Korean makeup "faded"

Source/Lianshang Network & Sopu.com

Author/Lieser

In the past two years, whether active or passive, the strategic contraction attitude of Korean cosmetics represented by Amorepacific Group in the Chinese market is obvious.

Recently, with the closure of HERA's offline stores, Korean makeup has once again aroused industry attention, and unlike the previous innisfree closure of stores and the withdrawal of Itie's House from the Chinese offline market, Heyan is the first high-end brand under Amorepacific Group to withdraw from the Chinese market, which means that the Korean makeup brand has lost in the fierce competition of high-end makeup brands in the Chinese market.

In fact, Amorepacific's adjustment and dilemma also represent the epitome of Han Makeup's survival in the Chinese market.

Han makeup's "explosion" and "fading"

On March 1, the popular beauty brand Heyan announced the complete withdrawal of the cabinet in the Chinese market and the closure of the official WeChat mall, before which Heyan had preemptively closed the self-operated stores of JD.com and Vipshop, which meant that Heyan's purchase route in the Chinese market was only Tmall flagship stores.

From entering the Chinese market in 2016 to opening its first store in Beijing SKP to the offline retreat in 2022, Heyan has witnessed the "explosion" and "fading" of Korean makeup in the Chinese market for 6 years.

Although the outside world has been criticizing Heyan for ignoring her own skincare brand promotion by relying too much on makeup products, for Heyan in 2016, taking advantage of the situation to explode beauty is the best way to open the Chinese market.

The rise of Heyan in the Chinese market is inseparable from "You from the Stars" and Quan Jixian's "beauty output", all the makeup products used by the heroine Qian Songyi played by Quan Jixian are sought after by the whole people, bringing fire to Amorepacific Group's IOPE, Heyan and YSL and other beauty brands, because the TV series was released in 2013, when IOPE and Heyan have not yet entered the Chinese market, which has instead achieved a lot of Korean beauty purchasing business, according to public data, the peak period, Heyan's classic air cushion is the first product sold by duty-free shops, and there are statistics that South Korea sells one Heyan air cushion every 30 seconds.

Hye Yeon signed Jeon Ji Hyun as the brand spokesperson, and in 2016, she once again went out of the circle with "The Legend of the Blue Sea" starring Quan Ji Hyun, and "mermaid color" became the hot search word of the year.

The relevant person in charge of Amorepacific Group told Lianshang Network: "Since entering the Chinese market in 2016, Heyan has been recognized by many consumers, especially black gold cushion foundation and gold tube lipstick are popular star products of consumers. ”

"Lianshang Network" noted that the highest-selling product of heyan Tmall flagship store is still an air cushion, but on the other hand, it also shows that Heyan has not "developed more new weapons" in the Chinese market for 6 years, coupled with the fact that brands such as Dior, Armani, TOM FORD, YSL and other brands in the market have successively launched air cushion products, and Heyan has gradually lost its advantage.

Especially with the outbreak of the Korean restriction order and the THAAD incident, the Chinese cosmetics market began to reshuffle, on the one hand, high-end luxury products have more right to speak, on the other hand, perfect diary, Huaxizi and other new domestic cosmetics began to rise, to seize the parity market.

The intensity of competition can also be seen in Amorepacific Group's financial reports in recent years:

In 2016, its sales reached 6,697.6 billion won (about 40.4 billion yuan), an increase of 18.3% year-on-year, and its operating profit was 1,082.8 billion won (about 6 billion yuan), an increase of 18.5% year-on-year.

Of the two single-brand stores, Innisfree's sales reached 767.9 billion won (about 4.6 billion yuan), an increase of 30%, and the operating profit was 196.5 billion won (about 1.18 billion yuan), an increase of 56%, and the sales of Iti's House were 316.6 billion won (about 1.9 billion yuan), an increase of 23%.

Affected by the THAAD incident, total sales in 2017 were 6,029.1 billion won (about 34.836 billion yuan), down 10% year-on-year; operating profit was 735.1 billion won (about 4.227 billion yuan), down 32.4% year-on-year...

By 2020, Amorepacific sales were only 28.579 billion yuan, a decline of more than 10 billion yuan compared with the peak of 5 years ago, in addition to the decline in performance, the influence of the former "mythical brands" Innisfree and Itti House also began to decline rapidly.

Of course, due to the epidemic and other major environmental impacts, more and more brands have begun to shrink the Chinese market:

In August 2018, Face Shop announced its withdrawal from the Chinese offline market;

In March 2021, Etude House completely closed all offline stores in the Chinese market, retaining only the offline beauty collection point "colorist" channel, and others switched to online operations;

In the same year, IOPE also closed offline channels, retaining only the official flagship store of Tmall and Xiaohongshu.

In April 2021, Princess Belle announced her withdrawal from the department store channel, focusing on Sephora and online;

In December 2021, Unilever's luxury skincare brand, K-BRIGHT, completely ceased operations in the Chinese market;

At the end of 2021, Japanese makeup brand KATE Kaiduo withdrew from China's offline channels;

In January 2022, Innisfree "withdrew" its stores in the Chinese market, closing from more than 800 offline stores to only 140;

In February 2022, HERA announced that it had successively closed its china offline counters and planned to close the online WeChat mall in mid-March 2022.

The superposition of many factors such as cost pressures such as offline rents, the "fading tide of makeup" brought about by the epidemic, the gradual division of high-end beauty and domestic makeup into the mid-end market, and the compression of the living space of mid-range brands that "can't go up and down" have accelerated the contraction of brand strategy

Online becomes a new battlefield

Amorepacific Group said that the strategic contraction is a comprehensive consideration of the needs of digital transformation and the minimization of the impact of the epidemic on operations, but at least for Amorepacific, leaving Snowflake Show alone in the brand matrix game of Baigou channel and other groups is still a bit "weak", although the sales of Snowflake Show in the Chinese market increased by more than 50% last year, it is still difficult to stop Amorepacific Group's performance from falling by 10%.

Fortunately, the online channel Amorepacific also retains the complete brand matrix such as Espoir (Esper), BE READY (Beladi), Heyan, IOPE and so on.

In 2020, Amorepacific Group has successively introduced its Korean professional makeup brand Espoir (Esper), men's makeup brand BE READY and natural skin care brand primera Flamena into the Chinese market, of which espoir (Esper) and BE READY (Beledi) have entered Tmall, and primera Flamena has opened its first flagship store in Shanghai.

In addition, Amorepacific opened its first brand collection store in the Chinese market, ARITAUM (Aritaum), which is the effort of Amorepacific Group to revitalize the Chinese market.

From the perspective of the entire market environment at that time, 2020 was the hottest year for beauty collection stores, WOW COLOUR, THE COLORIST colorist, KKV, H.E.A.T. Hi-Fire, HAYDON Black Hole began to dominate social media, and e-commerce platforms such as Douyin also brushed the screen with live broadcasts.

At this time, Amorepacific's new layout is worth studying: ARITAUM (Aridane) explores the collection store model offline, and espoir (Esper) and BE READY (Beiradi) rise with the help of Vibrato, which means that Amorepacific's playing style in the Chinese market is more local and flexible.

In Amorepacific's digital transformation strategy, one of the most important ones is to make a steady layout on mainstream platforms such as Tmall and JD.com, while vigorously developing emerging social and e-commerce platforms such as Douyin and Xiaohongshu to seamlessly connect with Chinese consumers.

Online has become a new battlefield for brands and a new engine for sales growth.

According to feigua statistics, during the double eleven period in 2021, in the top ten of douyin pre-sale beauty products, a combination of a skin care gift box and a set of wowo ranked first and third. The overall performance of the brand outside the single product is also very eye-catching, and after the 618 period, Whoo became the only brand with sales of more than 100 million yuan on Douyin.

Amorepacific also told Lianshang Network that this year's 3.8 festival of its brands in the Douyin platform increased by 260% year-on-year. Its major brands have achieved remarkable results in the field of digitalization, snowflake show through the cultivation of high-end series such as "Zhiying Sheng Ginseng" and excellent performance in e-commerce channels, last year's sales increased by 50%; Laneige also achieved double-digit sales growth by strengthening the efficacy of skin care categories and actively deploying digital channels.

This may also be the reason why Amorepacific has moved its brand online in a big way, "With the adjustment of strategy, especially the far-reaching impact of digital transformation, we will also have a new understanding and positioning of the channel and make corresponding adjustments." For us, the most important thing is always how to put consumers at the center, meet their diverse needs with high-quality products and services, and respond quickly and flexibly to change. ”

In addition to channel changes, Innisfree, which has closed its stores in a big way, has finally made a big breakthrough in products this year.

The wind of "morning C and evening A" has been blowing for two years, and Innisfree has finally caught up with the "evening train" and launched its first retinol single product on the occasion of the tenth anniversary of entering the Chinese market.

The retinol essence priced at 259 yuan is still aimed at a young audience, and the "Lianshang Network" found that the product currently sells more than 3,000 in the Tmall flagship store, and more than 5,000 people buy the trial product, which is a good result for the new product that has been online for less than a month.

Write at the end

The effect of surviving with a broken arm seems obvious.

Amorepacific's 2021 financial report data shows that sales of 5.3 trillion won (about 28.2 billion yuan), an increase of 8% year-on-year, net profit of 292 billion won (about 1.6 billion yuan), up 1224% year-on-year, although the profit is less than half of 2016, but the 1224% increase is still good news for Amorepacy Pacific Group.

More importantly, with the announcement of the change of coach in China in February, how the newly appointed Huang Yongyu will lead the brand to break through in the Chinese market and better write a new story of Korean makeup deserves the attention of the industry.