Pharmacies have always been an important channel for VICHY. The strategy of returning to pharmacies in 2020 has gained some performance. It is expected that VICHY will achieve double-digit growth next year.
In Roman times, the town of VICHY, located in central France, was famous for its hot springs which originated in the Auvergne volcanic region and were loved for their unique strengthening and rejuvenating properties. In the 17th century, the town of VICHY became known as the “Queen of Hot Spring”.
In 1931, cosmetologist Mr. GUERIN and Dr. HALLER, a dermatologist at the VICHY Spa Treatment Center, co-founded VICHY Health Skin Care products. It registered trademark as VICHY and incorporated VICHY spring water into a high-tech product for beauty and skin care that became a worldwide success.
In 1955, VICHY was incorporated into the L’Oréal Group as part of the Active Cosmetics division. In 1998, VICHY entered the Chinese market as the first skincare brand to apply pharmacies as its main channel, focusing on “safe pharmaceutical cosmetics” when it entered the Chinese market. At that time, the cooperation between VICHY and Chinese pharmacies showed a win-win situation. For the pharmacies, the aura of international brand as VICHY and beautiful display of back counter enhanced the overall image of the pharmacy and attracted more young consumers to the pharmacy. At the same time, the higher profit of the products also brings considerable benefits to the pharmacy.
With the differentiated channel positioning of “pharmacy exclusive” and the background of dermatologists, VICHY has successfully brought the concept of “cosmeceuticals” into the Chinese market. Public information shows that the number of VICHY counters in Chinese drugstores reached 3,000 at its peak and annual sales once exceeded $235 million making it an unparalleled success.
Obviously, this approach by VICHY continues its business strategy in the European and American markets but it has to face up to the fact that there are many differences between European and American pharmacies and Chinese pharmacies. In China, pharmacies have never been a mainstream channel for cosmetics with some consumers saying that “a big factor in buying cosmetics in pharmacies is the ability to use medical insurance cards.” However, with the policies related to medical insurance cards are limited, such taking advantage of the loopholes have been curbed.
Furthermore, fast-changing market led VICHY to abandon its “pharmacy exclusive” and start multi-channel development. Since 2008, VICHY has made a decisive change from a single channel to a multi-channel development and has entered Chinese mainstream e-commerce platforms such as Tmall and Jingdong while applying counters in department store as the main channel offline.
The neglect of the professional channel by VICHY has diluted the professional image of the brand that has been operating in China for many years. Between 2010 and 2019, market share of VICHY in China declined from 38.1% to 7.1%.
VICHY also had an inkling of the changes in the market which is the period of pressure that Vickers experienced. Chen Min, vice president of L’Oreal China and general manager of the Active Cosmetics Division, once said, “In 2017, we only had a few hundred counters inside Chinese pharmacies.” Along with the period of pressure, VICHY also went through a “silent period”. This period of silence may be related to performance. Although L’Oreal has never disclosed the individual performance of VICHY but the performance of the L’Oreal Active Cosmetics division where VICHY is located can be seen that although the division’s performance to achieve growth, but the proportion is small and the growth is not very well compared to L’Oreal’s high-end cosmetics division.
In 2020, after 12 years of farewell to pharmacies in the Chinese market, VICHY decided to return to this channel. On August 11, 2020, VICHY joined hands with a large Chinese pharmaceutical retail chain, Guoda Pharmacy, to launch the 0+0 (integration of offline and online channels) Skin Health Science Management Center and to start to focus on the pharmacy channel again.
In L’Oreal China’s 2020 financial results, the active division has seen a explosive growth in the wake of a series of skin problems caused by wearing masks. VICHY “back to the pharmacy” channel strategy has also yielded some results – no more new department stores but back to the pharmacy. It promoted effective new products. From many actions of the brand in last year to date, VICHY is increasingly focused on “functional skin care”.
In the perspective of channel, L’Oreal China Vice President and General Manager of the Active Health Division, Ma Lan, said that pharmacies have always been an important channel for VICHY. After the strategy of returning to pharmacies in 2020 has been effective, online and offline are also gaining integration.
In terms of youthful marketing, VICHY differentiated from the general marketing approach of skincare products and based on efficacy, ingredients and professional positioning. The brand will invest more marketing expenses in the future on vertical social platforms such as professional KOL test accounts and cooperation with dermatologists to continuously output professional promotion and science.
“Consumers are getting more and more rational now. Professionalism is the trend of the future and the main concern of young users. Young marketing has to do with marketing that communicates scientifically, such as working with dermatologists to promote, dispel rumors and do efficacy lectures.” Ma Lan pointed out that “VICHY will also accelerate innovation and speed up R&D and new product launches. It is expected to achieve double-digit performance growth next year.”
In June 2021, VICHY also released two of its new products, VICHY Mineral 89 Probiotic Fractions and DERCOS Densi-Solutions Series which is the first time VICHY DERCOS Scalp Care Series has introduced its products to the Chinese market. The two new products, a total of 8 SKUs, are now available in VICHY Jingdong overseas flagship store and VICHY official Tmall flagship store. This time, the introduction of the DERCOS series will refresh its brand positioning in the Chinese market and provide a new growth opportunity for VICHY to enter the scalp care category. It also gave a new challenge to the Chinese shampoo industry.