#FMCG Eight Talks##Consumption##Cosmetics##Benefit#If the withdrawal of EDI House and Field's Shop is a representative of the ebb of affordable makeup, then the retreat of Benefit is somewhat of a wind blowing to high-end makeup. On January 2, a reporter from Beijing Business Daily learned that Benefit, a high-end makeup brand under LVMH Group, issued an announcement on the closure of stores in Tmall, Douyin and Jingdong flagship stores. From withdrawing offline two years ago to withdrawing online now, the Chinese market may not have so much time left for Benefit to "adjust".
With excellent eyebrow pencils and other products, as well as a professional eyebrow shaping business that is all the rage, Benefit has once again announced the closure of stores, this time an online flagship store. On January 2, a reporter from Beijing Business Daily learned that Benefit's Tmall flagship store, Douyin flagship store, and Jingdong flagship store issued a suspension announcement at the same time. According to the announcement, Benefit will cease operations and will continue to accept new orders until 23:59 on January 28, 2024, and the goods ordered before that will be delivered as planned.
At present, the Douyin flagship store of Benefit has emptied all products, and the Tmall flagship store and JD.com flagship store are still selling normally. "Benefit is adjusting its business scale and development focus in Chinese mainland. Consumers can continue to purchase Benefit products at Sephora offline stores in China and online flagship stores on Sephora's platforms. The customer service agent said.
There is speculation in the industry that Benefit and Sephora are both brands of LVMH Group, and now they are left alone in the Sephora channel, or there are considerations for reducing costs and stabilizing channels.
In many Sephora stores, there is uncertainty about whether Benefit can sell normally. The sales staff of Sephora's Beijing Vientiane Hui store told a reporter from Beijing Business Daily that Benefit's products are still on normal sales, and it is to be determined whether they will be cleared or even withdrawn in the future, and they have not yet received relevant notices. The sales staff of the Sephora store in Beijing World Mall told reporters that at present, Benefit's goods are not complete, and there will be a possibility that they will not be sold in the future. The sales staff of the Sephora store on Xidan Street said that they had not received a notice on whether to clear the warehouse and stop sales in the future. The sales staff of Sanlitun Sephora said that Benefit, as an exclusive product of Sephora, will continue to be sold and will not be cleared.
In fact, Benefit's great retreat in the Chinese market began two years ago. In March 2021, there was news of the retreat of Benefit's offline counter channels on the Internet, and in April, Benefit's offline counters in many places were completely closed. At that time, Benefit responded through its official customer service that with the change of the retail environment and trends, the brand is adjusting its business model in China, and will gradually withdraw department store counters, and will mainly sell them in Sephora and Tmall online official flagship stores in the future.
The adjustment of withdrawing from offline counters two years ago does not seem to have had much effect after two years, so that Benefit chose to close the store again. Regarding the closure of the store, the explanation given by Benefit is still "to adjust the business scale and development focus in Chinese mainland".
Regarding the closure of online channels, a reporter from Beijing Business Daily interviewed Bailin Fei, but did not receive a reply as of press time.
Founded in 1990 by Jane Ford and her twin sister Jean Ford, LVMH became the owner of Benefit when it acquired a majority stake in LVMH in 1999. With the blessing of strong capital, Benefit began its global expansion route. In 2007, Benefit entered the Chinese market.
Compared with today's retreat, as one of the first overseas high-end makeup brands to enter the Chinese market, Benefit was quite popular in China with a number of star products, such as eyebrow pencil, dandelion powder, lard balm, Counter-Strike primer, etc.
In particular, Benefit's eyebrow shaping business has captured many consumers. Consumer Jelly said: "The eyebrow trimming business of Benefit Counter in Guangzhou has been repaired for seven or eight years, and the beeswax eyebrow trimming business is really good, but I didn't expect it to go out of business." Previously, LVMH Group's public data showed that the Benefit brand has been involved in 55 countries around the world, and an eyebrow product is sold every two seconds.
However, this time and that time. "Post-00s" netizen Tutu complained that Benefit Girl is mainly positioned in the group of girls, but she has a price that girls can't afford. Muzi said that although Benefit's products are easy to use, they can't keep up with the pace of the times. "In the past two years, other brands have been looking for Internet celebrities to bring goods for marketing, but it has not said a word, domestic products are improving, but it is standing still. Muzi said.
Benefit's retreat is not an isolated case, in the past two years, foreign makeup brands and even high-end line makeup have been out of the market.
In 2022, Maybelline, a makeup brand under L'Oréal Group, will successively close all offline stores in the Chinese market, except for Watsons. Also in this year, L'Oréal's makeup brand 3CE announced that its online store would be terminated on October 31, 2022, and then closed its flagship store in Sanlitun, Beijing.
In 2021, BeccaCosmetics, a high-end makeup brand owned by Estee Lauder, suddenly announced that it would shut down the brand in September 2022. In August 2022, Too Faced, a mid-range makeup brand also owned by Estee Lauder, ended its operations.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, said that the local cosmetics brands that have risen in the past two years are better than foreign affordable cosmetics brands in terms of product design, consumer demand, marketing and other aspects, while foreign cosmetics brands may not have adapted to the changing new consumption patterns in the local market, resulting in a squeezed market share and having to leave the market.
In the past two years, with the gradual rise of domestic makeup brands such as Huaxizi, Perfect Diary, and Caitang, many foreign makeup brands have to face the situation of squeezing their living space.
This has already been seen in 2020. Tmall data shows that in the "Double 11" in 2020, the growth rate of domestic beauty turnover ranked first, among which cutting-edge domestic beauty brands Huaxizi, Perfect Diary, Xiao Aoting, etc. have become dark horses. In 2020, among the skin care categories that account for more than half of the share of beauty cosmetics, the overall growth rate of domestic products in the sales of its TOP50 brands reached 78.9%, much higher than the overall growth rate of foreign brands of 26.8%. In 2023, this trend is becoming more pronounced. According to public data, in the 2023 "Double 11", Proya surpassed L'Oreal, Estee Lauder and other international beauty brands, ranking first in the beauty industry list of Tmall and Douyin. In 2023, 10 of the TOP20 pre-sale lists on the first day of "Double 11" in the Tmall beauty industry are domestic brands.
"The domestic makeup market is too volatile, if the brand lacks a distinctive personality and lacks a high brand premium, it will directly enter the competition with local makeup brands for cost performance, and it is difficult to win, so that opting out may be a better choice, and enterprises can concentrate resources to make more potential brands. Wu Daiqi said.
As Wu Daiqi said, whether it is affordable makeup represented by Maybelline, or high-end cosmetics such as Benefit Concubine, which have entered the Chinese market with high-end positioning, at a time when domestic cosmetics are developing continuously and the market pattern is changing, foreign makeup brands are probably experiencing that life is becoming more and more difficult.
Of course, the rapid development of domestic cosmetics is not the only absolute reason for the withdrawal of foreign cosmetics, just like the voice in the industry, Benefit may be the "victim" of the group's cost optimization. Whether it's L'Oréal or LVMH, this contraction strategy is more like a timely stop-loss.
It is understood that LVMH Group is mainly focused on high-end business, in addition to Benefit, it also has more high-end brands such as Dior, Givenchy, and Mei Kefei. When high-end has become the development trend of domestic and foreign beauty brands, internal adjustment may be inevitable.
According to the financial report data, LVMH Group's operating income in the third quarter of 2023 was 19.96 billion euros, a year-on-year increase of 9%, lower than the market's previous expectation of 21.14 billion euros, and the year-on-year growth rate was lower than the growth rate in the previous two quarters. This is the first time this year that LVMH's revenue has fallen short of expectations. Compared to the 17% revenue growth in the first and second quarters, the growth rate in the third quarter was only 9%.
Not only LVMH, but also brands such as L'Oréal are constantly concentrating their resources on more promising businesses. Combing the financial reports of L'Oreal Group in recent years, it can be seen that Maybelline's mass consumer brand division has ranked first in the group's sales for many years, but the growth rate is slowing down or even declining. In the 2021 annual report, the number one sales position was handed over to the luxury beauty department, and L'Oréal has repeatedly issued a voice to focus on luxury beauty.
According to Jiang Han, a senior researcher at the Pangu Think Tank Research Institute, some makeup brands have failed to establish an effective brand image and brand reputation in the fierce market competition, and cannot compete with other well-known makeup brands, which eventually leads to a decline or even withdrawal from the market.
Beijing Business Daily reporter | Guo Xiujuan Zhang Junhua
Image source: Benefit's official website
Edited by Topol