Retail in Asia


Diving into the offline multi-brand beauty store boom in China


Beauty multi-brand stores are quickly growing in China – as Chinese consumers’ appetite for beauty products continues to evolve. The big players such as Sephora, Watsons, or Mannings, where customers can access a wide range of skincare, make-up and fragrance products, have the advantage of their vast portfolios of brands, product categories, and price ranges. Whilst Sephora focuses more on high-end goods, Watsons and Mannings offer mass market and daily use products, both sourced domestically and internationally. 

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Today new models of offline multi-brand beauty stores have emerged one after another, boosting cosmetics consumption, and gradually eroding market share of the old, established players. According to data from iResearch, the market size of China’s multi-brand beauty stores reached 41.9 billion yuan (US$6.6 billion) in 2020. Going forward, the market size and market share of  these new players are expected to grow. Here we dive into this trend and look closer at three successful new multi brand beauty concepts: The Colorist, Harmay and H.E.A.T.

 Source: Azoya
Understanding the growth of multi-brand beauty stores

Market demand – The change of new beauty collection stores

The new multi-brand beauty stores are more in line with the needs and shopping preferences of young consumers, from the product selection to the layout (store design, experience). They focus on young consumers who pay attention to the shopping experience and cost effectiveness. In addition, the abundance of brands are an important reason for consumers to favor new multi-brand beauty stores.

The consumption of beauty products by the new generation of users shows a trend of diversified categories and functional demands, and they are more willing to choose beauty products suitable for their own needs. The new multi-brand beauty stores have a higher tolerance for emerging brands, and they cooperate with design and personality brands. Therefore, the new type of beauty collection stores, including many emerging brands at local and abroad, are gradually gaining more consumers’ favor. According to research data, 73.5 percent of consumers go to new multi-brand beauty stores because they can buy brands and products that are not available in traditional beauty collection stores.

On the other hand, traditional multi-brand beauty stores have professional consultants who interact with consumers and promote products to them. Compared with beauty associates (BA) following shoppers in traditional beauty collection stores, the new beauty collection store adopts a light BA mode, which also creates free shopping space and a pleasant shopping experience for consumers.

Source: Azoya

Consumer demand – The younger generation pays more attention to the shopping experience

Compared with traditional beauty collection stores with relatively consistent in-store layout and design, the new multi-brand beauty stores bet heavily on the retail space design with big investments to attract young people to the store. The new beauty collection store provides a place for consumers to play, experience, buy, take photos, and share on social media. According to research data, about 50 percent of consumers believe that a sharable visiting experience for real-time fun on social media is also one of the main reasons to visit and shop from new beauty collection stores.

Customers also find new beauty collection stores very generous with distributing samples from high-end brands. The new beauty collection stores have captured the new generation of beauty users’ demand for small sample products, and sell the samples as stand-alone products in stores at much lower prices helping brands reach new customers.

Top three beauty collection stores in China to know right now

1. The Colorist

Source: Azoya

The Colorist, run by KK Group (Guangdong Kuaike E-Commerce), opened its first store in October 2019, positioning itself as a go-to spot for both affordable and upscale beauty products. By June 2021, The Colorist had expanded to over 300 stores in 20 cities nationwide.

The Colorist stores are designed with bright colors, such as pink, orange, light purple, etc., giving them a more youthful feel that appeals to Gen Z and  Millennial consumers. Its rainbow-colored decor has become a selfie spot for consumers, who then post such photos on Weibo, WeChat, or other Chinese social media platforms.

Source: Azoya

The Colorist, which only opened for business in 2019, has risen rapidly in popularity in just two years with a staggering 2887.5 percent CAGR in total merchandise transactions, second only to Watsons and Sephora in market share. From 2018 to 2020, the net profit of KK Group was still negative, but The Colorist was always profitable. The Colorist has advantages not only in terms of capital, but also in terms of product category, service quality, and supply chain.

The Colorist focuses on emerging brands, niche brands, and popular brands. According to consumption data, the stores maintain impressive speed and efficiency with their product updates to fuel in-store traffic and sales. The wide variety of products is one of the reasons why The Colorist is popular. According to the official data of The Colorist, its stores cover 400+ global popular beauty brands with over 5,000 individual products. The assortment includes both familiar products, such as UNNY, Canmake, and big cosmetics brands, such as La Mer, Farman, Chanel, Armani, and Dior.

2. Harmay话梅

Source: Azoya

Harmay, founded in 2008, is known for its architecturally designed stores and niche brand offering. In January 2022, Harmay secured US$200 million in series C and D rounds of financing.
Harmay mainly sells mid-to-high-end brands, attracting traffic and improving full-size product conversion through big brand samples. Prices of many international products in the Harmay store are also very attractive. Many products are discounted from the counter price, and some popular items like lipsticks that may be out-of-stock at traditional counters can still be found at Harmay.

Harmay is different from other beauty collection stores in the market. Harmay does not have many offline stores, nor does it sell many domestic products in the store; it mainly sells foreign brands. At present, 50 percent of the SKUs in Harmay’s offline stores are overseas niche beauty brands. Harmay has introduced a series of overseas niche brands through exclusive agency and capital operations, aiming to enhance brand differentiation and increase store repurchase rates.

To complement its offline stores, Harmay also operates a mini-program store, WeChat public account, and Taobao store online. In addition to increasing sales, Harmay attracts traffic to its offline stores by promoting new product launches, special events, and new store openings. The offline stores will also guide consumers to register members in the checkout process, realizing the closed loop marketing.

In terms of the construction of the membership system, Harmay launched paid membership cards, which sold out as soon as they were released. The paid membership system can effectively bind high-quality members with strong stickiness, so that middle-tier and high-end users can enjoy differentiated membership services during the shopping process, thereby enhancing membership stickiness.

3. H.E.A.T喜燃

Source: Azoya

H.E.A.T, run by Guangzhou Yiran Daily Necessities, opened its first store in Guangzhou city in July 2020, and then went on to expand further to 10 stores within a mere six months. Their stores are spacious and clean with picture-perfect interior designs for eye-catching social media posts.

H.E.A.T’s target demographic is post-95s (or those born from 1995 onwards). They handle over 300 brands and over 4,000 SKUs worth of items and mainly focus on new Chinese brands, such as Perfect Diary, and niche brands from overseas.

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As the majority of new cosmetics brands mostly sell online, H.E.A.T stores are becoming spaces to try out products firsthand before making a purchase. Along with a spacious testing corner, H.E.A.T stores also have full body mirrors that allow visitors to select cosmetics to match their overall style. Meanwhile, the company is also running an e-commerce business, having set up an online store as a WeChat mini program in November 2020.

(Source: Azoya)