opened its first offline store. Since 2014, Innisfree has expanded into second- and third-tier cities at a rate of opening 100 new stores a year.

Although it once occupied a large share of China's beauty market, today, Innisfree is facing operational difficulties. According to Amorepacific Group's financial report, in the first three quarters of 2021, Innisfree's revenue was 89 billion won, 87.9 billion won and 72.2 billion won respectively, down 17.2%, 0.5% and 10.2% respectively from the previous year.

Under the pressure of performance, Innisfree has experienced a large-scale reduction of stores. According to media reports, since the end of 2021, Innisfree's stores in China have shrunk by nearly 80%, from more than 800 at the peak to about 140. Recently, even the store on Nanjing Road in Shanghai, which is known as the largest flagship store in Asia, has closed its doors.

It is reported that the Innisfree Yin stores in Beijing Xidan Joy City, Chaoyang Joy City, Sun Palace CapitaLand Mall and other places have been closed. A clerk of Watsons in Chaoyang Joy City told Caijing That only loose powder was left in the store's Innisfree products, other products were not sold, and the nearby Innisfree Boutique store had been closed for half a year.

"The price-performance ratio is very low and the substitution is too strong." Li Jing said that she rarely buys Korean makeup anymore. Products at the same price point are more inclined to choose domestic beauty products or European and American big-name beauty products.

Innisfree is not the only Korean makeup brand facing operational pressure, and Iti's House, another beauty brand owned by Amorepacific Group, is also facing the same dilemma. According to the financial report, the operating income of Itti House in 2020 was 111.3 billion won, down 38% year-on-year. According to media reports, in March 2021, Itti House closed all offline stores in China.

The same Korean makeup brand, Fei shi xiao shop also gradually withdrew from the Chinese market at the end of 2018, and more than 300 offline stores were also closed.

The enthusiasm of the domestic beauty market for Korean makeup has gradually cooled. According to data from the Korea Cosmetics Industry Research Institute, in the five years from 2013 to 2017, the average growth rate of Korean cosmetics exports to China was 66%. But in 2018, that number quickly fell to 20 percent; by 2019, it had fallen further to 14 percent.

A beauty e-commerce industry practitioner told Caijing that in recent years, Korean makeup independent brands in the Chinese market have been cooling down, with the rise of domestic products, and European and American niche brands into the Chinese market in large quantities, the younger generation of consumers have more choices. In recent years, Korean cosmetics have not improved in product quality and innovation, the cost performance is not as good as domestic brands, and the product functionality is not as good as That of European and American brands.

The rise of domestic beauty brands, the dark horse of e-commerce platforms

In addition to the above-mentioned Korean makeup brands, some foreign beauty brands have also chosen to withdraw their cabinets and close their stores. In December last year, Japanese makeup brand Kate also withdrew its offline counters in the Chinese market. In April last year, American makeup brand Betty also withdrew in many cities in China.

Bao Yuezhong, a new retail expert, told Caijing that there are many reasons for the reduction of stores, which may involve market factors, may also involve factors of corporate capital operation, and may also involve factors of corporate strategic adjustment.

In the domestic beauty market, some foreign beauty brands have been frustrated, but some domestic beauty brands have risen. Perfect Diary, Huaxizi, Colorkey, Orange, etc. have all been loved by consumers many years ago.

"Good value for money, good color rendering, no loss of big names at all." Li Jing commented that she had been using orange blush for a long time. In addition to the base makeup, almost all of her cosmetics are domestic products.

According to the "Insight Report on the Behavior of Makeup Consumers and Potential Consumer Groups" released by the grapefruit platform, as of the end of 2020, more than 55% of actual consumers of makeup have purchased domestic makeup products; 56% of potential makeup consumers have said that they will buy domestic makeup brands; domestic makeup brands not only have consumption potential, but also have a high penetration rate.

The popularity of domestic beauty is also inseparable from advertising and marketing.

On the Little Red Book, which is mainly used by women, there are more than 30,000 notes on "domestic beauty". Among them, the number of notes liked by a perfect diary eyeshadow collection can reach 29,000, and the number of likes for notes in an orange full-line review can also reach 29,000.

In addition to spreading on social platforms, domestic beauty brands closely follow the preferences of young consumers, launch co-branded products and invite celebrity endorsements. Perfect Diary has cooperated with the British Museum, the Metropolitan Museum of Art, Oreo, etc. for many times to launch co-branded products; Tangerine has also co-launched the Beech Elf Flight series products with Bubble Mart; Hua Xizi has invited Ju Jingyi and Cuckoo as its spokesperson, and Li Jiaqi as its chief recommendation officer.

Domestic beauty brands have also become the dark horses of e-commerce platforms. According to the "China Beauty E-commerce Industry Data Report", after the Double Eleven, Huaxizi's makeup powder became the best-selling product in November last year, and the second place was Colorkey lip glaze. The best-selling brands, as in the previous year, are still Perfect Diary and Huaxizi.

According to magic mirror data, since 2017, winona, Polaria, Nature Hall, Yuze and other domestic product leaders have a clear upward trend; and the proportion of domestic brand double eleven pre-sale in the overall sales has increased significantly, and the battlefield has moved forward; in 2021, among the TOP50 brands in the sales of double eleven beauty and skin care categories, the overall growth rate of domestic products has reached 78.9%, which is much higher than the overall growth rate of foreign brands by 26.8%.

epilogue

With the expansion of the new generation of consumer groups, the beauty market still has a lot of space.

Public data show that the retail sales of cosmetics products in the first two months of 2021 increased by 40.7%, exceeding the growth rate of 33.8% of the total retail sales of consumer goods. In terms of makeup, Deloitte data shows that in the next five years, the mainland makeup market will continue to grow rapidly at a compound annual growth rate of 17.6%, reaching 124.3 billion yuan by 2024.

At present, the rise of domestic beauty brands, some consumers turn to buy more cost-effective domestic beauty products, the domestic beauty market pattern is ushering in a new transformation.