The fairy water, which was once a big fire, has been cold in China in the past two years. Not long ago, some netizens reported that SK-II was withdrawn from many shopping malls in Shanghai, including Jing'an Temple Jiuguang Department Store, one of Shanghai's core shopping malls. What is the reason behind the frequent withdrawal of SK-II?
1.SK-II在上海频繁撤柜
Recently, a netizen posted on a book that a friend said that the SK-II of Jiuguang Department Store in Jing'an District, Shanghai has been withdrawn, and after a search, it was found that this was indeed the case. Not long ago, the SK-II of Isetan Department Store in Shanghai Westgate Town was also exposed to the cabinet. In the past year or so, five SK-II counters have been withdrawn from Shanghai, and now there are only 10 SK-II counters left in Shanghai. As a high-end beauty product that was all the rage, it doesn't feel like a good sign.
Image source: Xiaohongshu
In response to the revelations of netizens, the staff of Jiuguang Department Store in Jing'an District, Shanghai told the "21st Century Business Herald" that the SK-II counter of the department store was withdrawn at the beginning of this year, which is a normal phenomenon. The staff of the Isetan mall in Shanghai Meilong also told the Beijing Business Daily that the SK-II counter had been withdrawn from the mall last month, but they did not know the reason for the withdrawal.
Image source: Weibo screenshot
According to incomplete statistics from Beijing Business Daily, in the past year, the SK-II counters of Shanghai Pujian store, Wujiaochang store, Pacific Department Store, Isetan Department Store and other shopping malls have been withdrawn, and only 10 are currently in normal business. Previously, SK-II had 18 counters in Shanghai, which means that SK-II removed nearly half of its counters in Shanghai. Regarding the reason for the frequent withdrawal of cabinets, the relevant person in charge of Procter & Gamble told Beijing Business Daily that "it is in the quiet period in the early stage of the financial report release, and it is inconvenient to respond".
2. Sales declined, and fairy water went down the "altar"?
Although Procter & Gamble did not explain the specific reason, there is a view that the withdrawal of many SK-II counters in Shanghai may be related to SK-II's poor performance in China in the past two years. Not long ago, Procter & Gamble released its 2023 financial report, with a revenue of more than 600 billion yuan hitting a record high, but its net profit attributable to the parent company has declined. In the second quarter of fiscal 2024, P&G's net profit also fell 11.8% year-on-year while sales increased by 3% year-on-year.
In this regard, Procter & Gamble said that it was mainly due to "the decline in sales of skin and personal care categories, including the SK-II brand". Among them, SK-II's sales decline in Greater China was the most significant, with sales in Greater China falling by 34% in the second quarter of fiscal 2024. At its peak, SK-II had 15 consecutive quarters of sales growth of more than 20%, supporting the performance growth of P&G's beauty division. In fact, since the beginning of fiscal year 2021, SK-II has been named in P&G's financial reports many times because of its declining performance. Why is SK-II not popular in China?
Image source: Canned Gallery
SK-II is not selling well in China, and Procter & Gamble believes that it is mainly affected by Japan's discharge of nuclear wastewater. Although Procter & Gamble has issued a statement that all SK-II products meet market regulatory requirements, it is still difficult to dispel the concerns of domestic consumers.
3. High-end beauty products are "not selling" in China?
In fact, SK-II is not the only high-end beauty product that has suffered setbacks in the domestic market. In the first quarter of fiscal year 2024, Estee Lauder's total revenue fell by 10.37% year-on-year, and the net profit attributable to the parent company fell by 93.66% year-on-year. Among them, the sales decline in the skincare segment was the most severe, which Estee Lauder believes is mainly due to the decline in travel retail business in Asia and the slower than expected recovery of the high-end beauty market in Chinese mainland.
In the third quarter of last year, Shiseido's sales in the domestic market fell by 9% year-on-year, and Shiseido's high-end skin care brand IPSA was also rumored to be withdrawn from the cabinet in many places. In the first half of last year, La Prairie, a luxury skincare brand owned by the Beiersdorf Group, saw its unadjusted sales fall 10.5% year-on-year. High-end beauty seems to be "unsellable" in China.
Image source: Canned Gallery
In the face of the performance that is not as good as in the past, many beauty companies attribute it to the domestic crackdown on daigou and the market recovery is not as expected, but there is a view that in addition, it is also related to the downgrade of domestic consumer consumption, the impact of high-end beauty brands on brand image and the rise of domestic products.
In the past two years, posts of "consumption downgrade, looking for replacement" can be seen everywhere on social platforms, and consumers are increasingly inclined to high-quality and low-cost beauty brands, which has ushered in opportunities for low-end brands. In the case of the Beiersdorf Group, although the sales of its luxury skincare brand La Prairie fell year-on-year, the mid-range brands Nivea and Eucerin both had double-digit year-on-year revenue growth last year.
In addition, in order to seize online traffic, high-end beauty products have also begun to enter the live broadcast room to fight price wars. This has led to a contradiction between the "self-depreciation" of high-end beauty and its previous high-end brand image, which can not attract new users who pay attention to cost performance, and may even lose old users.
Image source: Canned Gallery
While high-end beauty brands are caught in the contradiction between traffic and image, domestic beauty brands are on the rise. Last year's Double 11, Taobao beauty stores topped the sales list and Douyin beauty and skin care TOP10 list, all of which were Proya. In the "2023 Bazaar Beauty Carnival" and "2023 Douyin Top 100 Beauty and Good Things Gold List" in the same year, Winona won the annual essence honor and the 2023 Douyin Top 100 Beauty and Good Things Gold List respectively.
Procter & Gamble is optimistic about the decline in SK-II sales. Procter & Gamble's chief financial officer has said that "we expect continued improvement in the second half of the year". However, the SK-II is not only cold in the domestic market, but also because of Japan's nuclear sewage discharge, but in this case, in this case, SK-II sales in the second half of the year will improve as P&G hopes?
(Source: Fun Solution)