#精品长文创作季#
The competition in the beauty market is becoming more and more fierce, and you are chasing me to catch up with who has a more stable chassis, whose framework is firmer, and whose thinking is updated.
Author: Luo Wenbin Editor: He Xiang
出品：零售商业财经 ID：Retail-Finance
In 2024, cosmetics giants will start the main task of "reducing costs and increasing efficiency": from brand "subtraction", store closure, personnel changes to layoffs, there are bursts of pain behind the ripples.
The author found that since the beginning of the year, more than a dozen beauty companies such as Estee Lauder, Shiseido, BASF, American high-end skincare brand Matter of Fact, and Unilever have successively announced layoffs.
Among them, Unilever's layoffs have reached the largest in the past five years, and it is expected to lay off 7,500 jobs worldwide. The high-end skincare brand Matter of Fact laid off all remaining employees, and it is reported that the company has carried out two rounds of layoffs in 2023, but still failed to "recover" and finally regretted its exit.
Individual cases are often not enough to tell the story of the industry as a whole, but dozens of companies have made consistent layoffs in a similar period of time, which is worth pondering, what has the cosmetics industry experienced?
Source: Retail Business Finance
In fact, we can't simply attribute layoffs to "streamlining institutions, reducing costs and increasing efficiency", if we want to get a glimpse of the truth behind layoffs in the cosmetics industry, we also need to conduct a deeper analysis of the reasons from multiple perspectives such as enterprise development, industry trends, and market environment.
01 Poor management triggered a storm of layoffs
Back in February, Estée Lauder said it would lay off 3% to 5% of its workforce, meaning the beauty giant (which has about 62,000 employees worldwide) will lay off at least 1,800 or more employees.
On this basis, the Group expects the layoffs and broader restructuring plans to drive operating profit to US$1.1 billion to US$1.4 billion, which is more than the costs incurred by the restructuring.
The reasons for Estee Lauder's layoffs can be glimpsed in its earnings report.
According to the financial report data for the second quarter of fiscal 2024, the Estee Lauder Companies' sales fell by 7%, marking the seventh consecutive quarter of decline. Therefore, how to maintain a stable advantage in the next market competition has become an urgent problem for Estee Lauder to solve, and "layoffs" have naturally become one of their answers.
Coincidentally, at the end of February, Shiseido announced that it would offer an "early retirement" plan for 1,500 employees in Japan to reduce costs.
In fact, Shiseido's move has long been followed. According to the 2023 financial report, Shiseido's sales were 44.678 billion yuan, a year-on-year decrease of 8.8%. The performance that fell short of market expectations became a prelude to Shiseido's layoffs.
Overall, declining sales and poor business performance are the primary reasons for layoffs in beauty companies, but there is far more than one trigger for layoffs, and the goal of "high-quality development" has made major companies begin to formulate new business strategies.
Source: Weibo screenshot
Unilever said in its plans to lay off employees and streamline divisions that it will help the company more effectively leverage its innovation, marketing and market entry capabilities to drive continued growth.
It is worth noting that Unilever has divested its ice cream business and then made large-scale layoffs, both in order to accelerate the implementation of the "Growth Action Plan". It is reported that the plan was proposed by Unilever's current CEO Sima Han after taking office, aiming to promote the high-quality development of the brand.
One of the strategies for high-quality development: intensive resources and increased technology.
In the "involution" cosmetics track, major companies have strengthened the investment cost of R&D and product innovation. Looking at the successful experience of global cosmetics companies, short-term development is in marketing, medium-term development is heavy on research and development, long-termism depends on brand, and scientific research is the only way for mature brands.
In recent years, domestic beauty enterprises have developed rapidly, and data shows that in 2023, the market share of domestic beauty products will reach 50.4%, surpassing foreign brands for the first time.
Behind the good results is inseparable from the support of the brand, and behind the brand is inseparable from quality and innovation.
For example, Bloomage Biotech's R&D expenses in the first half of 2023 will reach 187 million yuan, a year-on-year increase of 4.04%, once leading many beauty brands, Proya has invented more than 100 patents and has three exclusive core ingredients, and Shangmei has obtained more than 200 patents and published more than 20 international journal papers.
Source: Internet
In order to maintain their R&D advantages, international beauty companies such as L'Oréal, Estee Lauder, Shiseido, and Amorepacific continue to showcase the latest R&D achievements and the technological power behind beauty to consumers and the industry.
It can be said that in 2023, beauty companies all point to one keyword: technology. In 2024, "technology" will also be the highlight of the cosmetics industry. The development trend of the industry is such that there are traces of layoffs to concentrate resources and develop efficiently.
02 Can layoffs boost performance?
The volatility of the global economic situation has exacerbated uncertainty in all walks of life.
According to public information, in 2023, about 26 overseas beauty brands will announce the closure of their Tmall flagship stores or withdraw from the Chinese market, including many well-known brands, such as "Revlon", which was once popular in China for its high-quality and inexpensive lipstick products, "Uigen", a well-known French skin care brand for sensitive skin, and "Benefit", a high-end makeup brand.
At the same time, the international beauty market is also constantly being squeezed by more cost-effective domestic beauty products. In the 2023 Douyin beauty GMV rankings, Han Shu achieved the first place with a GMV of 3.34 billion yuan, Proya ranked third with a GMV of 2.2 billion yuan, and domestic brands Dianti and Jiaorunquan rushed into the top 20. Estee Lauder fell out of the top three for the first time in nearly three years, and the Korean beauty brand WHOO fell from the top of the list in 2021 to the top ten today.
Source: Official account "Cosmetics Observation"
There are all kinds of signs that the competition in the beauty market is becoming more and more fierce, and you are chasing me to catch up with the stage of whose chassis is more stable, whose framework is firmer, and whose thinking is updated.
In addition, the volatility of the global economy has led to an increase in the cost of raw materials, and some beauty companies have begun to raise prices in order to maintain the company's profit margins.
After the Spring Festival, many big-name cosmetics began to increase in price. For example, L'Oreal Group's Kiehl's, YSL Yves Saint Laurent, Armani and other brands have maintained a high level of growth, and some products have even reached an increase of nearly 40%, in addition, brand products such as Estee Lauder and Shiseido have also quietly increased in price.
Raising prices is not necessarily paying, especially in today's highly competitive beauty market, where consumers have more choices, and they will shift their attention to more cost-effective domestic brands.
Raising prices will increase profits, but in the long run, it's wise to streamline costs, improve efficiency, and foster brand loyalty.
03How to revive?
Beauty companies make layoff decisions based on the company's operating status and industry development, which affects employee motivation to a certain extent, consumes the cost of organizational change, and reduces the industry's self-confidence in the brand. What happens after layoffs? Enterprises still have to make adequate plans.
First, companies need to face up to reality and rebuild trust.
It should be recognized that layoffs not only affect the reputation of the employees who have been laid off, but also have psychological effects on the employees who remain, such as insecurity and reduced morale.
Therefore, the transparency of active communication and information disclosure is particularly important at this time, and in the face of the arrangement of having to lay off employees, it is necessary for the company to let the team know the reasons for the layoffs and future plans, and it is also responsible to help the layoffs to a certain extent.
Source: Weibo screenshot
As early as 2022, there was also a wave of layoffs among Internet companies. However, along with the layoffs, we will continue to introduce scientific and technological talents and outstanding graduates to "lose fat and increase muscle" and achieve more efficient development.
From this to this, cosmetics companies should also realize that although it is feasible to reduce labor costs, it is essential for the introduction of talents and the formulation of long-term planning. This is an important step to reassure employees and regain the trust of the industry.
Secondly, beauty companies should also adjust their strategies in a timely manner in order to seek a new round of development.
The implementation of the layoff and restructuring plan in the cosmetics industry illustrates a trend from the side: at a time when the competition in the beauty market is fierce, beauty companies are determined to reform and find breakthroughs.
The survival and development of retail enterprises largely depends on market demand, so the adjustment of strategy needs to grasp the market.
With the rapid development of China's economy and the continuous improvement of people's living standards, China, relying on a huge population base, has become a major part of the global cosmetics market.
The international beauty giants that laid off employees have made certain adjustments to the Chinese market.
Source: Internet
BASF's CEO said in a statement that most of this year's investment will go to its Verbund plant in China, Estee Lauder has made efforts in products, channels and investments, emphasizing that the layoff plan will help empower the Chinese team and adapt to the development of the Chinese market, and Shiseido President Mei Jinli has also declared that China will be the first market for cutting-edge innovation.
The sustainable growth of the cosmetics industry not only needs to rely on short-term human resource adjustment, but also needs to build a diversified, innovative and sustainable future plan.
It's true that layoffs may be a measure that companies have to take in some emergency situations, but they often only solve temporary financial difficulties, especially in the highly competitive beauty industry, where simple layoffs won't solve the underlying problem.
In the long run, enterprises need to fundamentally rethink and restructure their development strategies, including but not limited to product innovation, market positioning, brand building, customer experience optimization, etc.
Source: Internet
More importantly, innovation has always been the core driving force for development. Companies need to continuously develop products with innovative features that meet market needs in order to appeal to a wider range of consumers.
According to the data, the market size of China's functional skin care products will exceed 100 billion yuan, accounting for about 22.9% of the overall skin care product market, which shows a strong development trend. There is no doubt that beauty companies will win the favor of consumers if they increase their investment in scientific research and create more green and environmentally friendly products.
At the same time, building a unique and attractive brand image, optimizing customer experience, and improving customer satisfaction and loyalty are also key factors to promote the long-term stable development of enterprises.
Personalized service will be a major growth driver for the cosmetics industry. If companies want to stand out, they may wish to start differentiated competition, tap into the customized beauty track, and capture the psychology of consumers.
In addition, beauty companies should embrace digital transformation and leverage advanced technologies such as big data and artificial intelligence to improve operational efficiency, improve products and services, and develop new sales channels.
Layoffs in the cosmetics industry may continue, but one thing should be clear: get out of the shadow of layoffs, be innovation-driven, customer-centric, and build a more sustainable and vibrant future. It's not just a beautiful vision, it's a shared mission in the beauty industry.