Benefit Cosmetics will be the first high-end beauty brand to close its stores in 2024.
Recently, LVMH Group’s high-end cosmetics brand, Benefit Cosmetics, announced the closure of its official flagship stores on Tmall, Douyin (TikTok), and JD.com, indicating the end of operations and the cessation of accepting new orders after January 28, 2024.
It is worth mentioning that there are also rumors that Benefit Cosmetics may exit from China. In response to CHAILEEDO’s inquiry, Benefit Cosmetics’ customer service stated that they are “adjusting the scale of business and development focus in mainland China” and mentioned that consumers can continue to purchase their products through Sephora in China. Several Sephora store employees also confirmed hearing such rumors but stated that they have not received any specific notifications yet.
As the former global leader in eyebrow pencils, having been in China for 16 years, Benefit Cosmetics is not unfamiliar to Chinese consumers. However, in 2021, Benefit Cosmetics underwent business adjustments, resulting in a significant closure from offline counters and a shift in focus to Sephora and online channels. With the closure of their online stores, only Sephora channels remain to support the brand.
Nevertheless, it is certain that the adjustment and decline of one or two brands will not shake LVMH’s long-term confidence in the Chinese beauty market.Benefit Cosmetics was once the world’s leading eyebrow makeup brand
The founding story of Benefit Cosmetics is an interesting one.
One day in 1976, Jane Ford and Jean Ann Ford, twin sisters who had just earned their first bucket of gold through modeling, were discussing how to use the money. They had the choice of opening a hot pot restaurant or a cosmetics store. In the end, they decided to open a cosmetics store called The Face Place by flipping a coin. This was the precursor to Benefit Cosmetics.
In 1990, The Face Place company was renamed Benefit Cosmetics and the following year, it entered the upscale department store Henri Bendel. In 1997, Benefit Cosmetics expanded into the international market and opened locations at the Harrods department store in London.
In 1999, LVMH Group acquired the majority stake in Benefit Cosmetics. The two founders subsequently left the company in 2012 and passed away in 2019 and 2020, respectively.
In terms of product lineup, Benefit Cosmetics offers products for eyebrows, eyes, pore care, lips, and other areas, spanning multiple fields such as makeup, skincare, and makeup tools. However, Benefit Cosmetics is best known for its positioning as an eyebrow makeup brand.
In 2003, Benefit Cosmetics opened its first “BrowBar” in San Francisco and subsequently expanded globally. According to the official website, Benefit Cosmetics claims to sell “1 brow product every 2 seconds” and currently has offices in 59 countries across five continents, with over 3,000 BrowBars and 85 boutiques worldwide.
According to public reports, Benefit Cosmetics is estimated to be the world’s number one eyebrow makeup brand based on the total retail sales of well-known eyebrow products from January to December 2021.
In 2007, Benefit Cosmetics officially entered the Chinese market. In the following year, it entered Sephora China. It later opened boutiques and counters in major department stores. It’s worth mentioning that Benefit Cosmetics’ brow grooming services are still available in some Sephora stores in China. For example, at a Sephora store in Guangzhou, the price for Benefit Cosmetics’ brow grooming services ranges from 108 yuan to 208 yuan.
In 2011, Benefit Cosmetics briefly entered Tmall but closed its store in less than half a year. In 2017, Benefit Cosmetics returned to Tmall and subsequently joined JD.com and Douyin’s e-commerce platforms in 2021 and 2022, respectively.
However, while Benefit Cosmetics was expanding online, it was also giving up from offline counters. In 2021, according to an exclusive investigation by CHAILEEDO, Benefit Cosmetics had already withdrawn from counters in many cities across China. At that time, the official customer service of Benefit Cosmetics stated to CHAILEEDO, “It’s mainly a brand business adjustment, and in the future, we will focus on Sephora and the brand’s official Tmall store.”
This year, Benefit Cosmetics suddenly announced the closure of its official flagship stores on Tmall, Douyin, and JD.com. Although it is not a complete withdrawal from the Chinese market, the news of store closures still surprised many consumers.
It is understood that as of the time of writing, Benefit Cosmetics’ online platforms have a total of over 3.5 million followers, and the browsing volume of the “Benefit Cosmetics” topic on Xiaohongshu alone exceeds 22 million.
In addition, this year, Benefit Cosmetics has held product upgrade launch events, announced popular ambassadors in the Chinese market, and conducted other series of activities. Meanwhile, Benefit Cosmetics’ official WeChat account, Weibo, and Xiaohongshu accounts have been regularly updated.
The public’s reaction to Benefit Cosmetics’ collective closure of online stores has been mixed. Many netizens expressed surprise and regret, saying, “It’s quite nostalgic, it used to be very popular” and “Shocking!” Some netizens, however, expressed no surprise, saying, “Benefit Cosmetics’ products launched in recent years lack innovation and have fallen behind the times.”
Benefit Cosmetics to exit from Sephora? Response: No notification received
So, as a former global leader in eyebrow makeup, how has Benefit Cosmetics performed on various online channels in China?
Currently, Benefit Cosmetics’ Tmall flagship store has 1.36 million followers. The product prices range from 125 yuan to 455 yuan, with a total of 37 SKUs. Product types include face primers, eyebrow pencils, blushes, and more. Among them, three products have sold over 10,000 units in the past year. The Dandelion blush powder set, priced between 165 yuan and 300 yuan, and the POREfessional face primer, priced between 125 yuan and 455 yuan, have both exceeded 20,000 units in sales.
Benefit Cosmetics’ official flagship store on JD.com has 1.018 million followers, with nearly twenty products receiving over 10,000 reviews. Several products are currently out of stock. The fanbase of Benefit Cosmetics’ flagship store on Douyin (TikTok) is 345,000, and the total sales volume is 162,000 units. It is worth mentioning that in the early morning today, Benefit Cosmetics’ flagship store on Douyin quietly cleared all its products. Additionally, Benefit Cosmetics has several products available on Vipshop and has not issued any store closure announcements.
It is worth noting that besides closing the three major official flagship stores, some netizens have indicated that Benefit Cosmetics may gradually withdraw from Sephora, exiting the Chinese market. In response, CHAILEEDO contacted Sephora officials for verification, and they stated, “We have not received any relevant notifications.”
Furthermore, CHAILEEDO contacted multiple Sephora stores in Shanghai, Beijing, Guangzhou, Wuhan, and other cities by phone, and several store employees candidly stated, “We have indeed heard of this rumor, but we have not received any notifications yet, so we cannot confirm.”
Some employees also mentioned, “It’s unlikely. Benefit Cosmetics sells well in our stores, and we have many customers who come for brow grooming.” As for whether Benefit Cosmetics will exit the Chinese market, CHAILEEDO will continue to monitor the situation.
However, from closing counters two years ago to the recent closure of online stores, it has become a fact that Benefit Cosmetics’ space for survival in the Chinese market has been shrinking on a daily basis. Some industry insiders analyze, “Benefit Cosmetics has a youthful and lively brand image, mainly targeting a young audience. However, its product prices are positioned in the high-end range, which creates a certain conflict between the two, resulting in a vague target audience.”
Some consumers expressed similar opinions, stating, “Benefit Cosmetics is either unaffordable when you don’t have money or unappealing when you do. Once you have the financial ability, you would rather buy products from other high-end brands at the same price.”
A brand communications manager believes, “It is not surprising that international brands lacking competitiveness are closing stores with the rise of domestic cosmetics in China. By cutting off some channels for Benefit Cosmetics, LVMH can focus more on the main beauty brands with development prospects in the Chinese market.”
Compared to its lackluster performance in the domestic market, Benefit Cosmetics seems to maintain a good momentum in overseas markets. According to LVMH Group’s Q3 2023 financial report, continuous sales growth has been observed for Benefit Cosmetics’ newly launched Fan Fest mascara and pore care series.
The report also shows that within the three months ending on September 30, LVMH’s revenue increased by 1% YoY to 19.96 billion euros, with organic revenue growth of 9%, which was lower than market expectations, reflecting the trend of a decline in luxury goods consumption. However, the perfume and cosmetics business achieved organic revenue growth of 9% to 1.99 billion euros in Q3.
In fact, the growth of LVMH’s beauty business may be attributed to Stéphane Rinderknech, who is known for his expertise in the Chinese market. In early March this year, LVMH officially appointed Stéphane Rinderknech as the CEO of the beauty division. Subsequently, there were significant changes in the management of various LVMH beauty brands, with new leadership for brands such as Guerlain, Dior, and Acqua di Parma.
From the financial report and personnel changes, it can be seen that in the face of a weakening trend in luxury goods consumption, the beauty business is not only a “cash cow” for LVMH but also an important growth driver that must be seized. In the future, LVMH may have more significant moves in the beauty business.
The Year of LVMH Beauty’s Blooming in China
CHAILEEDO’s analysis found that Benefit Cosmetics’ “retreat” in the Chinese market seems more like a move by LVMH to concentrate its efforts and prepare for a full-scale attack on the Chinese beauty market next year.
Looking back at the past year, LVMH has made frequent moves in the Chinese beauty market, breaking its usual pattern. First, in April of this year, LVMH Asia Beauty Research and Development Center officially opened in Pudong Jinqiao, Shanghai. The center is reportedly the largest research and development center for LVMH in Asia, with a total area of over 2,200 square meters, divided into product innovation development laboratories and consumer centers.
Chen Jing, the R&D Director of LVMH Beauty Asia Pacific, has stated that “the future research center will conduct in-depth research on the skin characteristics of Chinese consumers and closely follow the latest technologies in the digital and AI fields to develop innovative products for all beauty brands within the group” and will expand functional skincare business.
In addition to strengthening its research and development in China, in June of this year, LVMH Group’s affiliated company, LVMH Perfumes & Cosmetics (Shanghai) Co., Ltd., expanded its business scope to include cosmetics production, which also sparked speculation in the industry that “LVMH’s skincare products may be localized.” The following month, LVMH Perfumes & Cosmetics (Shanghai) Co., Ltd. obtained the “On-site Personalized Service” cosmetics production license issued by the Shanghai Municipal Food and Drug Administration, marking that the company’s brands are expected to provide personalized cosmetic services to consumers.
Just this month, following last year’s initial investment in collagen protein company Trautec, LVMH’s fund, LVMH Cathay Capital, is going full throttle. First, it acquired a stake in the parent company of foundation brand Blankme, and later invested in children’s skincare brand Hi!papa.
From establishing research and development centers in China to investing in Chinese companies, LVMH’s ambitions in the Chinese beauty market are gradually becoming evident.
CHAILEEDO’s analysis shows that whether it is establishing research and development centers or investing in Chinese enterprises, LVMH focuses more on areas with high technological barriers or areas that its own business has not yet entered, indicating a need for reinforcement. In fact, as a high-end beauty conglomerate specializing in makeup and fragrances, LVMH excels in brand positioning, but lacks comparable research and development depth in areas such as skincare compared to rivals like L’Oréal and Estée Lauder.
Recently, Wu Yue, the President of LVMH Greater China, emphasized the importance of the Chinese market, stating, “Apart from the Japanese market, nearly 30% of LVMH’s revenue comes from Asia, and the Chinese market plays an important role in it.”
Overall, just like in a battlefield, sacrificing pawns and strategic rearrangement are basic tactics, all to ensure that one is not hindered by low-value chess pieces. In the Chinese beauty market, LVMH still holds many trump cards on the table.
