"Siege" Watson's: the new beauty collection store's offline enclosure movement

After milk tea and blind boxes, what will be the next new consumer species to "empty" young people's wallets?

Today, it looks like it might be the new one-stop beauty collection store.

In these two years, domestic beauty brands are experiencing explosive growth, the perfect diary for two consecutive years on Tmall double eleven makeup first, flowers, Xizi, Orange Duo, small Austin and other spring-like emergence of national brands, gathered the public eyeballs. And beyond the eyes, the new offline beauty collection store, also ushered in the spring.

Net red card wind, a collection of domestic and foreign trend brands, casual makeup trial, no sales promotion ...... This generation of beauty collection store, has already subverted the traditional impression of the beauty collection store, became a small red book public review, young girls store for goods new favorite.

However, the net red easy, long red difficult. These small red book "no girl can leave empty-handed" beauty retail new species, how to "long red"?

1, the emergence of new consumer brands, the lack of offline channels

A little attention will find that in recent years, the fire up the national cosmetics, whether it is the perfect diary, flower West, or orange, all are not with the help of the Internet marketing, social media word of mouth, the red man with goods, from the Tmall, jittery tone, Xiaohongshu, microblogging channels such as red! and then swept the list of e-commerce channels. The same is true for some foreign niche brands that have caught fire in social media.

However, these brands do not have much of a presence and a place to land in offline channels.

Currently, domestic CS channels are fragmented and traditional, and traditional channels such as Sephora and Watson's have a high barrier to entry for brands, which need to pay a variety of "taxes" such as shelving fees, entry fees, and stacking fees, as well as may have to endure a long billing period of 60-99 days;

In addition to this, traditional channels have a high demand for beauty brands, as well as the need for a high quality product.

However, skincare and cosmetics is a very heavy experience of the category, the so-called "his honey, my arsenic", not after the actual trial, it is difficult to pick the right product for their own, and thus online channels can not completely replace the offline experience.

The old offline beauty channel's rejection of emerging beauty brands has given these new beauty collection stores a chance.

Qian Kun, a partner at N5Capital of Wuyue Capital, which also invested in KK Group (whose businesses include The Colorist, KKV, etc.) and Harmay Plum, said in an interview with Titanium Media that in the next five years, the trend of the spurt of emerging domestic and international beauty brands will not change, and therefore, offline channels serving these new brands are very valuable. The And, compared to the counter, young consumers are not as loyal to the brand, and the market needs a channel-based sales approach.

Yang Yang, Project Director of WOW COLOR, believes that "national makeup may be the next growth point for offline channels", which comes from a previous sales data - in June 2019, Yang Yang brought the popular national makeup brand "Tangerine Duo" introduced into its responsible for the home class retail store project, its less than 4% SKU occupancy actually, surprisingly, created the whole store a month 40% sales.

The above phenomenon has also become the opportunity for the birth of WOW COLOR, a beauty collection store under Meitong Yuping.

WOW COLOR @ Xiaohongshu

In fact, in the overseas market, the brand that can challenge the traditional beauty channels has long appeared, Ulta Beauty is one of them, and now it has become Sephora's biggest competitor in the North American market. As of the end of the third quarter of 2020, Ulta Beauty has *** there are 1,262 stores in the United States, with more than 31.8 million members and 2019 sales of about $6.7 billion.

Beauty aggregator NOISY Beauty wants to be the "Chinese version of Ulta Beauty".

In an exclusive interview with Titanium Media, Mai Zi, the founder of NOISY Beauty, believes that with the depletion of the online traffic dividend, the cost of online advertising and buying volume has skyrocketed; and in the emerging offline channels, you just need to put the goods will generate natural sales, and there is no need to enter the venue and other miscellaneous fees. Therefore, for these beauty brands relying on e-commerce to grow up, the input-output ratio of the offline channel is higher.

NOISY Beauty @SmallRedBook

2, the epidemic under the retail format of the great reshuffle, but also brings a new opportunity

2020 new crown epidemic, so that the offline retail experienced a major reshuffle. Inferior retail formats began to clear out and withdraw their stores, making the vacancy rate of shopping centers increase.

And can attract users to come to try makeup, a long time to stay in the beauty collection of stores, shopping centers have a similar "traffic harvester" role, so the emerging beauty collection of stores has become the meat and potatoes of a lot of shopping centers to attract investment, hoping to use the beauty of this highly popular category, to boost the overall performance of the stores in the shopping center, and with the surrounding malls to form a staggered competition. The neighboring malls to form a staggered competition.

This has also given these new retailers the opportunity to take up sought-after space at low rents.

THE COLORIST and WOW COLOUR have been opening stores in a hurry over the past year, seizing popular shopping centers in core business districts, the metro level with the highest foot traffic, and other advantageous locations.

Such as THE COLORIST colorist in Shanghai Jingpin CrystalGalleria, Jing'an Dafongcheng, Global Harbor and other core business district; WOW COLOUR site selection is also in the first and second tier cities in the core business district and CBD area.

The most sensitive to the trend of investors' funds, but also began to converge in the emerging beauty collection store this track.

According to incomplete statistics, this year, including the KK Group, HARMAY plum, WOW COLOR, NOISY Beauty, including offline beauty collection stores have been favored by well-known funds.

1, the customer group: focus on Watson's failed to lock the group of young girls

Although the consumer population and consumption habits of the differentiation is inevitable, loved by young people, the new species of the channel to occupy the social high ground, and can not be represented throughout the country's old beauty store decline. But whether it is Watson's, which has been in China for more than 20 years and has opened 3,900 stores in the country, or Sephora, which has had almost no competitors in the country for more than a decade, they are indeed old compared to the emerging beauty collection stores.

The "old", first reflected in the customer base.

If you have ever entered the emerging beauty collection store, you will find that the vast majority of consumers in the store are 20-25 years old young girls, the age range is significantly younger than Watson's and Sephora.

NOISY Beauty said it wants to be the consumer upgrade of Watson's in the sinking market. In an exclusive interview with Titanium Media, founder Mai Zi laughed and said that she likes to open her store next to Watson's because "where there's Watson's, there's a market."

Colorist, wow color, hi-burning, and talking plums are in a similar situation.

From the current perspective of consumption scale and consumption level, Generation Z and third- and fourth-tier consumers are the most promising consumer groups, and are expected to continue to be the core driving force of growth. These two types of users are in pursuit of cost-effective, easy to be influenced by social media marketing, and the third and fourth tier city consumers are more reliant on offline store experience and purchase.

According to the "China Beauty Consumer Purchasing Habits and Needs Insight White Paper", young female consumers aged 15-24 spend 1,713 yuan per capita on beauty products, and the number of types of purchases is about seven, which is more than that of female groups in other age groups.

It can be said that whoever can capture this group of young people with explosive spending power is at the forefront of the times.

2, selection: how to ensure that the trend is followed?

The "old" traditional channels are also reflected in their solid new system and unchanging product selection.

First of all, the brand is very limited to be able to "enter the field of sale".

Qian Kun, a partner at N5Capital, told Titanium Media that the brand threshold of the old beauty collection store is relatively high, and that the shelf fee, entry fee, stacking fee and other costs have dissuaded a large number of emerging brands with insufficient financial strength. Secondly, is the new process is long, the introduction of new brands slow rhythm, the need to drive from the headquarters down layer by layer, which makes so many years, the change in its commodity structure are very small.

In contrast, the emerging beauty collection store's new and merchandise structure adjustment is much more flexible.

NOISY Beauty Mai said that all decisions are made from the bottom up, synthesizing feedback from frontline staff and sales data to discuss implementation. And every month there will be as few as four, five, as many as ten brands on the line, to ensure that the store goods "always new", to maintain the user's sense of freshness.

Similarly, the frequency of WOW COLOUR and THE COLORIST can be maintained at about 1 month (much faster than Watson's and Sephora's 3 or 4 months).

For emerging beauty collection stores, product selection is a big question, which directly affects whether consumers will come to buy.

In order to select high-quality, cost-effective brands and products that are loved by young consumers, Xiyan, which is known as the offline warehouse of Li Jiaqi and Weiya, makes forward-looking predictions through trends in Tmall's sales, the brand's popularity and trends in social media such as Xiaohongshu, Jieyin, and B-station, and conducts in-depth surveys or communication to understand the brands and products. The company's research and communication efforts to understand the characteristics of the brands and products will lead to a decision on whether or not to make large-scale purchases.

To summarize, it is to screen brands through online word-of-mouth and sales buzz - professional buyer survey - product selection meeting - trial sale - large-scale purchase, in which the Internet sales data and word-of-mouth data are important reference factors.

With Watson's Japanese and Korean brands mostly, Sephora focuses on international brands differently, riding on the wave of national beauty emerging new beauty collection store, the most favored national tide brand. This is also in line with the emerging beauty collection store high quality, high efficiency, high cost-effective, loved by young people's selection guidelines.

At present, the brands that Xiyan has cooperated with in depth are Little Orting, Tangerine Duo, Perfect Diary, JOOCYEE, HEDONE and other head brands of national makeup; and in the skincare category, there are Winona, HFP, Grainrain Rain, Daisy's Sky, etc.

NOISIS is the most popular brand in the new beauty collection store, which is the most popular among young people.

NOISY Beauty currently has 30 stores, 5000+ SKUs, and among the 400+ brands it cooperates with, the sales of national tide brands account for 55%, and among the TOP 20 brands, 14 national tide brands*** account for 70%.

THE COLORIST colorist, WOW COLOR is similar. WOW COLOR will be the current popular net red brand as the main focus, all makeup categories in accordance with 70% of the net red national brands, and then introduce 30% of the international popular makeup brand distribution.

3. Digitalization: what role does it play in emerging beauty collection stores?

The construction of the digital system is the basis for the new retail business to be able to accurately select products and play Internet marketing.

NOISY Beauty's most core decision-making process is highly dependent on the digital system. KKV, a full-category collection store under the same KK Group as The Colorist, also has products that are taken off the shelves and put on the shelves not by people, but by data-driven, and each product is almost always eliminated at the end.

In contrast, Xiyan seems to pay more attention to the connectivity of users' online and offline data and membership system, and conducts customer interaction, service and consumption guidance through a private domain traffic pool. in late November 2020, Xiyan launched a small program store, which is intended to provide members with full-time and full-area beauty new retail services, and to realize full-cycle user retention and growth.

At present, the total number of purchasing members, private domain members, and public members all together (without de-emphasis) of Joyful Fuel is about 300,000, and the customer unit price is 200+.

Starting from Taobao store, HARMAY plums began to shift to the offline in 2017 is also the same. January 8, HARMAY plums on-line small program, through the online and offline membership and points system, HARMAY plums of the public number has also gathered a lot of plums of the fans, the discount information will be announced in the public number, the number of readings and comments is also very considerable.

Before founding NOISY Beauty, Mai was first engaged in R&D and marketing work in Huawei, and then went to SAP to do business big data, and then went to Fosun Kunzhong, Hupu Investment did PE. Mai's early work experience makes the NOISY Beauty team attach great importance to the digitalization ability of the whole scene to open up.

In Mak's view, digital capability is a gimmick in the short term, but in the long term it is crucial, even decisive.

This is because the construction of the digital system is a long-term process, the digital construction of the whole system, to cover the user management analysis, commodity procurement, order transactions, warehouse inventory management and other full scene, and its user behavior, commodity sales, inventory turnover and other predictive capabilities of the high and low, extremely dependent on the long-term, huge consumer population and consumer behavior data accumulation.

It can be said that in the absence of much consumer and user data accumulation in the early stage of the creation of the enterprise, talk about digital capabilities is "rogue". However, when data is accumulated to a certain extent, the value of digital capabilities will become more and more prominent.

Therefore, while most new retail brands are developing and adjusting digital systems while opening stores, NOISY Beauty spent nearly a year at the beginning of its creation in 2018, repeatedly adjusting its store type and merchandise structure, and building its online and offline membership system, merchandise purchasing system, order and transaction system, and inventory and logistics management system models before it started to open stores. Currently less than two years to accumulate more than 100,000 members.

And with the accumulation of member data and the accumulation of sales data constantly generated, Mai told Titanium Media, NOISY Beauty's digital system, commodity sales forecasts have been very accurate, and its procurement and sale of goods turnover is also very fast, probably in about 30 days; members of the re-purchase rate is relatively high, with an average monthly number of purchases of 1.2 times, the number of purchases of 4, the average per capita ARPU value of the members is nearly 300.

The boutique collection store model is more concerned about the selection of products, the success of the selection of products determines the final high inventory turnover rate, so the user recognition of the popularity of high explosions, naturally become the object of the channel side of the scramble.

The traditional offline beauty channel, the channel is a relatively strong party, through the entry fee, shelving fees, billing period and other forms of pressure on the brand at the same time, but also to ensure the stability of the brand cooperation.

And the emerging channel is more friendly to the brand side, but make it in the strong brand side before less call the capital, supply brand stability is poor. For example, Harmay plums of big brand pop-up cosmetics are still sourcing from traders, has been authorized 200 + brand direct, exclusive agent focused on small and medium-sized brands.

In fact, before focusing on the current national trend of beauty and skin care, NOISY Beauty has tried to do beauty pop-up collection store. However, the gross profit was too low and the users were not loyal, which made Mai finally give up this path.

Now looking back and reflecting, Mai told Titanium Media, if you just do the pop-up business, it's enough to do it online, and do it offline on the one hand, you will fall into the trap of low prices, and on the other hand, the offline retail scene can experience the advantages of the new product at any time, which has not been played out.

Therefore, on the surface, the new beauty collection store is very dependent on the star pop-up products, which is more just used to get customers and marketing gimmicks, with the collection of hundreds of brands in the store, thousands of SKUs compared to, whether it's profit or sales, pop-ups contribute to one hair.

The new beauty collection store should still return to the most fundamental ability of offline retail - sales.

Speaking of sales ability, BA (shopping guide) is a topic that can not be avoided. Despite the numerous complaints about the Watson's shopping guides, it must be said that the Watson's shopping guides are really strong in sales.

How to sell the goods without users being offended is something that new beauty retailers are pushing over and over again. Nowadays, some players are using service-oriented guides/professional guides by strengthening the BA's professionalism, affinity, and linkage with consumers to improve sales ability.

NOISY Beauty, for one, wants to form a more professional BA team that does not aim at sales promotion, so that BAs can become beauty consultants for users. To this end, NOISY Beauty has established a set of internal BA examination system, which involves the assessment of the basic knowledge of skin, skin cytology, cosmetic ingredients, etc., and assesses the BA's professionalism through written tests and interviews. The BA's salary does not have a direct relationship with sales, but is linked to the level, and the more professional the BA, the higher the income.

Xiyan's BA team construction, and NOISY Beauty's thinking is roughly the same, Xiyan more emphasis on the BA team and the user's linkage, hope that BA from the user, can become the user's side of the "slightly understanding of the beauty of the girlfriends". We encourage BAs to bring users into the private flow, diagnose their real needs, and then recommend suitable products and help them make good use of various promotional activities.

In addition, as mentioned earlier, the annual fee of the new beauty collection store crowd, concentrated in young women under 30 years old. However, as the age of users grows and consumption power increases, how to keep the users after the consumption upgrade, it is a great test of whether the commodity structure of the beauty collection store is rich enough and the coverage is wide enough.

At present, the SKUs of new beauty collection stores are between 3k-6k, and the categories and products are rich enough. But this is obviously not convincing enough. The introduction of beauty services and the use of scene services to stick to users may be a worthwhile attempt.

Previously Parkson Group has opened a beauty collection store Parkson Beauty in Changsha IFC, which combines beauty products, professional beauty, hair care and other diversified business. It is reported that NOISY Beauty has already started to introduce nail services into its retail stores and has achieved good results.

In addition to the retention problem brought about by users' consumption upgrades, the new beauty collection stores are facing a counter-attack from established channel players.

A.S. Watson, with its membership system and distribution power, has been actively exploring its new collection of stores, and its makeup concept store colorlab by Watsons, is also working to introduce international brands and network popularity of the tide brand, weakening the BA service, but also no lack of AI virtual make-up trial of the black science and technology experience; Shiseido group's BEAUTY METHOD, Amore Pacific Group's ARITAUM (Alidaen) have landed; retail department store giants K11, Yintai also participated in the battle with K11 beauty and cloud store respectively.

Although in terms of innovation, the veteran players lack, but its control of the brand, as well as the accumulation of members and sales data, but more advantageous to the new beauty collection of stores to bring the pressure should not be underestimated.

Wu Yuning, founder and CEO of KK Group, said in the Chaos University sharing:

This may also be the reason why the new retail players are currently focused on running the horse.

Less than a year after the startup, WOW COLOUR has spread across 30 provinces and 88 cities, occupying the first-line business districts in each city, and has opened nearly 300 stores, with the goal of realizing the opening of 600 stores in 2021 and 1,000 stores in 2022.

THE COLORIST, a subsidiary of KK Group, has also opened about 150 stores across the country since landing its first store in October last year.

NOISY Beauty, which has already opened 30 stores in the sinking markets, plans to open 100 new stores by 2021.

And Hi-Burn aims to focus on Tier 1 and Tier 2 cities this year, expanding to 50 new cities.

The race for new beauty stores has just begun. (This article was first published in the Titanium Media App, by | Zhao Hongyu)