In the past March 8 th promotion, the beauty industry was full of smoke, and all families tried their best to capture the hearts of consumers by exerting their efforts in price.

In the past year, affected by the macro environment such as the epidemic, consumer confidence was insufficient, and the beauty industry was under pressure. According to the data released by the National Bureau of Statistics, the total retail sales of social consumer goods in 2022 was 439.733 billion yuan, down 0.2% from the previous year, of which cosmetics decreased by 4.5%, which was the first negative growth since 2000.

As a shopping festival featuring women, March 8 promotion is a long-awaited recovery opportunity for the beauty industry.

However, a data circulating in the industry shows that the sales data of major brands in this promotion seems to be unsatisfactory, and the expected recovery is coming. Many beauty brands and even big brands have experienced a serious year-on-year decline in performance. According to industry insiders, influenced by macroeconomics, consumer behavior tends to be conservative, and the beauty industry is undergoing great changes. Some high-luxury brands, including Estee Lauder, are experiencing a lot of trouble.

Li Jiaqi can’t sell cosmetics either?

During the March 8 promotion last year, Li Jiaqi, the "first brother with goods", made a blockbuster on the night of pre-sale, welcoming more than 77 million viewers, "live broadcast for 7 hours, with goods of 2.825 billion", and swiped the network.

After a year, this year’s live broadcast room in Li Jiaqi was "quiet".

During the March 8 promotion period, Li Jiaqi Live Studio set up eight theme live broadcasts according to different categories, and the beauty was also featured on the night of pre-sale. As in the past, there are sales of international beauty brands and domestic brands in the live broadcast room. According to statistics, the discount strength of many brands is comparable to that of last year’s Double Eleven. However, many links can still be purchased, and they have not continued to be empty in the past. Even if there is a single product with a sales volume of over 100,000, it cannot hide the unsatisfactory overall consumption.

After the pre-sale night, almost no sales data were released. An industry analyst told China Newsweek that although the data of live broadcast rooms in Li Jiaqi were not made public this year, the final sales were not as good as expected when the consumption situation was not optimistic this year.

A beauty brand official told China Newsweek that his brand has been cooperating with Li Jiaqi Live Studio for a long time, and its sales performance has increased slightly this year, and its ranking has also jumped to the top of the list. However, he also felt that the Li Jiaqi team has more and more demands on prices and gifts. Li Jiaqi himself bluntly said on the night of the live broadcast, which brand is giving a big discount now and which brand is selling well.

The source pointed out that the seasonal promotion such as March 8 accounted for a certain proportion in the annual sales of beauty brands. Under the pressure of last year’s performance, various beauty brands naturally wanted to boost their performance in this promotion. At present, the number of SKUs that head brands participate in is obviously higher than last year, and the overall preferential strength is higher than last year’s 3.8, and some products are comparable to the Double Eleven.

However, according to a data circulating on the Internet about the turnover of Tmall beauty brands in March 8, the turnover of international big brands such as Estee Lauder, Lancome and Hailan Mystery dropped by 20% to 50% year-on-year. In addition, the turnover of most beauty brands was declining year-on-year. According to media reports, this year’s March 8 sales promotion has indeed declined, and the sales of brands such as Estee Lauder and Hailan Mystery have dropped by 20%-35% year-on-year.

The above analysts said that the circulated screenshot data may not be accurate, but it is true that the overall sales situation is not good. The decline rate of major brands is relatively less than that in the screenshot, but it is also relatively large. In addition, both the platform and the merchants have done a lot of homework for this promotion, but the result is too high-consumers have not raised more interest in it.

According to the data of third-party platforms, during the March 8th promotion this year, the number of daily users of e-commerce platforms did not increase much, and the number of daily users during the March 8th promotion in the past 30 days was not even the peak.

Zhang Yi, CEO of Ai Media Consulting, told China Newsweek that the pictures circulated in this big promotion did show that the sales did not achieve the expected results. First of all, because after the epidemic, consumption has been affected to some extent, and everyone’s income may fluctuate and consumer confidence is insufficient; In addition, e-commerce platforms, especially beauty products, are facing the diversion of live e-commerce in Tik Tok and Aauto Quicker. Traditional e-commerce platforms are facing greater growth pressure.

Consumers are becoming more and more sensitive to prices.

A consumer from Beijing used to "stock up" and buy one or two sets of big-name skin care products such as Estee Lauder during the March 8 promotion last year, but this year she turned to domestic products with higher cost performance. In her understanding, the efficacy of domestic products is not far from international brands, and the price is relatively cheaper.

There are not a few cases of seeking replacement, and consumers are becoming more and more sensitive to prices. Many consumers, after staying in the live broadcast room in Li Jiaqi, found that the price advantage of the live broadcast room in Li Jiaqi was no longer so obvious, which also revealed the increasingly fierce competition in the industry.

"From the online subsidy of 10 billion yuan in JD.COM this year, we can see that the competition for users among e-commerce platforms should be heated up." Zhang Yi believes that e-commerce platforms can compete at a "low price" at the expense of profits, and it is conceivable that this is urgent and intense.

In May, the founder of beauty cosmetics pointed out that brands now pay attention to global e-commerce and will not all bet on one platform. However, in the case of all kinds of live broadcasts, self-operated live broadcasts of brands and various promotions, consumers are no longer sensitive. Moreover, in the absence of an overall consumption environment, consumers may cut back on some beauty budgets.

The conservatism of consumers is also reflected in the financial reports of big names in the head. According to the data of Estee Lauder’s financial report, in the second quarter of fiscal year 2023, the net sales were US$ 4.62 billion, down 17% year-on-year; Net income was $397 million, down 64% year-on-year. In fact, the net sales of Estee Lauder in the first six months reached 8.55 billion US dollars, down 14% year-on-year; Net income was $887 million, down 50% year-on-year. In the past year, the performance of the Asia-Pacific market continued to drag down the sales of Estee Lauder. In the previous four quarters, the sales dropped by 14.78%, 23.2%, 3.91% and 17.46% respectively. P&G’s sales in the second quarter of fiscal year 2023 was $20.723 billion, down 1% year-on-year, and its ultra-high-end brand and star single product SK-II faced a decline in sales.

On the other hand, L ‘Oré al’s sales and growth rate in 2022 hit a record high in the past decade. According to the financial report data, the sales volume was about 38.26 billion euros, an increase of 18.5% compared with 2021.

In May, it was believed that the performance of Estee Lauder and Procter & Gamble was affected by the epidemic, which was a reflection of the macroeconomic downturn. Under this background, the high-end beauty businesses of Estee Lauder and Procter & Gamble, which are mainly high-luxury brands, were affected; On the contrary, L ‘Oré al has created the best performance in the past decade, which reflects the differentiation of the cosmetics industry, and also shows that the cosmetics industry is welcoming consumption degradation.

"In 2022, especially in the fourth quarter, the domestic epidemic was more serious. Consumers stayed at home for a long time and wore masks when they went out, and the demand for beauty products was weakened." Zhang Yi said that the whole industry is under pressure.

In the data circulating on the Internet, most of the domestic brands have seen year-on-year growth in performance. It is reported that the pre-sale performance of Polaiya brand ranks first in the industry, with a year-on-year increase of more than 50%, and its share price has also risen sharply, but Polaiya did not give a clear answer. The above analysts pointed out that in the process of consumption degradation, consumers have a certain degree of awareness of domestic brands, and these products are more cost-effective than foreign brands.

Is it useful to raise prices when the big promotion fails?

"An important reason for the failure of online promotion is that in the context of the epidemic, the cosmetics industry as an optional consumer product has been seriously damaged on the consumer demand side; The other is that in the past few years, affected by the epidemic, the proportion of online consumption scenes has increased. After the epidemic was released this year, offline consumption scenes such as tourism, tax exemption and high-end shopping malls have been opened, which will inevitably generate some consumption and affect the proportion of online consumption; In addition, if consumers go offline, the budget for online shopping may be reduced accordingly. " The above analysts believe that today, with the increasing recovery of offline consumption, this year’s March 8 e-commerce platform promotion is not very attractive.

In fact, online channels are increasingly becoming an important channel in the cosmetics industry, accounting for an increasing proportion. According to Euromonitor statistics, the proportion of e-commerce channel sales in the beauty and personal care industry increased from 10% in 2012 to 39% in 2021, and it is currently the single sales channel with the highest proportion. The proportion of traditional convenience stores and supermarkets, which previously accounted for a relatively high proportion, dropped from 38% in 2012 to 19% in 2021.

When such an important channel fails, in order to boost performance, the response of big-name beauty cosmetics is to raise prices. Taking Estee Lauder as an example, it has been positioned as a "high-end brand" in the market for many years, including two top brands: Hailan Mystery and Tom Ford, as well as high-end brands such as Estee Lauder and Barbie Brown. According to the data of the third party, the Estee Lauder Group raised its products such as cosmetics, perfumes and skin care products, including Estee Lauder brand frozen platinum and admiring lipstick, with an increase of less than 10%, while the overall increase of Hailan Mystery was 6%. At the same time, L ‘Oré al Group and LVMH Group all raised their prices for their beauty products.

A staff member of a domestic brand told China Newsweek that the price system of its own brand has always been relatively strict, and it has basically not broken the price. At most, it will give consumers some travel clothes. On the issue of price increase, the home-made products have been upgraded to the fourth generation products, and only when the second generation was upgraded to the third generation, they rose by 100 yuan, and there was basically no price increase afterwards. He pointed out that the price increase needs effective support and investment in scientific research, and it is not possible to "take out things" but raise prices.

Zhuang Shuai, founder of Bailian Consulting, pointed out that the price strategy belongs to the core strategy of the retail e-commerce industry and is also the core driving force for the long-term development and progress of the industry. The promotion activities based on price strategy will also be carried out for a long time, but with the change of consumption habits, the promotion forms and product selection need to be more diversified and accurate, and the price increase strategy of big-name beauty products is actually changing with the price increase of e-commerce and marketing strategies.

The price increase will increase the profit rate in the short term, but in the long run, May thinks it will overdraw the brand power.

Zhang Yi said that well-known brands such as Estee Lauder and Shiseido have actually been greatly adjusted by local brands in China. The main channel for local brands to exert their strength is the e-commerce channel. Whether through live broadcast or planting grass, social media communication is closer to consumers. Besides increasing prices, big-name beauty cosmetics should also be closer to users in marketing channels. He stressed, "In the fierce market competition in China, it is not necessarily a good idea to raise prices to find space for profits, and ultimately we must find a way to adapt to this market."

Author: Meng Qian