Cosmetics giant conversion style strategy directly refers to the second and third line market

If the "wolf is coming" is only a few years ago, local brands are not irritating and shouting two scorpions. Since the multinational makeup brand represented by Shiseido and P&G last year, the channel has been sinking, and it has been in the second and third tier cities. The local cosmetics companies that lived relatively moist have begun to complain.

At the 2nd China Cosmetics Industry Forum held in Shanghai recently, the reporter learned that with the acceleration of China's urbanization process, the second- and third-tier cities and even rural markets that were not particularly valued in the eyes of multinational brands began to become under them. The focus of a stepping army. With a large and mature network of channels, local brands that have an advantage in these places are truly aware that the crisis has come to their homes.

Cosmetics growth is lower than the average speed of consumer goods

In the first quarter of 2009 to the first quarter of 2010, the growth of the cosmetics industry continued to slow down despite the steady growth of the domestic economy. In January-February this year, 15.6% of the transcripts were even lower than the total retail sales of social consumer goods. %growth rate. Cosmetics have a relative low.

Yuan Li (a pseudonym), head of the marketing department of a domestic second-line brand, told reporters that in his perceptual knowledge, cosmetics based on the “lipstick effect” should be the fastest-rising category, but his company did not feel the spring breeze. The feeling of kneading.

When the local brands were struggling, P&G and Estee Lauder and other multinational cosmetics giants found a “safe haven” in China. “China’s high-end luxury market is second only to Japan in terms of consumption, and is regarded as the most powerful engine in the global luxury goods industry. Taking the Estée Lauder Group as an example, it grew by nearly 30% in the Chinese market in 2009, while global luxury consumption declined during the same period. 8%, China has become one of the fastest growing markets in the world,” said Wu Yongnan, CEO of Sibao Daily.

The top few in this market are basically international brands. According to the data, in 2009, P&G ranked first in the Chinese cosmetics market with 13.32 billion sales and 19% share, and L'Oreal with 8.178 billion sales and 11.7% market share. Ranked runner-up.

At the beginning of this year, Estee Lauder once again imported the source of high-end brand Origins into China, becoming the ninth brand entering China. Shiseido will extend its tentacles to the professional hairdressing market previously occupied by the four international hairdressing brands of L'Oreal, Germany, Weina, Schwarzkopf and Gewei, and will work with Unilever's TIG I in 2010. The reporter recently learned that after expanding the sales scope of the public shampoo in 2009, L'Oreal plans to reach a wider area, and may be involved in the SPA. In addition to the traditional primary market, the sales promotion of the second and third-tier markets will become Its focus is on work.

Procter & Gamble went to the countryside four times and Shiseido "decentralized" sub-brand

The reporter learned that P&G and other big-day brands are at the forefront of the “channel sinking” strategy, with roughly four attempts to go to the countryside before and after the rough estimate. Between 1996 and 1999, tens of thousands of villages and towns across the country opened a huge road show, driving a float, playing drums, and "face-to-face" with rural consumers through live demonstrations of end products and consumer trial experiences. I did not forget to win over the rural terminal, and carried out activities such as small shop visits and shopkeepers' associations. In 1999, the implementation of the “township terminal network plan” began, cutting a large number of small distributors, focusing on cultivating a number of large distributors, advocating first-tier distributors to set up branches in second- and third-tier cities, and developing secondary distributors to cover product coverage areas. Expanded to townships. In 2007, P&G teamed up with the Ministry of Commerce to launch the “Chun Village Thousand Township Project”. The “C hinaT hree” project launched in June last year required nearly 100 dealers nationwide to cover nearly 30,000 townships and one year, and distribution. The merchants signed an agreement to explicitly demand the growth of the township market and the number of stores, and at the same time give some support according to the size of the market.

"P&G going to the countryside mainly needs to overcome the problems of fake goods, stocks, high prices and low gross profit." Yuan Li told reporters. Yuan believes that the most successful channel sinking strategy should belong to Shiseido. “Shiseido promotes its popularity in the small towns in the Mainland, and then implements rural encircling the city.” According to its introduction, the brand hierarchy of Shiseido in the Chinese market has also been praised by other multinational companies – Oupley is facing the city’s high-end department stores. For the local specialty stores, there are Yulai, Bomei, and Ji Yun, which is specially designed for young people. "Shiseido mainly uses two strategies when the channel sinks. First, it puts down the body of high-end cosmetics and strongly contracts the specialty store (unlike the Avon store model, but Shiseido chooses to cooperate with existing franchise stores and set up counters to sell products). The second is to exert the gentle lethality of the beauty consultants in its unique consulting service center."

“Lian Lihua is very cautious about the sinking strategy, and only follows the pace of expansion of chain supermarkets with cooperation foundation,” said senior industry insider Snowflake. Local brands are more likely to choose small shops or mom-and-pop stores in townships and rural markets. “The operating costs and risks of these stores are relatively low, which makes there is enough space for the survival and development of local cosmetics companies. However, most towns and towns in the central and western regions are far apart from each other, and logistics is not accessible, which also brings many obstacles to the operation market. In the process of urbanization in the future, these problems are expected to be resolved.” Snowflake said that a slightly higher-end local brand can also reverse-infiltrate the central city, the most successful of which is the Herborist.

The franchise store is extremely prosperous but implies a crisis

“The Chinese cosmetics franchise store has been developing since 1997. Incomplete data in 2009 shows that there are nearly 150,000 cosmetics franchise stores in China, and the annual growth of total cosmetics retail sales has remained at around 15%. franchised stores and stores. The increase in quantity is as high as 30%. At the same time, in China's second- and third-tier markets, the skin care retail share of cosmetics franchise stores has exceeded 60%, becoming an important channel for purchase.” Sang Jingmin, chairman of the China Cosmetics Industry Forum Organizing Committee, said. The market in the process of urbanization is highly dependent on franchise stores. The reporters from the China Beauty Expo show that the brand of independent franchise stores has increased year by year, this year has exceeded 50%, from the group of visitors, the number of franchise stores has increased by more than 30% for three consecutive years.

"But there is a hidden crisis behind the extreme prosperity of the store. The profit level of single-stores in the whole industry continues to decline, lack of new profit growth points, imperfect training system, difficult implementation of standardized operations, difficulty in standardizing manuals, and loss of core technicians. Has become a barrier to restrict the healthy development of franchise stores."

Wu Yongnan further revealed that the circulation channels of local Japanese brands are gradually declining, with more than 90% of sales and profits falling, the lack of high-quality stores and the management bottleneck of the chain model, leading to franchise stores all over the country. The pace of opening new stores has slowed down. "From the current market trend, franchised stores are beginning to develop in a specialized, refined and special direction, and more companies with no core competitiveness are facing the risk of being eliminated."

In addition, e-commerce in emerging channels has also had a potential impact on traditional channels. "If the e-commerce market is still an irregular army in the past few years, there will be new changes this year. L'Oreal has already adopted online shopping methods for high-end products such as Lancome and Biotherm. Yaslan has also opened up an e-commerce platform. The department store counters are not able to cover the consumers in China's second- and third-tier cities.” Wu Yongnan said that the involvement of these big brands shows that the huge potential of the online shopping market cannot be ignored.

data

China's third largest market for cosmetics in the world

The data disclosure of the China Business Federation undoubtedly delighted the Japanese industry. In 2009, China's cosmetics sales exceeded 140 billion yuan, becoming the world's third largest cosmetics sales market after the United States and Japan. But in an increasingly important global context, there is still a seemingly innocent shadow. The reporter learned from the Second China Cosmetic Industry Forum that in the context of the economic crisis, the total retail sales of consumer goods last year was 1,254.3 billion yuan, an increase of 15.5% over the previous year, of which cosmetics increased by 16.9%, lower than 22.1% in 2008. In the first two months of this year, the total retail sales of consumer goods totaled 255.2 billion yuan, a year-on-year increase of 17.9%, an increase of 2.7 percentage points over the same period of the previous year, but the growth of cosmetics category was only 15.6%.

Market trend

Market consumption structure is fissile, men's cosmetics are popular

“Urbanization has promoted the upgrading of consumption structure, and the demand for cosmetics market has been expanded. At the same time, the consumption capacity of rural and township residents has increased significantly. Urbanization has also enabled more people to enter the city and become urban consumer groups.” Wu Yongnan said.

Personal care products

Obviously, the growth of middle-income groups has effectively promoted the accelerated upgrading of household consumption structure, and new consumption patterns and consumption concepts have begun to play an important role in promoting the growth of the cosmetics industry. “From the perspective of product development, products with fashion, individual appeal and technical content will stand out. In the personal care market, the demand for men is increasingly prominent, and the differentiated positioning has prompted them to form a single cake.” At the summit of China Cosmetics Industry Forum, the challenges and opportunities brought about by urbanization are no matter who is big or small. Although CEOs of different companies have different opinions, they still have relatively consistent conclusions on product categories.

Cleaning Products

In the detergent market, concentrating and liquefying are also predicted to become future trends. “The market for detergents that have produced local brand giants in the segmented category market is not optimistic. According to the statistics of China Washing Products Industry Association, the main business income of the detergent industry increased by 4.57% in January-August last year, but the total profit declined. 2.73%. The new development direction of the market will inevitably shift from low-level price competition to high value-added products." Wu Yongnan said.

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