After achieving the highest growth rate in nearly a decade in May this year, the growth rate of China’s cosmetics retail sales fell to a near-decade low in June.
Yesterday (July 15th), the National Bureau of Statistics released the latest data, which showed that the total retail sales of cosmetics in June this year amounted to 40.5 billion yuan, a year-on-year decrease of 14.6%, marking the largest monthly decline this year. This is also the first time in nearly a decade that the total retail sales of cosmetics have declined in June.
It is worth mentioning that some industry insiders have previously stated that “the impressive data on the total retail sales of cosmetics in May is related to the cancellation of the pre-sale mechanism for the 618 Shopping Festival this year. This created a ‘beautiful illusion’ brought about by the advance release of consumption, and the data for June is estimated not to be good.” Looking at it now, their prediction has come true.
In the first half of the year, the total retail sales of cosmetics in China reached 216.8 billion yuan, a slight increase of 1%.
According to data released by the National Bureau of Statistics, the total retail sales of consumer goods in June nationwide reached 4.0732 trillion yuan, a year-on-year increase of 2%. However, the cosmetics category experienced its worst June, with a decline exceeding double digits, far from the overall market growth trend.
CHAILEEDO analyzed the total retail sales of cosmetics in June over the past decade (2015-2024) and found that, except for this year, June has been a period of continuous growth each year. In June 2019, it recorded the highest growth rate in nearly a decade, reaching 22.5%. Even in the most severe year of the pandemic in 2020, it still achieved a high growth rate of 20.5%.
However, it is also evident that since 2020, the growth rate of total retail sales of cosmetics in June has gradually narrowed each year. The growth rate was 13.5% in 2021, 8.1% in 2022, and only 4.8% in June last year. In June this year, for the first time, a year-on-year decline was observed, with a significant decrease of 14.6%.
With the release of the data on the total retail sales of cosmetics in June, the sales situation in the cosmetics market for the first half of this year has been officially revealed. According to data released by the National Bureau of Statistics, the total retail sales of cosmetics in China from January to June this year reached 216.8 billion yuan, a slight increase of 1% compared to the same period last year. During the same period, the total retail sales of consumer goods reached 23.5969 trillion yuan, a year-on-year increase of 3.7%. This means that in the first half of this year, the cosmetics category did not outperform the overall market.
In addition, CHAILEEDO analyzed the data on the total retail sales of cosmetics from January to June over the past decade and found that, except for the two years of 2020 and 2022, which showed a decline, the remaining eight years recorded growth in the total retail sales of cosmetics. This year has the smallest increase among them. The data shows that from January to June 2021, the total retail sales of cosmetics reached 191.7 billion yuan, with a year-on-year growth rate of 26.6%, the highest increase in the past decade.
According to the official interpretation by the Statistical Bureau, in the first half of this year, the external environment became more complex and severe, with increased uncertainty, and domestic structural adjustments continued to deepen, bringing new challenges. However, the continuous release of macroeconomic policy effects, a slight recovery in external demand, and the accelerated development of new productive forces have also provided new support. Overall, the national economy maintained a positive trend of recovery and steady progress in the first half of the year.
“May + June” combined, the overall situation is not bad.
In fact, since last year, the voices of “cosmetics business is difficult” have been heard constantly, and many industry insiders have expressed that the industry is facing challenges. Looking at the individual months in the first half of this year, the situation was indeed not ideal. The data shows that except for May, which achieved a high growth rate of 18.7%, the other months had only slight increases of less than 5%. Moreover, both April and June showed a year-on-year decline, with April experiencing a decline of 2.7%.
Furthermore, in terms of month-on-month comparison, the total retail sales of cosmetics in June this year remained relatively flat compared to May, slightly decreasing by 50 million yuan, a decrease of about 0.1%.
In May, when the growth rate of total retail sales of cosmetics reached a new high for the month and also a new high for the same period in nearly a decade, some industry insiders poured cold water by saying, “The high growth in May is only a ‘beautiful illusion’ caused by major platforms canceling pre-sales and directly selling spot goods from May 20, which led to the advance consumption of the market.” Moreover, industry insiders with similar views are not exceptions, and some people believe that “the overall data of May + June should be considered for a more objective assessment.”
Therefore, based on this, CHAILEEDO analyzed the total retail sales of cosmetics in May + June over the past three years and found that the overall situation this year is not too bad.
According to the data analysis, the total retail sales of cosmetics in May + June for the three-year period from 2022 to 2024 were 71.52 billion yuan, 78.06 billion yuan, and 81.05 billion yuan, with year-on-year growth rates of 2.5%, 9.1%, and 3.8% respectively. Therefore, overall, the total retail sales of cosmetics in May + June this year showed a slight increase compared to the same period last year.
Hence, some experienced industry insiders also stated, “Although the total retail sales of cosmetics in June this year recorded the largest decline in nearly a decade, there is no need to be overly alarmed. It is just a consequence of the changes in the 618 shopping festival mechanism this year. After all, the overall data of May + June still looks decent.”
“Goodbye to the era of high growth, the beginning of a great shakeout.”
However, looking at the overall situation of the industry in recent years, it has become a consensus that “the cosmetics industry has bid farewell to the era of high growth and has entered a new round of great shakeout.” Previously, industry insiders have stated that the once thriving cosmetics industry has entered a new stage of development.
Industry experts point out that the slowdown in industry growth is not accidental but the result of multiple factors. On one hand, after the pandemic, consumers’ consumption concepts and purchasing habits have undergone significant changes, becoming more cautious about non-essential purchases. On the other hand, the competition in the cosmetics market has become increasingly fierce, with domestic and international brands vying for market share. Price wars, quality battles, and marketing wars have been ongoing, putting pressure on the industry’s profit margins.
The signs of industry growth slowdown can be seen from the frequent reports of bankruptcies, factory closures, and brand failures in recent years. For example, in the first half of 2024, at least 21 beauty brands announced store closures, clearance sales, or even direct shutdowns.
In addition, another noteworthy data is the cooling trend of imported cosmetics in China. According to data from the General Administration of Customs, the import amount of cosmetics in June this year was 8.88 billion yuan, a year-on-year decrease of 4.4%. From January to June this year, the cumulative import quantity of cosmetics was 157,400 tons, with a value of 59.32 billion yuan, compared to 182,200 tons and 65.66 billion yuan in the same period last year, representing a year-on-year decrease of 13.6% and 9.6% respectively.
Some analysts believe that while the overall cosmetics market in China has experienced slight growth in the first half of this year, there has been a significant decline in imported cosmetics, indicating that “Chinese cosmetics are rising compared to imports.” This view is also supported by recent data released by CHAILEEDO Intelligence. The data shows that the sales of cosmetics in China in the first half of this year reached 479.25 billion yuan, with a year-on-year growth of 2.38% (due to different statistical calibers, the data may differ slightly from the National Bureau of Statistics, but the overall trend is consistent). Among them, the sales of domestic cosmetics accounted for 56.7%, surpassing the market share of foreign cosmetics once again.
Therefore, many insiders have expressed their sentiment, saying, “The ‘rise of Chinese brands’ is finally more than just a slogan.” The founder of a Chinese brand also recently told CHAILEEDO, “The dividend period for Chinese brands is just beginning. It is inevitable for local brands to rise and develop within 20-30 years after a country completes its industrial revolution. And China is currently in this stage.”
At the same time, despite many industry professionals complaining, many brands have achieved high growth in the first half of this year. One typical example is Proya. According to data from CHAILEEDO Intelligence, the brand’s online GMV (Gross Merchandise Value) in the first half of this year reached 5.62 billion yuan, a year-on-year increase of 87%. Proya is the only brand in the Chinese cosmetics industry with a GMV exceeding 5 billion yuan. Not only Proya, but brands like KANS and Gu Yu also experienced significant growth in the first half of this year. CHAILEEDO Intelligence data shows that KANS achieved a GMV of 4.32 billion yuan, a year-on-year increase of 222.8%, while Gu Yu’s GMV reached 2.06 billion yuan, a year-on-year increase of 56.4%.
As the great shakeout continues, when the sand settles, true gold will be revealed. Undoubtedly, the Chinese cosmetics industry will go through economic cycles, and short-term fluctuations are inevitable. In this process, weak enterprises/brands with limited competitiveness will be eliminated. Only enterprises/brands with absolute advantages and high competitiveness can stand undefeated in the market.
