Recently, the high-end skincare brand SK-II has attracted attention for its frequent withdrawal in Shanghai, and the well-known beauty brand KOSE has also announced that it will close its Tmall flagship store on April 19. The continuous "wave of store withdrawals" and "store closures" has made it increasingly clear that the current situation of the continuous shrinkage of daily cosmetics brands in the Chinese market is becoming clearer, and how to break through the Chinese market for daily cosmetics companies seems to be a problem they need to solve urgently. The founder of a trading company that is deeply involved in Japanese brand purchasing said that in the past 10 years, from shining to falling off the altar, Japanese cosmetics have long been no longer the "first echelon" choice of Chinese consumers.
SK-II"撤柜潮" 引关注
Recently, some netizens said that the high-end skin care brand SK-II has been frequently withdrawn from the cabinet in Shanghai in the past year, including many high-end shopping malls located in the center of Shanghai. The reporter verified and confirmed that since the second half of last year, SK-II in Shanghai has withdrawn 5 counters, including Paris Spring Pujian store, Wujiaochang store, Pacific Department Store, Isetan and many other shopping malls. As of April 18, 10 SK-II counters in Shanghai were operating normally, compared to 18 SK-II counters in Shanghai.
According to a report by Beijing Business Daily on April 15, "According to people familiar with the matter, SK-II will next start withdrawing cabinets nationwide." ”
However, the reporter found that there are currently 6 SK-II counters in Shenzhen, all of which are in normal operation. Among them, the clerks of the Huaqiangbei store of Maoye Department Store and the Yitian Holiday Plaza store said that they had not received the news of the store withdrawal, "Those are all rumors on the Internet, and we have never received a notice of store withdrawal or preparation for store withdrawal." ”
On April 17, in response to the rumors of the recent withdrawal of the SK-II brand, SK-II responded that the statements that "frequent withdrawals", "nationwide withdrawals" and "1/3 of the recent withdrawals" are all false information, "China has always been a very important market for SK-II, and SK-II is committed to providing consumers with excellent products and consumer experience." In the past three years, SK-II's counter coverage has been stable, and the online and offline consumer service experience has been continuously improved. SK-II will regularly update the layout of stores and counters to provide consumers with a more advanced and superior skincare retail experience. SK-II is committed to always serving all consumers with a premium experience and superior products.
Organic sales in China -34 percent
However, even if the "nationwide withdrawal" is untrue, from the financial report, especially in China, SK-II's performance has indeed declined, and P&G executives have directly pointed out the above problems in several consecutive earnings quarters.
According to Procter & Gamble's previously released report for the second quarter of fiscal year 2024, P&G's sales were US$21.4 billion (about 154.161 billion yuan), a year-on-year increase of 3%, and net profit fell 11.8% year-on-year to US$3.468 billion (about 24.983 billion yuan). Among them, SK-II's beauty division became the slowest growth division, with an increase of only 1%. In its earnings report, Procter & Gamble attributed it to "declining sales in skin and personal care categories, including the SK-II brand, resulting in a mid-single-digit decline in organic sales." This decline in SK-II is even more pronounced in the Chinese market. According to the financial report, in the second quarter of fiscal 2024, SK-II's sales in Greater China fell by 34%.
Faced with weak sales of SK-II, Procter & Gamble chose to raise prices. According to incomplete statistics, since 2018, SK-II has raised prices four times. During February 2023, SK-II issued a price increase notice, with an increase of 12%, the highest in the past five years. At the beginning of 2024, SK-II has once again increased its price. In the second quarter of fiscal 2024, P&G Beauty achieved a 1% increase in sales, partially offset by higher product prices.
In addition to the "price increase", the doubts from "nuclear pollution" should not be underestimated. During June 2023, SK-II was questioned by consumers because a large amount of wood chips containing the radioactive substance cesium had been piled up at the production area. This was followed by the first round of nuclear wastewater discharge in August 2023. In the face of the nuclear contamination incident at the production site, P&G officially responded: "All SK-II products are produced in strict accordance with internal quality standards and external standards, and meet the requirements of market supervision. SK-II products manufactured in Japan or shipped abroad are safe to use. But consumers aren't buying it, "I've been using all kinds of daily makeup brands for more than a decade, from skincare to makeup." After the news of the nuclear sewage discharge came out, I quickly bought a batch of cpb and SK-II stock products, and I will not buy any more daily makeup when this batch is used up. Ms. Jin, a consumer, told the reporter of Reading Special News.
The daily makeup brand can't sell?
Since Japan's nuclear sewage was discharged into the sea, Japanese cosmetics are under a lot of pressure. On April 11, KOSE Cosmetics issued an announcement on its official flagship store on Tmall, announcing that it was about to end operations, announcing that due to the needs of the company's strategic adjustment, KOSÉ's official flagship store plans to end operations on April 19, 2024, and the official flagship stores of the company's other brands such as Decorté and SEKKISEI will continue to operate and will not be affected.
In the past year, at least 10 daily cosmetics brands have announced the closure of their brands or stores, involving Kao, KOSE Group and POLA Group. Among them, in less than half a year since the end of last year, Kao has announced the closure of five beauty brands, SALA, Blanchir superior, Frēshel, AUBE and COFFRET D'OR, involving affordable makeup, mid-range makeup, skin care, hairdressing and other brand types. In addition, Shiseido Group's Infu Yarn has also been exposed to a large area of offline counters, including the brand's first customized concept store in China, which opened in December last year in the Lujiazui Center in Pudong, Shanghai.
Behind the withdrawal and suspension of operations, there is a decline in the popularity of Japanese cosmetics brands in China, which can be glimpsed from the financial report. Kao, Shiseido, and KOSE, the three major Japanese cosmetics groups, have previously released their 2023 financial reports. According to the data, in 2023, Kao Group's net sales will be 1,532.6 billion yen (about 71.822 billion yuan, converted at the exchange rate on April 16, the same below), down 1.2% year-on-year, operating income will be 60.035 billion yen (about 2.813 billion yuan), down 45.5% year-on-year, and net profit attributable to the parent company will be 43.870 billion yen (about 2.056 billion yuan), down 49.0% year-on-year.
In 2023, Shiseido Group's net sales will be 973 billion yen (about 45.598 billion yuan), down 8.8% year-on-year, operating profit will drop 39.6% year-on-year to 28.1 billion yen (about 1.317 billion yuan), and net profit attributable to the parent company will be 21.7 billion yen (about 1.017 billion yuan), down 36.4% year-on-year.
In fiscal year 2023, the total revenue of KOSE Group will be about 300.4 billion yen (about 14.078 billion yuan), a year-on-year increase of 3.9%, but the operating profit will be 15.9 billion yen (about 745 million yuan), a year-on-year decrease of 27.7%, and the net profit attributable to the parent company will decrease by 37.9% year-on-year to 11.7 billion yen (about 548 million yuan).
From selling day makeup to selling fishing rods
Yang is the founder of a trading company, stepping on the "daigou fever" tuyere, opened a company in Japan in 2014, "For us, 2014 to 2016 is the 'best' three years, China's demand for Japanese products is huge, any product can be sold, and the profit margin is also very large." Yang recalled that at that time, most of them were "human flesh purchasing", and the trading company had an advantage, "What we did was simply to buy products from Japan and then sell them to the Chinese market, and the profit was the difference in price." Big brands like cpb and SK-II can only be connected to the counter, while comparative civilian brands such as Kanebao can be connected to the company, and the more the volume, the greater the discount. ”
Yang told the reporter that in the hottest years, not only Japanese cosmetics, but also Japanese daily necessities and food products are also hot, "snacks, such as white lovers, etc., our company can get 300,000 goods in Japan a month, and then ship them back to China for sale, with a profit of about 30%." At that time, the Pinduoduo platform was in its infancy, and the Japanese snacks such as Shiroibito and Shengqiao were all supplied by our company. ”
In Yang's view, changes have occurred three times, "the first is in 2017, the e-commerce platform took a fancy to this market, set up a lot of overseas shopping platforms, the result of the 'volume' is to fight a 'price war', the profit pressure is particularly low, we can't keep up, the space is getting smaller and smaller; the second is the new crown epidemic, the package needs to be sanitized and various very cumbersome procedures, from sending to receiving sometimes takes more than half a year, the time cost is too high; the third is Japan's nuclear sewage discharge into the sea, this time the impact is the greatest." ”
Yang recalled that although the addition of e-commerce platforms has compressed profit margins, the market demand is still huge, but with the passage of time, the demand of Chinese consumers for daily cosmetics brands has declined significantly. Especially after Japan's nuclear sewage is discharged into the sea, it is impossible to sell it below the cost price. ”
In the past 10 years, from shining to falling off the altar, the daily makeup brand is no longer the choice of the "first echelon" of Chinese consumers.
However, as an industry insider pointed out, from Japanese factories to Japanese brands to Japanese channels, nuclear sewage discharge is only an accelerator for the successive retreats of Japanese cosmetics in the Chinese market.
[Source: Read special client]