According to market research firm Euromonitor, the growth rate of retail value in the global beauty and personal care market fell to 1.9% in 2019 after reaching a nearly decade-high of 6% in 2018, while the epidemic hit the retail value fell by 3.3% in 2020, and the agency predicts that the growth rate is expected to return to 3.3% in 2021, and overall, the global beauty market is in a weaker development cycle.
And China as one of the world's most important beauty market, although after the epidemic has become an important force to promote the recovery of the global beauty market, but the recent market performance is not optimistic, according to the National Bureau of Statistics released by the retail sales of social consumer goods, cosmetics consumption at the end of 2020 to the beginning of 2021 showed a strong growth momentum, the year-on-year growth rate in the first half of 2021 was 26.6%, but from the second half of 2021, the growth rate of cosmetics consumption has been single digits, There was also zero growth in August. In addition, Bernstein's data also shows that the marginal share of major beauty companies on Tmall and Taobao fell by 9% in December 2021, compared with a 27% increase in the same period last year.
In the face of sluggish market conditions, major beauty giants and retailers have invariably chosen to bet on high-end beauty.
After a failed acquisition of GlaxoSmithKline's consumer health business and a restructuring of the company's business, Unilever released its 2021 financial figures on Thursday, with the luxury beauty division performing well, with basic sales up 24% for the full year.
Hourglass
On a conference call after Unilever announced its full-year results, the company's chief executive, Alan Jope, said luxury beauty and wellness products were making a "meaningful contribution" to overall sales growth. Unilever's luxury beauty division was set up in 2014, and from 2015 to 2021, the company acquired a number of luxury beauty brands such as Ren, Dermalogica, Hourglass, Living Proof, Paula's Choice, and Jope stressed on the call that this is now a €1 billion business.
But Unilever's ambitions don't stop there, with Jope hoping to triple the size of its luxury beauty business to €3 billion in the coming years.
When it comes to the growth opportunities of luxury beauty, Jope believes that focusing these products on sales channels such as pharmacies, independent retailers, D to C or online rather than supermarkets can help reduce the impact of price wars on them, while high-end brands can better connect with consumers, build communities and provide unique consumer experiences through e-commerce channels.
Since last year, Shiseido has been consolidating its position at the heart of the luxury skincare brand, selling its personal care business and three cosmetics brands, BareMinerals, Laura Mercier and Buxom, as well as mass skincare brands Za and Pomei, while brands such as Shiseido, CPB, Drunk Elephant and Baum have become the focus of the group.
Chantecaille
Procter & Gamble is also expanding its luxury beauty portfolio, acquiring high-end beauty brands Farmacy, Ouai and Tula from late last year to early this year. Beiersdorf also acquired another luxury beauty brand, Chantecaille, late last year, 30 years after the acquisition of La Prairie.
Mass-market retailers also see luxury beauty as their new growth point, with Sephora and Utal Beauty opening their store-in-shops at Kohl's and Target respectively last year, and the two department stores have been able to bring in a number of high-end beauty brands through such a partnership to add more appeal to them.
Walmart's former vice president of beauty, Musab Balbale, revealed in an interview with BethyInc last July that the luxury beauty category is one of Walmart's fastest-growing areas, and the retailer is in talks with many luxury beauty brands to introduce more high-end positioning brands. Higher-priced skincare and makeup products from brands such as Revision.
Sephora is in a shop-within-a-shop at Kohl's
At the same time, beauty products are becoming more and more expensive, at the beginning of this year, Estée Lauder and other brands under the Estée Lauder Group have carried out price increases of 5-50 yuan, and the price increase has been increased for the third consecutive year after 2020 and 2021, and Procter & Gamble has also announced several product price increases in recent years.
Among the participants in the beauty price increase, in addition to international luxury brands such as Guerlain, Lanc me, Chanel, etc., domestic products that play the "cost performance" brand have also joined in, and Polariya, Marumi, Yuze, etc. have increased product prices to varying degrees.
Although the price increase of beauty products is not unrelated to the rise of raw materials, it is also an important reason to boost performance and the high-end of the brand. In its 2020 annual report, Pleia mentioned that the company is implementing a large-scale single product strategy, "thereby increasing the unit price and repurchase rate of customers, and enhancing brand stickiness." General Manager Fang Yuyou mentioned at the 2020 shareholders' meeting that the company's growth goals for the next three years mentioned that "the product price band will continue to upgrade, and the brand image and product positioning will also be upgraded." ”
Pleia
Looking back at the domestic beauty market in the past two years, more and more local brands have begun to abandon the strategy of relying on low prices to obtain customers, and launch products with prices comparable to international luxury brands. For example, the high-end positioning of Kwadi under the Chinese Bio, its kinetic energy support light age cream (50g) is priced at 658 yuan on the Tmall flagship store, the luminous powder cream (30g) of the main "pure" cutting-edge makeup brand Ishi yi is priced at 359 yuan, and Maogeping, which positioned itself at the beginning of its establishment, launched a luxury caviar skin care series and a black gold rejuvenation skin care series in 2019, the former single product price is 209-890 yuan, and the latter is priced at 1380-1860 yuan.
Although Chinese consumers now have more trust and recognition of domestic beauty, are they willing to pay a high price for this?
According to NPD data, in 2021, luxury beauty sales in the US market increased by 30%, and recorded a growth rate of 66% in the second quarter, and major beauty groups have repeatedly mentioned the outstanding achievements of luxury beauty brands in their financial reports.
In the Chinese market, although the competitiveness and development potential of domestic products cannot be ignored, the return of the double 11 international big brand to the top of the list last year also shows that expensive but high-quality products are still highly attractive to Chinese consumers.
HSBC's fourth China Luxury Consumption Survey shows that luxury companies and high-end beauty brands are somewhat insulated from fluctuations in the Chinese market, with about 45 percent of about 2,000 wealthier respondents saying they would prefer to buy the highest quality products, while 29 percent of them would prefer to buy imported brands with prices commensurate with quality.
Among the young generation of consumers in China, looking for "Gui ti" has become a new trend, mostly focused on makeup and perfume products, many consumers look for "Gui Ti" because they like the color number of a cutting-edge domestic beauty brand, but the use of this product is less experienced. One of the reasons behind this is the self-pleasing consumption concept of young people – it can be expensive, but it is worth it.
International luxury beauty brands have many years of word of mouth and excellent research and development capabilities to do endorsement, coupled with the low sensitivity of consumers of high-end products to price, even if the price is raised, consumers will still maintain consumer enthusiasm, but for high-priced domestic beauty products, do Chinese consumers feel worthwhile?
In this year's double 11 Tmall skin care list, Winona's ranking rose to sixth, and the average transaction price was close to that of international brands, reaching 318 yuan. Winona can be said to be one of the brands with the best momentum of development in the Chinese beauty market in recent years, its star product Shumin Moisturizing Special Cream (50g) is priced at 268 yuan, which does not look too high, but it is also a dermatological brand focusing on Shumin repair products, La Roche-Posay B5 multi-effect repair cream (40ml) Tmall flagship store price is 119 yuan, Eucerin Soothing Cream (50ml) 225 yuan, Avène soothing special moisturizer (50ml) 272 yuan In contrast, Winona's price is actually not cheap.
Winona Shumin Moisturizing Special Cream
Although many consumers complain that Winona is too expensive, the brand's star product still achieved sales of 250 million yuan on Double 11 last year.
Another local up-and-coming brand, Blank Me, also attracted attention at the shopping festival, this brand focuses on base makeup products, and its small black box air cushion set priced at 329 yuan ranks second in the double 11 full-net perfume makeup category sales list, between the 410 yuan Estée Lauder Double Wear makeup holding foundation and the 430 yuan Lanc me light makeup holding foundation.
Blank Me small black box air cushion
According to the sales data of Dongxing Securities in January this year, winona, Polaria and Caitang, which are positioned in the middle and high-end, increased by 0.52%, 14.54% and 3.85% respectively year-on-year, all of which achieved three consecutive months of growth, while other domestic brands performed relatively weakly.
Although there are many complaints on the current social platform for high-priced domestic beauty products such as "stepping on the thunder", "not worth the price", "no merit", but the data also proves that local brands that do not rely on the low-price strategy can also be recognized by the market, and the key is still the improvement of product strength, only by improving the quality of products on the basis of high-end can help brands grasp the future development direction and achieve long-term value. BINC
Author: Lee
EDIT: Horse Spurs
Image source: Network