On March 19th, the 2024 (9th) Conference on China Cosmetics Trends, organized by CHAILEEDO and supported by MeiDD, was held in Hangzhou with the theme “Offline Reconstruction.” The conference brought together the top ten domestic beauty companies in China, offline channel agents, CS channel stores, beauty retail concept stores, and others to discuss the new trends and opportunities brought about by the reconstruction of offline channels in the cosmetics industry. During the event, Wang Kai, the founder of the beauty chain brand Beauty Choice, delivered a keynote speech titled “Multiple Breakthroughs in Offline Reconstruction.”
The following is a transcript of the speech:
Hello, everyone. I am Wang Kai! Beauty Choice is a cosmetics chain born in Shanghai and began expanding into the national market last year. We have over 50 stores in Shanghai, ranking first in terms of quantity and second in terms of scale, with Sephora being the first.
Let me give you a few examples. The Beauty Choice store located in Shanghai Jing’an Joy City has already undergone reconstruction. I will talk about the logic behind our reconstruction later. We have also tried opening customer-oriented stores in tourist areas like Nanjing East Road Pedestrian Street, with a younger store image.
We are also experimenting in Nanning department stores and opening directly operated stores in Shangli Plaza, Rikaze, Tibet. The logistics time is particularly long there, requiring a 12-day delivery. At that time, our main goal was to challenge whether we could maintain the same pace of weekly new arrivals as our Shanghai stores. It turned out that we were able to achieve it through certain methods and approaches.
Beauty Choice already has stores in several cities across the country, and this year our task is to expand to some extent. We have already opened some stores in Xiamen, Qinghai, and other places, and we will be opening many new stores in March and April.
Internally, we have refined differentiation, branding, digital shopping experiences, and digital operational and training systems. From a digital perspective, we have divided it into five stages: store, supply chain, decision-making, customers, and supply chain nodes.
Our requirement for operations is to strive for each store, headquarters team, and operation team to be able to see every detail clearly. We have our own cash register system, such as a self-developed POS machine, using our own large screens. It serves as a space for interactive activities, as well as a processing center for platforms like Meituan and Ele.me. It also acts as a device for timely feedback on store supply chain systems and store warehousing systems.
The reason it’s called digital training is because it involves multidimensional analysis of all the sales associates. We analyze what they lack, what kind of empowerment they need at different stages, and gather them at the headquarters for training or appreciation in this way.
Our goal can be summed up in one sentence: “Making millions as one.” We hope that at any time, in any scenario, we can understand each store’s needs just like a store manager. This is the purpose of our digital transformation.
When it comes to offline reconstruction, I believe that offline stores are constantly reconstructing. It is inevitable and necessary for stores to do so. Before discussing reconstruction, let’s talk about positioning: retail and sales. From a brand perspective, retail emphasizes attributes such as packaging, promotions, and displays. The brand itself sells products. On the other hand, sales focus on efficacy, characteristics, training, and incentives from the brand’s perspective. In terms of the channel side, retail focuses on display, product selection, and promotional activities, while sales focus on forming a set of training and incentive programs for sales associates (BAs). This is the difference in positioning between retail and sales.
Generally speaking, brands with a strong retail attribute will choose stores with a strong retail attribute, which usually yields good results. Similarly, if a brand with a strong sales attribute chooses stores with a strong sales attribute, the results will also be strong.
If there is a mismatch, where a brand with a strong retail attribute insists on entering channels with a strong sales attribute, it is not impossible, but it can be challenging. Similarly, if a brand with a strong sales attribute enters channels with a strong retail attribute, difficulties will arise, and these are the challenges we need to overcome.
Speaking from our own channels, we have demands for retail. For example, on the retail side, we hope to have new products with traffic and to chase trends. We have tested this and found that placing a new product with traffic in the right position can generate more than ten times the sales compared to placing it in another location. This is an example of having a strong retail attribute. If you place a brand with a strong sales attribute in a prominent position, but the sales associates don’t promote it, it won’t sell well. These are two completely independent concepts.
On the retail side, we hope to work with brands that have traffic, but some brands may not have traffic, yet they have excellent packaging, reasonable prices, and good displays and promotions. They can also possess a strong retail attribute, and those are the brands we are eager to collaborate with.
The second layer of reconstruction involves the relationship between business retail and customers, which is an eternal topic. When I mention “customers” here, it doesn’t just refer to consumer customers. Since all our stores in Shanghai are company-owned, when we expand beyond Shanghai, we already serve customers nationwide through customer service. This year, we plan to open 100 stores, and most of them will be completed through customer franchise.
Now, we also need to reconstruct ourselves. We can’t just be a supply chain company. We are even involved in helping customers with site selection and providing operational services. We help customers streamline their entire system. We need to ensure that all systems can develop smoothly, and that’s where reconstruction comes in.
I divide retail reconstruction into four layers: First, there is the reconstruction of the retail aspect, which happens every day. The adjustments are stronger for stores with stronger retail attributes. Second, there is the reconstruction of retail and sales, which involves the reconstruction between channels and brands. Third, there is the reconstruction between channels, customers, and businesses. Fourth, there is the reconstruction involving government, capital, and (channel) brands.
Let me give an example. I had a conversation with a government representative in Zhejiang province before, and they offered very favorable conditions. They even mentioned that they have three office buildings in Shanghai that they could provide for our use. They also proposed investing in and franchising our stores in the most popular tourist areas. I said this was great. When the government, capital, and we work together on this, the probability of success is higher.
Of course, reconstruction at this level may be a bit more challenging, as it needs to adapt to changes in time and the economy. I believe that each of the first, second, and third layers has opportunities, and the more regionalized and localized the channels are, the better.
Lastly, reconstruction is essentially about breaking positioning. The only constant in this world is change. Why did offline businesses shift to online? It’s because offline business became extremely difficult at that time. The traffic dividend disappeared, and everyone’s good days were gone. So, we have to keep jumping and breaking and reconstructing between traffic sources. This has been the case for decades, and it has never changed.
From large supermarkets and hypermarkets to small convenience stores, to the various types of counters we see today, to the construction of commercial real estate systems, the retail system has always been changing, and I believe it will continue to change in the future.
In the end, whether it’s online or offline, it’s all retail, it’s all sales. We just need to think about the relationship between retail and sales, and then look at which channel is more suitable for our characteristics, and where we can leverage our strengths. Then, we believe we can find our place. If we can break barriers and disrupt the reconstruction, we can become an influential company.
Novices die from common sense, while experts die from trends. I am a novice, so I am easily bound by common sense. The tide of the times is like a high-speed train approaching from a distance. At first, it seems slow, but when it passes by you, you realize how fast it was, and you couldn’t even catch hold of it. This is a description people use to describe the arrival of ChatGPT. Initially, people may not feel it, but like many articles and content I write in the company, they are actually generated by ChatGPT. Now, foreign countries have fully embraced AI because I come from a computer science background, so I am relatively sensitive to this. I believe this applies to any industry. Reconstruction and iteration are ongoing processes that happen at any time.
I firmly believe in the cosmetics retail industry because it is related to beauty. Apart from the cold technology, it also involves warmth, emotions, values, and business, among other things. I firmly believe that we will have a bright future.
Thank you, everyone!
