For beauty brands, offline channels are not only the window for direct contact with consumers but also an important way to enhance brand influence. This year, many beauty brands have made efforts to strengthen their offline presence and reevaluate the value of offline channels.
Recently, CHAILEEDO conducted an interview with Xia Yu, the General Manager of Beauty Starsky, who revealed the secrets behind the rapid expansion of their store count and shared the company’s development plans for the next three years.
Public information shows that Beauty Starsky was established in 2022. It is a beauty retail chain in the Yangtze River Delta region, with its main categories being popular products, branded products, trendy products, and traffic-driving products. It has grown to become a new chain system with 108 stores.
“Based in Jiangsu, Zhejiang, and Shanghai and serving the entire country, that was Beauty Starsky’s starting point. If we can lead in the Jiangsu, Zhejiang, and Shanghai region, we will also lead nationwide,” Xia Yu explained. Beauty Starsky’s stores are mainly located in cities in Jiangsu, Zhejiang, and Shanghai. Since last year, they have started expanding into other cities.
It is worth noting that Beauty Starsky was founded during the most severe period of the pandemic. Due to the challenging business environment, they adopted a business model focused on multiple channels, with street stores playing a secondary role.
Xia Yu told CHAILEEDO, “Initially, Beauty Starsky stores were quite small, averaging around 20 square meters. This not only required small investments but also had lower risks. With this model, in less than a year and a half, Beauty Starsky opened 108 stores, including 92 multiple-channel stores and 16 street stores.”
As a global chain store that combines top beauty brands, popular products, and discounted prices, Beauty Starsky has introduced some domestic beauty brands since last year. Xia Yu stated that this decision was primarily based on two reasons: the future trend of domestic beauty brands and the current prevalence of counterfeit international brands.
Based on insights into domestic beauty brands, Xia Yu also established a second brand called “New Moon Time,” which focuses on domestic beauty products. Currently, they have three stores under this brand. Compared to Beauty Starsky, New Moon Time targets a younger demographic, mainly students, and offers products with higher cost-effectiveness.
Regarding the management of personnel and products, Xia Yu believes that “people” are the most challenging aspect. This includes employees, store managers, and partners. The differences between different store managers and beauty advisors can be significant, so it is crucial to select the right people.
Regarding the current trend of many beauty brands discussing the relaunch of offline stores, Xia Yu believes that the real renaissance of offline entities is still far away. Just like the automotive industry, 5-10 years ago, Mercedes-Benz, BMW, and Audi, the three major foreign automakers, dominated the market. However, with the rise of domestic electric vehicles, they captured a significant portion of the market share.
“Similar to the automotive industry, domestic beauty brands or offline beauty stores will also experience a renaissance, but it is still a waiting game. We cannot predict the exact tipping point for the breakthrough.”
When discussing the plans for the next three years and the number of Beauty Starsky stores, Xia Yu stated that this year, they are primarily focused on stability and may not open a large number of stores. The estimated store count will be between 130 and 160. In 2025, Beauty Starsky will make a full effort to accelerate its expansion. Over the next three years, they expect the store count to double or triple.
On March 19th, the 2024 (9th) China Cosmetics Trends Conference, hosted by CHAILEEDO and supported by Beauty Starsky, was held in Hangzhou. The theme of this conference was “Offline Reconstruction.” During the event, Xia Yu, the General Manager of Beauty Starsky, delivered a keynote speech titled “Offline Opportunities for Popular Beauty Products,” sharing Beauty Starsky’s understanding and interpretation of offline channels.
Here is a transcript of the speech:
Good afternoon, everyone!
I am the project leader of Beauty Starsky’s emerging brand. After listening to the presentations from several top cosmetic chain stores, let’s now hear from the “indestructible cockroach.” The organizing committee has assigned me three topics:
First, the future of offline entities.
The future of offline entities can be understood simply as the most important aspects of offline entities or how to make them better. After summarizing my own experiences, I have divided it into four aspects: model, capital, culture, and team.
Without a good business model, you can’t achieve rapid growth. Beauty Starsky, as an emerging brand, has gone from the opening of its first store to the present in a little over two years. It started during the severe period of the pandemic but has managed to grow in an organized and orderly manner, relying entirely on a sound business model.
Without capital, you can’t achieve significant growth. In fact, I have always been a business owner, running my own businesses since I was 18. However, I used to run small-scale businesses and never really understood the concept of “capital.” It wasn’t until Good Special Sale took off that I realized the unchanging truth that “money is not everything, but sometimes it is absolutely necessary.” So, I place the “capital” aspect as second. Without capital, you can’t achieve significant growth.
Culture is the foundation and DNA of a company. Nowadays, many companies, including my own, I believe, are 90% the company of the boss. The boss’s culture becomes the company’s culture. I don’t know if you agree with this. Anyway, I can’t achieve that level of greatness. I can’t be as great as Jack Ma or the extraordinary entrepreneurs of the previous generation like Zong Qinghou.
My personal experience tells me that in many companies, especially small and micro-enterprises, the boss’s culture becomes the company’s culture. So, what is the culture of Beauty Starsky? It’s simple—down-to-earth and hardworking. I believe you can tell from my attire that I just came from the frontlines. I was busy in the store before coming to attend our conference. Many people think that a company where the boss works is destined to never grow big. However, I think, how can you achieve significant growth without putting in the work? Work first, then talk about growth.
There is no strong company without a strong team. This point goes without saying. Running any physical store is like a monk fetching water. With two monks, they can carry the water together. But with three monks, there is no water to carry. Whether you enter or leave any company, as long as you have three or more employees, you form a small team. No physical industry can thrive without a team.
Second, the consumer profile.
In my opinion, the consumer profile refers to certain data about the customers. The average spending of Beauty Starsky is around 560 yuan, which is neither high nor low. I obtained this data three days ago and included it in my own presentation. In February, I found the precise figure of 560 yuan for the average sales per customer. Additionally, the gross profit margin of Beauty Starsky has declined to only 33%-38%, marking the end of the era of huge profits.
As a popular beauty discount store, Beauty Starsky mainly attracts customers in the age range of 25-45, including white-collar workers, families, and young married women. The student population is relatively small, while the age group of 20-40 accounts for 70%-80% of our customer base.
Regarding the repurchase rate and repurchase cycle, Beauty Starsky’s repurchase rate has increased by 22% compared to previous years. Why did it increase by 22%? It’s because Beauty Starsky was founded only two years ago, and the previous year was during the pandemic. So, compared to the pandemic period, the repurchase rate has increased by 22%. Furthermore, the repurchase cycle is 80 days, which I estimated based on customer repurchase and member repurchase data. However, this data may not be entirely accurate.
Moreover, Beauty Starsky has an impressive cross-selling rate of 66%. What does cross-selling rate mean? It’s not easy to calculate, but I estimated it based on the number of items purchased per transaction by members on our mini-program. For example, when a customer makes a purchase, they may buy one product, two products, or three products. I derived the cross-selling rate from this data, and it reaches as high as 66%.
In addition, we have been deeply cultivating this industry for many years. Our sales team, from beauty advisors (BAs) to store managers, possesses strong selling abilities.
Third, opportunities for popular beauty offline stores.
This is my third topic, and instead of discussing the opportunities for popular beauty offline stores, it is better to focus on how to excel in operating offline beauty stores or identify the entry points for such opportunities. I have contemplated for a long time on where the opportunities lie for offline beauty stores, and if I were to answer in one word, it would be “waiting.”
I believe that the opportune moment has not yet arrived; we still need to wait. Beauty brick-and-mortar stores have not yet passed through the winter and embraced the blossoming of spring. Perhaps not everyone present here is an owner of a physical store, so let me share a story that might resonate better with you.
Five to eight years ago, the three major international automotive giants, Mercedes-Benz, BMW, and Audi, dominated the Chinese automobile market, leaving domestic car manufacturers struggling for breath. However, today, domestic car brands have risen, and new energy vehicles have emerged. Mercedes-Benz, BMW, Audi, and even Porsche are now feeling the pressure and are developing new energy electric cars.
I have three cars at home, two of which are new energy vehicles, and I drive a Langtu. Does this story sound familiar in comparison to the beauty industry? Currently, international brands like Lancôme, Estée Lauder, and La Mer are aggressively seizing the Chinese market, and there are hardly any domestic brands that can compete with them.
They are seizing countless consumer resources in China, but I firmly believe that just like how new energy vehicles have defeated traditional fuel-powered cars, domestic beauty brands will make a comeback. This is also the entry point and opportunity for physical beauty stores. However, I believe that day is still to come; it has not arrived yet. China has a multitude of talented individuals, comprehensive technology, brand innovation, and practical application. I believe that China’s beauty industry will bring about the latest revolution.
Many people may say that what I’m talking about is the future, so where are the current opportunities in the beauty industry?
From a traditional perspective of physical stores, the opportunities revolve around people, products, and the shopping environment. I can’t find a third aspect. Among these, I prioritize “people.” Here, I don’t have any advanced technologies to share with you. I can only mention the internal system of Beauty Starsky, which is the master-apprentice model.
Beauty Starsky has a decent brand image, but it still hasn’t reached the level of replication seen throughout the industry. The products at Beauty Starsky are not significantly different from what is available in the market. However, the model of Beauty Starsky is something you cannot replicate, and even if I were to tell you the answer, you wouldn’t be able to learn it.
Therefore, I believe that “the model determines success.” Among them, products are our core focus. My wife is responsible for the procurement at Beauty Starsky, entrusting the most crucial aspect to the closest person. The product range includes well-known brands, popular products, trendy items, and traffic-driving products. We don’t make much profit from the high-profit items, which is why the gross profit margin of Beauty Starsky stores is not high, only around 30%. We have very high and cautious criteria for selecting profitable items. However, when it comes to these four categories (well-known brands, popular products, trendy items, and traffic-driving products), we open the doors and welcome them in.
Furthermore, the location is also crucial for a physical beauty store. I use a simple saying, “Prefer to be the head of a chicken than the tail of a phoenix,” when it comes to choosing a location. For example, a store located on the 10th floor of a building in Hangzhou is not as good as a ground-floor store in a small county town. It’s as simple as that.
Until the next era arrives, the entry point for offline beauty stores lies in establishing the right model, and the people, products, and shopping environment will always hold significant importance.
Third, opportunities for popular beauty offline stores.
This is my third topic, and instead of discussing the opportunities for popular beauty offline stores, it is better to focus on how to excel in operating offline beauty stores or identify the entry points for such opportunities. I have contemplated for a long time on where the opportunities lie for offline beauty stores, and if I were to answer in one word, it would be “waiting.”
I believe that the opportune moment has not yet arrived; we still need to wait. Beauty brick-and-mortar stores have not yet passed through the winter and embraced the blossoming of spring. Perhaps not everyone present here is an owner of a physical store, so let me share a story that might resonate better with you.
Five to eight years ago, the three major international automotive giants, Mercedes-Benz, BMW, and Audi, dominated the Chinese automobile market, leaving domestic car manufacturers struggling for breath. However, today, domestic car brands have risen, and new energy vehicles have emerged. Mercedes-Benz, BMW, Audi, and even Porsche are now feeling the pressure and are developing new energy electric cars.
I have three cars at home, two of which are new energy vehicles, and I drive a Langtu. Does this story sound familiar in comparison to the beauty industry? Currently, international brands like Lancôme, Estée Lauder, and La Mer are aggressively seizing the Chinese market, and there are hardly any domestic brands that can compete with them.
They are seizing countless consumer resources in China, but I firmly believe that just like how new energy vehicles have defeated traditional fuel-powered cars, domestic beauty brands will make a comeback. This is also the entry point and opportunity for physical beauty stores. However, I believe that day is still to come; it has not arrived yet. China has a multitude of talented individuals, comprehensive technology, brand innovation, and practical application. I believe that China’s beauty industry will bring about the latest revolution.
Many people may say that what I’m talking about is the future, so where are the current opportunities in the beauty industry?
From a traditional perspective of physical stores, the opportunities revolve around people, products, and the shopping environment. I can’t find a third aspect. Among these, I prioritize “people.” Here, I don’t have any advanced technologies to share with you. I can only mention the internal system of Beauty Starsky, which is the master-apprentice model.
Beauty Starsky has a decent brand image, but it still hasn’t reached the level of replication seen throughout the industry. The products at Beauty Starsky are not significantly different from what is available in the market. However, the model of Beauty Starsky is something you cannot replicate, and even if I were to tell you the answer, you wouldn’t be able to learn it.
Therefore, I believe that “the model determines success.” Among them, products are our core focus. My wife is responsible for the procurement at Beauty Starsky, entrusting the most crucial aspect to the closest person. The product range includes well-known brands, popular products, trendy items, and traffic-driving products. We don’t make much profit from the high-profit items, which is why the gross profit margin of Beauty Starsky stores is not high, only around 30%. We have very high and cautious criteria for selecting profitable items. However, when it comes to these four categories (well-known brands, popular products, trendy items, and traffic-driving products), we open the doors and welcome them in.
Furthermore, the location is also crucial for a physical beauty store. I use a simple saying, “Prefer to be the head of a chicken than the tail of a phoenix,” when it comes to choosing a location. For example, a store located on the 10th floor of a building in Hangzhou is not as good as a ground-floor store in a small county town. It’s as simple as that.
Until the next era arrives, the entry point for offline beauty stores lies in establishing the right model, and the people, products, and shopping environment will always hold significant importance.
