SK-II, La Mer’s Sluggish Sales In China Cast Shadow On Premium Skincare Trend Boom

What happened Japanese high-end skincare label SK-II reported sluggish sales in the first three months of the year, dragging down the performance of its parent company, Procter & Gamble. In its fiscal third quarter of 2023, the group's beauty segment rose 3 percent year on year in net sales to $3.5 billion (24.2 billion RMB). Compare this to the same period in 2021, when P&G's beauty segment recorded a 9 percent surge in sales. Similarly, L’Oréal’s premium beauty division, which has propelled the company’s growth over the past few years, has shown signs of slowing. In Q1 2023, L’Oréal Luxe posted a 7.7-percent YoY increase in global sales, but YoY sales growth in North Asia, including China, came in at an anemic 1.1 percent. Another indicator of this luxury skincare slowdown in China is the sales performance of high-end beauty products on International Women’s Day. The first shopping carnival after pandemic-related restrictions were lifted in China, the March 8 holiday served as a key opportunity for brands to boost revenue by launching new products and marketing initiatives. However, luxury skincare brands’ sales on Tmall collectively declined, according to local media Jumeili. Among them, La Mer and Shiseido’s sales dropped 47 percent and 57 percent, respectively, compared to the same period in 2022. Estée Lauder, Lancôme, and Helena Rubenstein also performed poorly. Does this mean the premium beauty boom is plateauing? The Jing Take While premiumization was once seen as the strategic formula for growth, beauty conglomerates’ recent earnings reports and sales data call into question luxury skincare lines’ ability to boost sales at the same rate. In 2021, Japanese group Shiseido sold affordable brands Senka and Aquair to focus on developing high-end lines. Meanwhile, Yatsen Holdings, Perfect Diary’s parent company, attempted to diversify its revenue sources by acquiring overseas luxury brands, such as Eve Lom and Galénic. However, the market’s high-end segment is getting crowded. Not only are international brands trying to expand their market share, but cosmetics brands are also seeking new opportunities in this area. For instance, Mac recently launched its skincare line, and homegrown names such as Proya, Yatsen Holdings, and Bloomage Biotech are moving up the scale by releasing anti-aging products and increasing their prices. Today’s beauty consumer in China is spoiled with a myriad of skincare choices. The challenge for established brands is securing consumer loyalty in the face of rising competition from new players entering the arena. Many renowned high-end brands, like SK-II, continue to rely on a few star products. Failing to release new products that meet local consumers’ changing needs would put brands at a disadvantage — those that don’t innovate will likely lose market share to homegrown upstarts, which have the advantage of being able to create skincare products specifically for Asian skin and rapidly adapt to market trends. Though competition is increasing, and sales aren’t growing as quickly as they were, the skincare sector as a whole is resilient and is still expanding, according to the National Bureau of Statistics. Premium skincare will continue to propel the beauty segment’s growth in the short term, but simply being luxurious is no longer enough to secure sales. Brands must reinvent themselves to remain relevant in China. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

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SK-II, La Mer’s Sluggish Sales In China Cast Shadow On Premium Skincare Trend Boom