In early June, according to media reports, Revlon, a well-known beauty brand in the United States, may file a bankruptcy protection application in the near future. It is also reported that it has negotiated with creditors to negotiate its $4.3 billion liabilities. After the news broke, its stock price fell by 52.8% in a single day.
As a beauty brand founded in the 1930s, after starting with nail polish, it entered the field of perfumes and other cosmetics, and at its peak, it once reached an average of 3 seconds to sell a lipstick record, and many well-known artists in history have endorsed it, including Ms. Hepburn, whose translation of the name of her entry into the Chinese market was translated by the well-known songwriter Huang Xia, citing Li Bai's allusion to Revlon. However, such a brand with a brilliant experience has finally gone to bankruptcy protection, which has to be lamented.
Debts are high, products are rotten, and marketing is pulling crotch
By March, Revlon's long-term debt was $3.31 billion, and its interest expense had more than doubled its revenue last year. At its earnings session in May, it reported $480 million in revenue for the reporting period, but a loss of $67 million.
In recent years, Revlon's operations have been poor, with losses of $158 million, $609 million and $207 million in the last three years. When the debt and loss expire, it is unable to develop new products, resulting in a long-term "rotten" product line update, and finally further leads to weak revenue and difficult to get rid of losses. Compared with its nearly 100-year history, its products are too slow to update. At present, the product update cycle of the beauty industry is generally 18 to 24 months, and the main FMCG style such as the domestic brand Perfect Diary is even close to 6 months.
The brand's SKUs (inventory product units) have changed little over the years, with only 25 SKUs in its flagship store on Taobao, and the best selling volume is still the well-known old product foundation. Some beauty artists even said that their products have not changed much in the nearly ten years from college to work.
Its products are not only slow to update, but also gradually decline in marketing. Taking China as an example, in 1976, it entered the Chinese market through Hong Kong, and won the first fate of the Chinese people with the romantic translation name of "Revlon". However, in the later period, it was relatively weak, and in the first 17 years of entering the Chinese mainland market, there was no local Spokesperson for China, and it was not until 2020 that Liu Yuning, one of the Modern Brothers, signed an endorsement.
The defeat of foreign affordable beauty brands
In fact, Revlon is not the only foreign beauty brand that is weakening. In recent years, Innisfree, a brand owned by South Korean beauty group Amore, has closed more than 600 stores in China, more than 80%. In January last year, Shiseido also sold its popular makeup brands such as Silk Beiqi, UNO, and Mizunomi. A number of affordable beauty brands are dying.
Behind its launch of the market reflects the important changes in the consumer market, on the one hand, the wind of consumption upgrading is becoming more and more intense, in this year's 618 results, its pre-sale results, the top few beauty brands are almost all Estée Lauder, YSL and other large brands, well-known brands only need to carry out a slight volume strategy, parity brands have been greatly impacted.
On the other hand, in the traditional field of affordable beauty, domestic brands have sprung up, and domestic brands such as Perfect Diary have eroded the market that was originally dominated by foreign affordable brands. Under such fierce competition, the traditional affordable "old brands" are naturally gradually forgotten by the market.
Especially in today's increasingly trendy consumption, the sales of beauty brands rely heavily on marketing. The marketing cost requires huge capital expenditure, and the research and development and polishing of the product is insufficient. As a representative brand of domestic affordable beauty, Perfect Diary once relied on strong Internet marketing to become the darling of the capital market and the star in the eyes of consumers. However, with the rise of other emerging brands, its homogeneous products have gradually led to its sluggish performance, and its parent company, Yixian E-commerce, has even entered the "delisting edge" zone.
It can be seen that for affordable beauty, the improvement of product strength is the key to maintaining market position.