Since last year, Shiseido’s brand AUPRES has abolished a number of branches in several regions in China and the total number of branches will be reduced from 22 to about 10. However, its online channels still maintain significant growth.
Recently, an industry insider disclosed the news that “by last year, Shiseido’s brand AUPRES has abolished a number of branches in Dalian, Tianjin, Fuzhou, Chongqing, Kunming, Guangzhou in China to merge to other regions. This year it also plans to merge its branches in Northeast, South and Central China, and the total number of branches will be reduced from 22 to about 10. Most of the people in the office have been laid off, and personnel, finance and education will be cut.”
In 1991, Shiseido and Beijing Liyuan Limited Company jointly financed the formation of AUPRES’ parent company, Shiseido Liyuan Cosmetics Co. Beijing Liyuan Limited Company was officially signed into a 15-year joint venture (Phase I of the partnership) with Shiseido at the government’s urging with both parties establishing a new factory in the Beijing Development Zone, with Shiseido taking a 65 percent stake and Beijing Liyuan Limited Company a 35 percent stake.
Although the above information was not responded to by the official account, it can be seen in a business searching service platform TianYanCha, a branch of Shiseido Liyuan Cosmetics Co. In Dalian, China is canceled. An agent who is deeply involved with Shiseido Group revealed that for the three northeastern provinces, the branches of the AUPRES in Jilin and Heilongjiang will be merged into Shenyang. This move aimed at saving operating costs and further improving corporate efficiency. For the news that the branch merger, AUPRES internal informed sources said the news is true, the merger has been basically completed.
According to the source, this year is the last year of the second phase of cooperation between Beijing Liyuan Limited Company and Shiseido. The cooperation between the two sides will continue but will discuss the details of cooperation, or make minor adjustments in the organizational structure and other aspects in August.
AUPRES has laid the early high-end brand status in the department store channel in the Chinese cosmetics market. It met the imagination of the high-end income group in the first and second-tier cities for cosmetics counter brands to be a leader in several department store channels. Its sales also soared from $14.82 million in 1996 to $468 million (2015). At the same time, the number of AUPRES’ counters reached 1,000 with sales in the department store channel once accounting for more than 5% of sales, second only to Estee Lauder and Lancôme.
In 2017, AUPRES has now achieved full coverage of 11 prefecture-level cities in Zhejiang Province, and it has sunk to 15 county-level cities in the course of more than 20 years of development, with a total of 60 counters in the province. In the same year, AUPRES, which has been cultivating in the Zhejiang market for more than 20 years, continued to make great efforts and achieved “double-digit growth and retail sales exceeding $15.6 million” in the Zhejiang region.
In terms of performance, even compared with many international first-line brands, AUPRES’ performance is also outstanding. The person in charge of AUPRES Hangzhou Branch said, “In the past 2017, AUPRES achieved a better performance in Zhejiang Province, reaching double-digit growth. Under the severe situation where international famous brands are competing to enter Zhejiang and rapidly extend the market of third and fourth-tier cities at an alarming rate, AUPRES achieved a good result of ranking fifth in retail in competition with nearly 70 international first-tier famous brands.”
However, after that, AUPRES was gradually surpassed by L’Oreal Paris. In the past two years, the news that the brand was going are incessant, and the dynamic energy of AUPRES in the department store channel seemed to be insufficient.
The person in charge of the department store business described that in the local market, the channel performance of AUPRES has shrunk significantly. Although the brand has made many attempts at rejuvenation in recent years, but the effect is not as expected. Its brand image is difficult to break through resulting in the young audience does not accept it.
It is reported that the main sales battlefield of AUPRES is still the department store channel, and its online section achieved significant growth mainly operated by ChanceMate on behalf of the company. It is reported that in AUPRES official flagship store on the Chinese e-commerce platform Tmall, 125 SKUs are available with the highest sales of AUPRES Extra Protection Sunscreen Lotion. Its sales volume achieved 20,000 and was priced at $32.8. From user reviews on Taobao, it can be seen that many users have tried and bought AUPRES’ products on offline counters and then they participate in promotions and repurchase in online stores. In the past two years, AUPRES has also endorsed with Chinese actress Sun Li and Chinese actor Luo Yunxi and other celebrities to increase its exposure and sales.
In fact, multiple international beauty brands have quit offline channels since last year such as well-known mass makeup brand Maybelline, L’Oreal’s skincare brand YUESAI, South Korea’s Amore Pacific Group’s mass beauty and skin care products brand Innisfree. Strategic contraction and adjustment have been the keyword for mass beauty brands in the offline store channel but all of these brands did not give up the online channels.
Industry insiders pointed out that part of cosmetics brand lack of core competitiveness of the product. And the difficulty of transformation also still exists, online e-commerce has long become a “place of necessity”.