Health,  Life

The mystery behind the price increase of cosmetics

  The group price increase seems to be the prelude to the new year in the domestic high-end cosmetics market. “The price increase trend of big-name cosmetics brands is becoming more and more obvious and more frequent.” Just after the Spring Festival, Wang Jinjing, an agent of imported cosmetics, received multiple price adjustment lists from big-name cosmetics brands. “The price of a single product has increased by 30 yuan to 60 yuan.”
  Around the Spring Festival, the price increase of big-name cosmetics may be a little “scheming”. Beauty blogger Vivian has a more sensitive sense of smell. She said that after the Spring Festival, big-name cosmetics brands may raise their prices to the highest point of the year, and then lower their product prices to catch up with promotions. “This time period is not the peak season for consumption, but more like using price increases to build a brand image.”
  According to incomplete statistics, up to now, Lancome, Chanel, Dior, Procter & Gamble, Guerlain, Estee Lauder and other big-name cosmetics have all raised product prices in offline stores. After the Spring Festival, most big-name cosmetics brands have raised product prices one after another.
Is the price increase just superficial?

  ”When most agents hear the news of the price increase, they will place an order before the price increase.” Upon hearing the news of the price increase, Wang Jinjing’s cosmetics group became restless. “Some merchants who use WeChat business and private domain channels will first release news of price increases in Moments, telling everyone that the price will increase uniformly one day, and buy it quickly.” Wang Jinjing said. With years of experience in the industry, Wang Jinjing did not choose to buy goods before the price increase. According to her observation, every February is almost the price increase month for big-name cosmetics. She believes that this customary price increase is more like a tactical move by big-name cosmetics brands to ensure their “face” in the high-end market.
  In this regard, Vivian also feels the same way. After comparing the prices of star items of several big-name cosmetics brands during the year, she found that when the new year begins, big brands tend to raise prices intensively. After that, the price will be lowered through promotional activities such as “6.18” and “Double 11” to stimulate consumers to buy. Some voices in the industry believe that the price increases of big-name cosmetics are actually “rising and falling”.
  In fact, after the Spring Festival, it is time for Wang Jinjing to “digest inventory”. In the cosmetics industry, the fourth quarter is the peak period for the purchase of cosmetics agents. “Everyone knows that prices will increase after the Spring Festival.” Wang Jinjing calculated the stock and found that it should be enough for sales in the first quarter of this year. “Most of the sales peak after the Spring Festival is on Valentine’s Day, and agents will give some cheaper prices than counters.” It is worth
  noting that, in Wang Jinjing’s view, unlike previous years, the price increases of some brands this year may also be for some Domestic agents of imported cosmetics “declare war”. “Many importers get goods from overseas duty-free shops, and the price is only half or even lower than the official selling price. If things go on like this, it will seriously damage the brand image and profits, and will also have a negative impact on healthy competition in this industry. This price increase, or It is also a strategy for the brand to clean up some agents.” Wang Jinjing said.
  Recently, Bernard Arnault, chairman and CEO of the global high-end consumer goods giant LVMH Group, publicly stated: “Some of our peer dealers buy products from overseas markets and then sell them at discounted prices in China… We are determined to avoid this situation.” Subsequently, LV announced that it will increase the price of global products from February 18, ranging from 8% to 20%.
Why price increases are collective actions

  The price increase of big-name cosmetics is showing a “collective effect”. Staff at the counters of Lancome, Procter & Gamble, Guerlain, and Estee Lauder’s major cosmetics brands said that the price of products will be raised in early February, and the increase is expected to be 5% to 10%.
  Many big-name cosmetics also stated that the price increase is a comprehensive decision after considering operating costs, transportation and storage costs, exchange rates and other factors. After the Spring Festival, not many consumers come to offline cosmetics counters. The relevant person in charge of a leading cosmetics online retail service company in China believes that because the profits of big-name cosmetics companies in the Chinese market have declined, raising prices for domestic distributors is also a means for them to guarantee profits.
  The current pricing system in the domestic cosmetics market may also cause headaches for big-name cosmetics brands. No matter how the price is raised, consumers can always buy products with a 50% discount or even lower discounts, which is also a fatal blow to the brand. The relevant person in charge of the above-mentioned retail service company said that this year’s price increase involves a particularly large number of brands, and it may also be a collective action to rectify the market.
  At present, foreign-funded big-name cosmetics brands still occupy the leading position in China’s high-end cosmetics market, and have a great say in product pricing. According to Euromonitor data, my country’s high-end cosmetics market is dominated by top international brands. The top three are L’Oreal, Estee Lauder and LVMH, with market shares of 18.4%, 14.4% and 8.8% respectively.
  ”Cosmetics brands that go to the high-end market will never want to use low prices and discounts to retain consumers.” Kong Sihan, a beauty marketing practitioner, said, “Since 2020, the main sales channels of foreign-funded big-name cosmetics brands have shifted to online. In order to cater to online sales rules, concessions have been made on prices and sales strategies. But the brand also knows that this cannot be a long-term strategy. If things go on like this, it will destroy the brand’s global pricing system. There is also a voice in the industry that this year or It is a ‘price increase year’ for big-name cosmetics, and this price increase is just the beginning.”
Is it still “up and down” this time?

  In Vivian’s view, when the e-commerce festival launches promotional activities this year, the prices of these big-name cosmetics that have gone up should be reduced.
  Will things go as she wishes? “Some of the low-priced products that consumers buy do come from import and export cosmetics agents, and this behavior may be strongly restricted by brands in the future.” Kong Sihan said, “This year, big-name cosmetics may be more inclined to stabilize their presence in the high-end market.” Its strategy in e-commerce channels may change.”
  Recently, Jean Jacques Guiony, chief financial officer of LVMH Group, said that in the past two years, a large number of discounted perfumes and cosmetics (mainly duty-free products) have flooded into the market. Mainland China market. Restricting these purchasing behaviors will indeed reduce the profitability of the brand, but the brand is determined to maintain its brand image, rejecting and opposing the purchasing behavior of high-end consumer goods and beauty products. “This year’s e-commerce promotion strategy has not yet been determined.” A staff member of a foreign-funded cosmetics brand in charge of e-commerce operations told the “China Business” reporter, “Brands will indeed invest more in self-operated live broadcast rooms. For brands , In the self-operated live broadcast room, it is easier for brands to grasp product prices. As for this year’s discount promotion strategy, it has not yet been determined.
  ” Come from this channel.” Wang Jinjing said, “At present, the low-priced products flowing out of this channel may decrease in the future.”

error: Content is protected !!