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"New" Business Opportunities In 100 Billion Beauty Market

2021/6/19 10:07:00 0

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In the age of beauty economy, the demand for beauty among the new consumers of generation 00 and generation Z is booming day by day, which brings new increment to the beauty consumption market in China. According to the data released by the National Bureau of statistics in January this year, China's total retail sales of consumer goods will reach 39 trillion yuan in 2020, down 3.9% from the previous year. The retail sales of cosmetics reached 340 billion yuan, up 9.5% year-on-year.

At the same time, the new consumer groups' pursuit of trend and individuation, together with the improvement of the upstream supply chain and the iterative upgrading of the downstream channel end, have also created opportunities for the rise of young and cutting-edge brands, and attracted a gold rush of capital.

In the field of cosmetics, there is a perfect diary in the capital, less than four years after its establishment, it went public. At the same time, some brands such as huazhizhi and Meishang have continued to complete large amount of financing. In the field of skin care, there are Winona's parent company, betaine, which has gained a market value of 100 billion yuan. Some companies such as ximuyuan and zhuben have completed several rounds of financing within one year. In the fields of Meitong and fragrance, there are also brands such as Ketang, 4inlook and scentooze.

The great migration of the mainstream consumers not only gives the birth of new brands, but also gives opportunities to reshape the channels. Online, the sales of beauty brands maintained a high growth momentum, but the main battlefield gradually changed from comprehensive e-commerce platform to content e-commerce and live e-commerce platform. The online reform and innovation have impacted the development of Watson's offline traditional beauty store.

At the same time, the local beauty collection stores began to rise in 2020, with the emergence of such brands as plum blossom, Xiran, color world and colorist, which attracted capital injection from Tencent and Hillhead.

For new people, what new opportunities will be brought about by the change of their consumption behavior? For the new brands, they grow rapidly under the support of capital, but it is still difficult to avoid the coexistence of growth and loss. How to find the balance key between the two and establish the sustainability of brand development? What is the logic of the rise of the new local beauty collection stores at the channel end? Can the new overlord of Watsons and Sephora be born under the capital re annotation?

The 21st century innovation capital research institute decodes the new group, new brand and new channel of beauty track by analyzing the data of the third-party institutions and interviewing the front-line practitioners and investors of the beauty track.

New crowd: "head up" international brand, actively embracing national trend

The change of people's consumption habits has brought new variables to the beauty market. In the past, beauty consumption was mainly for certain female consumer groups. A large number of consumers did not have the habit of using cosmetics and other products, and there were not many people who insisted on skin care.

But now, with the increasing emphasis on beauty, a large number of young consumers begin to use beauty products. Especially for the cosmetics category, even the same products may produce different effects on different consumers. Therefore, the increasing demand for color make-up also reflects the new consumers' pursuit of influenza and personalized inner appeal.

At the same time, it is worth noting that beauty is not exclusive to female consumers, and the growth momentum of men's beauty blue ocean market can not be underestimated.

At the same time, the 21st century Innovation Capital Institute believes that in the wave of "other economy", men's consumption behavior will still be different from that of women. First of all, women may brush small red books and Taobao every day to bring final consumption through the comparison of different brands. Men usually don't spend too much time reading Taobao and xiaohongshu. Their consumption behavior is more simple and direct, or tends to be stimulated by short-term external forces.

This also leads to the second difference, that is, men's consumption and women's consumption in terms of brand cognition are very different, men's cognition and loyalty to brand are not as mature as women's. Third, compared with the female consumer groups, men are not willing to show their motivation after using the products, so it is difficult to generate a discussion scene on related topics. Therefore, how to carry out word-of-mouth publicity in a more appropriate way is a new challenge for male beauty brands.

New brands: colorful make-up, skin care, beauty pupil, etc

In the face of the new consumer demand for beauty, a number of new brands, such as perfect diary, huaxizi, ximuyuan, etc., have sprung up. According to the statistics of the Innovation Capital Research Institute in the 21st century, the capital's investment in the cosmetics sub categories such as color makeup, skin care and beauty pupil is in a state of blooming flowers, and some head companies of the categories have gone public.

It should be noted that, as the two largest sub brand categories of beauty track, the business logic of color makeup and skin care is different. Make up is more like clothes, when consumers try on make-up, they can get immediate results. Therefore, new brands in the category of color make-up are more likely to enter consumers and attract them to buy for the first time. But at the same time, consumers also tend to follow the trend of fashion, constantly changing different brands and styles of cosmetics products, not too loyal to the brand, not easy to form a re purchase.

The use of skin care products is mainly for the improvement and repair of skin quality for a long time. When consumers spend a long time to establish cognition, the later use viscosity and repurchase rate will be very high. But it is also because of the high consumer loyalty, so it will be more difficult to enter the new brand in the early stage.

This difference in the cost of consumer education in the early stage also leads to the difference of brand starting speed. Therefore, the first thing to see is the accumulation of capital in the category of cosmetics, followed by the continuation of heat in the category of skin care. In addition, Meitong, aromatherapy and other sub categories also have investment enthusiasm.

However, it should be noted that the rapid growth of the brand under the nurturing of capital is still difficult to avoid the coexistence of growth and loss. According to the latest financial report of perfect diary, its total net revenue in the first quarter was 1.444 billion yuan, a year-on-year increase of 42.7%. The net loss of non GAAP in the first quarter was 234 million yuan, which was larger than 129 million yuan in the same period of last year. The main reason behind this lies in the high investment in marketing expenses, with the marketing expenses of 1.04 billion yuan in the first quarter, accounting for 72.1% of the revenue. Therefore, many voices question whether the perfect diary relies too much on marketing.

Beauty products bring forth new products quickly. Even if it is the same brand, different product lines have different functions and target consumers. In this case, it needs relatively high marketing cost to support, so that consumers can quickly perceive the characteristics of the product and purchase.

But the high marketing cost investment does not necessarily mean that the brand can be evergreen. High marketing investment can obtain consumers' cognition of the brand and transform it into the first purchase behavior. However, if the product quality is not hard enough, high investment in continuous marketing will not bring consumers' second repurchase, and burning money will become meaningless.

The 21st century innovation capital Research Institute believes that stable R & D capability and supply chain capability continue to bring forth new products. At the same time, reasonable planning of marketing costs, in many channels to find the most suitable channel to attract target consumers to buy. The key to the healthy development of a brand is to continuously accumulate word-of-mouth and user base.

New channel: upsurge of local beauty shops

The great migration of mainstream consumers not only gives the birth of new brands, but also makes the channel end constantly changing. Online, compared with comprehensive e-commerce sales channels such as tmall and Taobao, a large number of new consumers of generation Z and Post-00 prefer to obtain brand information on KOL platforms represented by xiaohongshu and Weibo, and purchase through content e-commerce and live e-commerce.

Offline, the impact of content e-commerce and live e-commerce, as well as the impact of the epidemic situation, have brought new challenges to the development of traditional beauty collection stores such as Watsons. At the same time, new local beauty collection stores are on the rise. In the past half a year, there have been some beauty collection store brands such as Huamei and Xiran, which have attracted capital injection from Tencent, Gaoling and Gaorong. In addition, there are also KK group's colorists, famous creative products under the banner of the world color (color beauty) and other rapid development momentum.

The reason for the rise of offline beauty store lies in the fact that online traffic is becoming more and more expensive. Now the head company's playing method is to spend a huge amount of marketing expenses online, resulting in the continuous increase of user costs, which also urges people to start looking for channels with lower user costs. Therefore, offline channels such as beauty collection stores have been paid more and more attention.

From the perspective of the user end, it is said that online shopping is not new for generation Z and generation 00, who are the indigenous people of the Internet. Instead, it is worth making friends by checking out the offline physical stores. At the same time, users may like not only high-end brand skin care products, but also affordable color cosmetics. And beauty products need to be tested offline to see the real effect. These complex needs can be met more effectively by offline collection stores.

Compared with traditional beauty shops, why do emerging local beauty shops attract more people and capital attention“ In essence, the demand side has changed, but the traditional stores have not kept up, giving new brands an opportunity to rise. " An industry source told the 21st century innovation capital institute.

For the brand side, there is no backstage expenses such as shelf charges, and has a better settlement period, and does not need to face inventory pressure. They will be more willing to reach a cooperation intention, and in the purchase cost price to the colorist and other channels to give a certain discount. For consumers, they can buy products with higher cost performance and better consumption experience.

For the channel side itself, after having a certain store size and user base, it mainly forms revenue through scale under high efficiency. At the same time, the channel's own product selection ability and consumer demand insight ability will be the core competitiveness, otherwise it will face inventory pressure and capital turnover problems.

The 21st century innovation capital Research Institute believes that the future trend of the channel end will be online and offline integration. Online small red books, live with goods, has the value of product diversion, which is conducive to improve consumer awareness and sales in a short period of time.

Offline, beauty store can bring better consumption experience to consumers and meet their complex consumption demand for different brands and categories of beauty products. The attention of local emerging Beauty Collection stores to digital capabilities is conducive to the improvement of store operation efficiency and continuous optimization of economic model.

At present, Watsons has nearly 4000 stores in China. Among the emerging Beauty Collection stores, Watsons has the largest number of colorists, and there are only 300 stores in China. From this point of view, the emerging Beauty Collection store in the future still has huge incremental development space, who will become the new overlord is still unknown. At the same time, compared with the obvious oligopoly effect of online sales channels, it is not easy to form a dominant situation offline. The national chain and regional giants of emerging Beauty Collection stores will develop together.

 

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