Today, Alibaba announced that it has agreed with another minority shareholder to sell 100% of the equity of Intime to a consortium led by Youngor Group and members of the Intime management team. This puts an end to nearly a year of rumors surrounding the sale of Intime Department Store.
It is worth mentioning that both the buyer and the seller have a presence in the beauty and cosmetics industry. Youngor Group has previously invested in companies like Shangmei Cosmetics and Forest Cabin, while Intime Department Store serves as a significant offline base for high-end beauty brands and has been one of China’s largest physical cosmetics retailers for many years.
In response to this acquisition, CHAILEEDO visited Wuhan Intime Department Store and GINKGO-X, a beauty store under Intime Department Store, and interviewed several senior professionals in the beauty retail industry to discuss the impact of Intime Department Store’s change of ownership on the domestic beauty market. They also explored the current and future positioning of beauty brands in the Chinese department store channels amidst various challenges.
China’s largest physical cosmetics retailer changes ownership
According to the Hong Kong Stock Exchange website, Alibaba today issued a voluntary announcement titled “Alibaba Group Sells Intime,” officially declaring that it has agreed with another minority shareholder to sell 100% of Intime’s equity to a consortium led by Youngor Group and members of the Intime management team, stating that “Intime is one of China’s leading department store enterprises.”
The announcement also states that Alibaba currently holds approximately 99% of Intime’s equity. The total proceeds Alibaba expects to receive from the sale of Intime are approximately 7.4 billion yuan ($1 billion). Alibaba anticipates a loss of around 9.3 billion yuan ($1.28 billion) from the sale of Intime. The completion of the sale of Intime is subject to the approval of China’s antitrust regulators and other customary closing conditions.
With this, the rumors surrounding the change of ownership of Intime Department Store have finally been confirmed.
In fact, as early as February of this year, there were rumors that Alibaba was considering selling Intime Department Store and had been in contact with several potential buyers to assess their interest in Intime Department Store.
Looking back at the history of Intime Department Store, in November 1998, the first store and flagship store of Intime Department Store—Hangzhou Wulin Intime Department Store—opened in the core Wulin commercial district of Hangzhou. In 2009, Intime Department Store was the first in the industry to transition into a shopping center and became the first traditional retail department store to venture into e-commerce.
In 2014, Alibaba made a strategic investment of 5.37 billion Hong Kong dollars ($691.1 million) in Intime Department Store, and the following year became its largest single shareholder through additional shareholdings. In 2017, Alibaba privatized Intime Department Store, which was subsequently delisted from the Hong Kong Stock Exchange.
As for the “buyer,” Youngor Group is a well-known domestic fashion conglomerate. According to the YAGEER official website, Youngor Group was established in 1979 and is a leading enterprise in the national textile and clothing industry, achieving sales revenue of 191.6 billion yuan ($24.66 billion) in 2023.
In recent years, Youngor Group has developed into a comprehensive international enterprise group with a core focus on the fashion industry, diversified and specialized development, with five major industries including fashion, real estate, investment, international trade, and tourism. It owns the listed company “YAGEER Fashion Co., Ltd.” and has established the strategic goal of building a world-class fashion industry group, further focusing on its core fashion business.
Regarding this acquisition, Youngor Group stated to the media, “The group’s joint investment with the Intime management team in Intime aims to ‘strengthen and complement the chain’ to enhance the fashion ecosystem. After the investment is completed, Youngor Group will provide the Intime management team with ample operational space to support Intime’s further high-quality development.”
It is worth mentioning that both Youngor Group and Intime Department Store have a presence in the beauty and cosmetics industry. Intime Department Store has a long-standing presence in the beauty business and has achieved remarkable success. In 2022, a total of 47 beauty brands’ counters at Intime Department Store ranked first nationwide. According to the Intime Department Store website, in 2020, Intime Department Store became the largest physical cosmetics retailer in the country.
In the role of an investor, Youngor Group has entered the beauty market, with its related companies having previously invested in domestic beauty brands such as Shangmei Cosmetics and Forest Cabin. According to previous reports by foreign media, the French high-end children’s clothing brand Bonpoint may be sold to Youngor Group for about 200 million euros ($209.8 million). The brand includes children’s clothing and skincare fragrance product lines, with skincare fragrances accounting for about 30%.
Visit to Wuhan Intime Department Store on site
How will Youngor Group tell the beauty story of Intime Department Store?
So, why does Youngor Group value Intime Department Store? Against the backdrop of a cooling offline channel, how is the beauty business of Intime Department Store developing?
To this end, CHAILEEDO visited the only store of Intime Department Store located in Wuhan—Wuhan Intime Department Store, and the beauty collection store brand GINKGO-X under Intime Department Store, and interviewed a senior beauty agent who has cooperated with Intime Department Store for many years to discuss the profound impact of this “change of ownership” of Intime Department Store.
According to public information, Wuhan Intime Department Store, opened in 2014 and adjacent to Wuhan University, Wuhan University of Technology, and other universities, is one of the youngest stores in the national Intime Department Store customer group, and is the only Intime Department Store in Wuhan after the closure of Intime Department Store’s Wuhan Century Store.
CHAILEEDO found that due to it being a working day, the overall customer flow in Wuhan Intime Department Store was relatively average, with mostly young faces in the mall. In terms of beauty distribution, cosmetics counters and stores are mainly distributed on the first and second floors, with the first floor mainly featuring relatively high-end brands such as MAOGEPING, Clinique, and Origins, while the second floor mainly consists of cosmetics counters, including Chinese domestic brands like CHANDO, Marubi, and Dr. Plant.
Overall, perhaps due to the consideration of the target audience, the number of beauty brands in the mall is relatively small, with domestic beauty products predominantly featured and fewer international brands.
A Chinese domestic beauty brand counter staff member told CHAILEEDO, “There are indeed not many beauty brands in this mall. In terms of customer flow, there are more people on weekday evenings and weekends.”
It is worth mentioning that CHAILEEDO noticed that the beauty collection store GINKGO-X on the first floor effectively supplements the lack of beauty brand variety in the mall.
According to public reports, GINKGO-X is a collection store brand incubated by Intime Department, mainly featuring international niche brands and popular Chinese products. It started trial operation in Shaoxing Keqiao, Hangzhou, and other places in 2022, with Wuhan Intime Department Store being its second-generation flagship store nationwide.
During the visit to GINKGO-X, CHAILEEDO found that the collection store features well-known high-end beauty brands like Armani, YSL, as well as niche brands like THREE, MORCANCOS, and PULJIM, with product prices mostly above a hundred yuan.
A store employee revealed to CHAILEEDO, “The store opened in May this year, it used to be the location of Sephora. As it has recently opened, to attract old customers, the store is still continuing the discounts from the Double Twelve event, with some products sold at a 22% discount.”
In response, Wang Fei, a beauty brand agent in Hangzhou who has cooperated with Intime Department Store for many years, told CHAILEEDO, “In recent years, facing the rise of online channels and emerging mall formats, department store channels are facing great challenges, and Intime Department Store is no exception. However, GINKGO-X, as exploration in the beauty business, has been influenced by factors such as the market environment, resulting in a slower expansion.”
“Even in core areas of first-tier cities like Hangzhou, the foot traffic at Intime Department Store has significantly declined. Influenced by the overall environment, more consumers tend to choose relatively lower-priced dining consumption, making it increasingly difficult to sell high-priced beauty products,” a beauty channel distributor with over twenty years of experience in East China recently expressed to CHAILEEDO.
However, several industry insiders have acknowledged that Intime Department Store remains one of the leaders in domestic department stores, leading in digital channel transformation. “From the operational system of Intime Department Store, it is one of the most internet-oriented department store enterprises in the entire Chinese department store industry, and has been quite successful in this regard.”
Regarding Youngor Group’s acquisition of Intime Department Store, Qian Huan, in charge of the department store and super channel at Hangzhou Mei Yitian Brand Management Co., Ltd., believes, “Youngor Group deeply cultivates the fashion industry, which places more emphasis on offline experiences. Since last year, Youngor Group has set the goal of building a world-class fashion group, and Intime Department Store strategically and operationally complements the current Youngor Group.”
It is worth mentioning that regarding the investment in Forest Cabin, a relevant person from Youngor Group once told the media, “The company’s current operations and investments focus on the fashion industry, including clothing, beauty, fashion business, etc. Forest Cabin and the Shanghai HAI550 project are the company’s expansions in the fashion field. In the future, the company will continue to focus on multidimensional development opportunities in the fashion industry.”
Multiple long-established department stores are closing down
Incremental growth in department store channels is slowing down
According to data from the National Bureau of Statistics, the total retail sales of cosmetics in November this year reached 43.4 billion yuan ($6 billion), a year-on-year decrease of 26.4%, marking a new high for the year. Overall, from January to November this year, the cumulative total retail sales of cosmetics reached 401.5 billion yuan ($55.11 billion), a year-on-year decrease of 1.3%, indicating that the domestic beauty market has entered a phase of negative growth.
As the beauty market growth is slowing down, the competition in department store channels is also showing a situation of new and old alternating. Last August, one of the once most popular department stores in Shanghai, Pacific Department Store, which had been operating for 30 years, announced the formal termination of its operations; in the same year, the Han Yang store of Wuhan Grand Ocean Department Store, which had been operating for nearly 14 years, also announced its closure.
This year has seen a continuous wave of department store closures. CHAILEEDO has noted that just this year, over a dozen department stores have announced closures, such as Shanghai Meilongzhen Isetan Department Store, Far Eastern Department Store Chongqing Jiangbei Store, and Ginza Mall Binzhou Boxing Store, all of which announced closures in June this year.
In response, Fan Jun, President of the China Department Store Business Association, once publicly stated, “Channel diversion is accelerating, and department stores are facing repositioning. The difficulties currently faced by department stores are twofold: first, the uniformity of department stores, and second, excessive competition. Shopping centers reportedly saw over 500 openings last year. Department stores are facing competition from shopping centers, malls, and e-commerce. Currently, they have entered a period of stock competition, not incremental growth.”
Therefore, department store channels are continuously transforming to cope with the crisis. However, some industry insiders suggest that the transformation may be more challenging than expected. A beauty agent who has cooperated with department store channels for a long time told CHAILEEDO, “Impacted by emerging shopping formats and the shift of shopping scenes online, the decline in customer traffic in department store channels is inevitable, and reform also faces significant challenges.”
“Compared to emerging shopping formats, department store channels actually suffer significant losses in various aspects such as floor height and business area. They lack competitive advantages, and because these structural hardware elements are difficult to change in the short term, it is difficult to achieve thorough transformation solely through external changes like renovations,” the beauty agent said.
On the other hand, there has been a profound change in the channel perspectives of current beauty brands. For example, a founder of a well-known emerging hair care brand recently told CHAILEEDO, “For brands, including department stores in our offline channels is indispensable, but in terms of cost and ultimate benefits, our brand hopes to achieve a revenue structure where offline accounts for 20% and online accounts for 80%. Looking towards the future, brands that heavily invest in offline may become fewer, with more emphasis on a combination of online and offline.”
However, in the view of Qian Huan, there is no need to be overly pessimistic about the prospects of department store channels. “Department store channels are in the process of transformation. Many new shopping centers in various places are still established by department store enterprises. With the increasingly perfect functions of dining, entertainment, and the interaction with e-commerce, the customer flow in department store channels may possibly return, ushering in a moment of rebound.”
“As a physical retail department store with good integration of online and offline, Intime Department Store still holds strong competitiveness within the industry,” added Qian Huan.
Therefore, after taking over, how will Youngor Group “revitalize” Intime Department Store, and will they continue to strengthen their presence in the beauty industry? CHAILEEDO will continue to keep a close eye on this.
