This newspaper (chinatimesnet.CN) reporter Hu Mengran Zhang Zhi Shenzhen photo report.
The price will increase at the beginning of the year! This year, all the major luxury beauty brands have made this decision in unison.
On February 21, the reporter learned from Chanel that Chanel adjusted the prices of some products through official channels in Chinese mainland, and many products were adjusted. Among them, lipstick products are about 20 yuan, and perfume products are about 40 to 60 yuan. On February 19, the Estee Lauder Companies upgraded a number of products under brands such as Estee Lauder, La Mer, Jo Malone, MAC Magic, and Yuemu Origin**.
According to incomplete statistics, 20 foreign beauty brands have issued price increase notices at the beginning of 2024, including L'Oreal, Estee Lauder, and LVMH.
Prices for foreign beauty brands have become more frequent in recent years, with Estee Lauder, for example, making about seven adjustments** since 2020, with two price increases last year alone. Regarding this round of price increases, Estee Lauder's official customer service responded: "Our product pricing needs to consider various factors, including raw materials**, operating costs, transportation and storage costs, etc. ”
It is worth noting that 14 days before the announcement of the price adjustment, Estee Lauder said that in order to achieve the profit recovery target for the 2025 and 2026 fiscal years, it has made a series of plans, including a layoff plan, and Estee Lauder said that it expects to lay off 3%-5% of its global workforce. It is reported that Estee Lauder has about 620,000 employees, based on this data, the number of layoffs is expected to be between 1,800 and 3,000.
Price increases have become a trend
The reporter recently visited the counters of major beauty brands and found that the brands of L'Oreal Group, such as Biotherm, Kiehl's, Lancôme, YSL Yves Saint Laurent, and Armani, have raised some products to varying degrees**; LVMH Group's Givenchy, Guerlain, Dior and other brand products have seen price increases; Many of Chanel's products have also been adjusted, including lipstick products of about 20 yuan and perfume products of about 40 to 60 yuan.
L'Oréal's Biotherm has seen a higher price increase, such as the Frozen Age Little Blue Bottle Essence (50ml) from 920 yuan** to 360 yuan to 1280 yuan. Biotherm's official customer service responded, "This price adjustment will start from February 1, 2024. A price adjustment is a normal market strategy adjustment. Lancôme also said, "This ** adjustment is related to the increase in products and overall operating costs." ”
In recent years, foreign beauty brands have increased their prices more frequently, taking Estee Lauder as an example, the brand has made about seven adjustments** since 2020, and last year alone, it has increased prices twice. In January 2023, the Estee Lauder Companies issued a price increase notice, and its Estee Lauder, Clinique, Tom Ford, Origin, Bobbi Brown and Jo Malone all raised the retail sales of their products**, with an increase of less than 10%. In July 2023, Estee Lauder's brand was raised online, with an increase of 23%—25.6%。
Price increases seem to have become an inevitable trend of high-end competition in the industry.
Li Jie, a digital marketing and communication expert at Tupperware (China)**, said in an interview with a reporter from the China Times that the reasons for the current round of luxury beauty price hikes include raw materials, labor and other costs. In addition, the particularity of luxury beauty lies in the uniqueness, scarcity and sense of value that come with its brand, which makes luxury beauty have a certain pricing power in the market. Luxury beauty sells not only the product itself, but also the "fantasy" it brings to consumers. Therefore, by increasing prices from time to time, luxury beauty can strengthen its high-end positioning and scarcity, and continuously enhance the brand value.
Pan Jun, who has more than 20 years of practical experience in international brand management in Europe and the United States, also pointed out that with consumers' increasing requirements for quality and brand, high-end competition has become the development trend of the cosmetics industry. Luxury brands maintain their premium positioning by improving their products** while also achieving higher profits.
Price increases are not a panacea. Zhan Junhao, founder of Fujian Great Aim Brand Positioning Consulting, told the China Times that with the development of the domestic beauty market, consumers have an increasingly wide range of choices. The price increase may cause some consumers to "rebel", especially for the most sensitive consumer groups. If the brand fails to provide a good justification and proof of value, consumers may choose to switch to another brand or product.
Estee Lauder announced layoffs
It is worth noting that 14 days before the announcement of the price adjustment, Estee Lauder said that in order to achieve the profit recovery target for the 2025 and 2026 fiscal years, it has made a series of plans, including a layoff plan, and Estee Lauder said that it expects to lay off 3%-5% of its global workforce. It is reported that Estee Lauder has about 6With 20,000 employees, the layoffs are expected to be between 1,800 and 3,000.
The Estée Lauder Companies said it expects the restructuring plan to save $3 per yearUS$500 million to US$500 million will drive an increase in the Group's operating profit by US$1.1 billion to US$1.4 billion over the next few years. Behind these plans is Estée Lauder's weak performance, the company's financial report for the second quarter of fiscal year 2024 showed that in the three months ended December 31, 2023, Estée Lauder Companies' revenue fell 7% year-on-year to 42800 million US dollars (about 307 yuan.)6.9 billion yuan), net profit decreased by 205% to 31.3 billion US dollars (about 22.2 billion yuan.)500 million yuan).
As for the decline, Estee Lauder explained that it was mainly due to the expected challenges faced by the Asian travel retail industry and the continued weakness of the overall high-end beauty business in Chinese mainland.
China is the world's second largest cosmetics consumer market, with an average annual growth rate of more than 10% in the cosmetics market, and a high overall import unit value, making it self-evident that the Chinese market is important to international beauty brands.
Looking ahead, Estée Lauder said: "China is our second home and has a significant market share in key categories, which is the key to winning the premium beauty market, and the Group will have a corresponding strategic plan in the future." We believe that there are long-term growth opportunities in the Chinese market, which will be one of the key drivers of our long-term growth. ”
L'Oréal is also increasing its investment in the Chinese market, and on February 9 this year, L'Oréal announced a minority investment in China's local high-end perfume and fragrance brand to Summer. "The beauty market is bound to be more competitive this year. International brands will continue to maintain their premium image through price increases, while at the same time creating a localization strategy through acquisitions or investments, such as L'Oréal's investment in the local brand Guanxia. In addition, China's local brands will make efforts through high-end and localization, on the one hand, through high-end series to compete with international brands, and on the other hand, through low-price strategies to penetrate the lower market. Li Jie said.
Editor-in-charge: Xu Yunqian Editor-in-chief: Gong Peijia.