On August 23rd, the 3rd China Cosmetics New Youth Forum, hosted by Pinguan APP and sponsored by MAY COOP, was held at the Eurasia Convention and Exhibition Hotel in Wuhan.
Deng Yingyan, founder and CEO of Guangzhou Xinruimeng Brand Service Co., Ltd., was the head of Watson's private label department for 8 years. She has witnessed the brilliant growth of Watsons from 200 stores to 3,000 stores, and has also developed and expanded Watson's own brand. During her tenure, Deng founded and managed more than 20 beauty private labels, bringing Watsons nearly $6 billion in annual business and nearly $4 billion in profits.
At this meeting, Deng Yingyan shared the experience summarized by years of work, providing ideas and methods for CS stores to build their own brands.
Doing private label has become the consensus of global retailers
"In a society with more and more abundant goods, consumers face difficulties in choosing, and private labels can provide consumers with differentiated options. At the same time, private brands can also convey a trust to consumers, so that customers will have a stickiness to the brand and stores. Deng Yingyan defines the value of her own brand in this way.
For why retailers should do their own brand, she explained that doing their own brand can make the product innovative and differentiated, homogenization is the problem that the industry and consumers have found today, and the private brand can solve this problem; secondly, doing its own brand can provide customers with cost-effective products, improve word-of-mouth and customer stickiness, and then help the store to obtain high gross profit and "cash cow", and ultimately maximize the value of the brand and enhance the brand image.
Deng Yingyan shared some cases of retailers building their own brands, such as Huiyi, Mingting and Jianshi launched by global retail giants Walmart, Beijing and Taoxiang Sweet launched by e-commerce giants JD.com and Ali respectively, and in the beauty field, well-known chains such as SaSa and Tang Sancai have also launched their own brands.
As can be seen from the above cases, different online and offline channels, supermarkets, cosmetics stores and different formats are doing their own brands, including many successful cases of annual sales of more than 1 billion yuan, Deng Yingyan made a detailed introduction to this:
In China, the leading social e-commerce platform gathered to launch its own brand Suye, listed for 8 years, and now has developed to an annual sales of 700 million, 800 million, but also set a lot of sales records, one of the single product listed within 2 hours of sales exceeded 100 million yuan.
From the 10 yuan store to the trend department store chain Mingchuang Premium, the launch of skin care makeup products, of which the price of 10 yuan / eyeliner pen sold 200 million in 3 years, contributing 2 billion revenue, and then it also cooperated with the top global makeup foundry company Intrici to create a MINI PONI series of products, which are also very popular.
Abroad, 711, a well-known convenience store in Japan, launched a makeup series, Simple Me Beauty, and cooperated with fancl to launch a Botanical Force skin care series. Deng Yingyan learned from the founders of 711 in Japan that 711's private label accounts for 70% of sales.
In addition to these private labels that have achieved success in their own countries, the influence of some private labels has also transcended countries and reached the world. A typical case is kirkland, a nut brand owned by the American supermarket chain Costco, which accounts for more than 25% of Costco's overall sales and brand penetration rate of more than 25%, exceeding the level of 18% of most international brands. The brand has now entered the Chinese market through the Tmall channel, setting a record of selling 100,000 cans a day on Double 11.
Another classic case is MUJI, "it takes its own brand to the extreme", not only developing daily necessities, but also expanding the surrounding areas such as restaurants and hotels, attracting a large number of loyal customers.
Based on these successful cases, Deng Yingyan concluded, "Private labels do the ultimate, let customers have stickiness to the brand, you can do whatever you want."
What are the success factors of private label?
Deng Yingyan used Watsons as a case study to explain how stores can build their own brands.
At present, Watsons has 14 private brands and more than 1,000 SKUs on sale, covering 5 categories such as skin care, makeup and personal care. Private labels, which account for only 25% of sales, contribute more than 60% of Watson's gross profit.
Deng Yingyan said that maintaining rapid new product development is the key to the operation of private labels, and the number of new product developments is directly proportional to sales growth.
Based on this case, Deng Yingyan shared the elements of successfully building a private label:
First, the development of its own brand should be raised to the height of playing the core of the company's strategic development. Deng Yingyan revealed that when Watsons first started doing its own brand, it had done a lot of market research and received many negative reviews, such as copycats and not doing business. Affected by this, the giant will build its own brand to the height of corporate strategic development, adhere to the investment, more than ten years later, its own brand has become a benchmark for industry learning.
Second, it is necessary to have an exclusive team and self-sustaining funds, and adhere to independent operation. She revealed that Watson's own brand has a franchise team, with about 100 people, to ensure that the product and brand from design, production, supply chain control, sales training have special personnel responsible.
As the person in charge, Deng Yingyan directly reports to the CEO, which can not only maintain the independence of operations, but also make quick decisions and seize market opportunities.
Third, private brand products must have price advantages. A.S. Watson's private label products are priced 10% to 50% cheaper than competitors, and consumers are obtained by price advantage.
All in all, free brands need to meet four high standards: high sales, high growth, high gross profit, and high quality.
Deng Yingyan took the SKIN Adavanced Zhuoyan brand founded by one hand as an example to illustrate that building a private brand requires time, location, and people.
Zhuo Yan was founded in 2013 with the positioning of cosmeceuticals, when there were few cosmeceutical brands in the market and a single channel, and her team found through research that most Chinese women face skin problems, especially allergy problems. Therefore, Zhuo Yan, who is positioned in differentiation, has gained a first-mover advantage in the early days of its establishment. Then, with the full support of A.S. Watson Group and the promotion of the personnel mechanism, Zhuoyan quickly became a brand with annual sales of more than 1 billion yuan.
How to develop private labels?
After clarifying the methodology, Deng Yingyan further introduced the details of team formation and new product development.
Deng Yingyan stressed that the team must uphold the special personnel, "can not let the procurement take into account, but to subdivide the team operation of different functions." She took Watson's team structure as an example to illustrate that private brands need to have a special person in charge of coordination, under the brand management, product development, commodity management and terminal sales of four modules, with the development and growth of private brands, quality control, legal affairs and other links should also be deployed.
"For most retailers that are not very large at the moment, you can optionally configure your team." She added.
In terms of new product development, she took the 30-week development cycle of ordinary private brands as an example, subdividing the links that should be carried out at different stages, "new product development is not simply to find OEM production, but requires careful planning."
Finally, Deng Yingyan stressed that retailers should not make their own brands into giveaways, and private labels must be operated like other brands.