Beauty market

As beauty brands close their stores in China, can the metaverse offer a second chance?

Enter the City of Rhythm, The Beginnings of Maybelline’s Metaverse on Tmall. Launching ahead of Alibaba’s Double 11 Festival, the limited-time virtual universe features four spaces that showcase four iconic offerings from the L’Oréal-owned cosmetics brand. In this immersive environment, users can try on makeup, receive beauty tips from virtual livestreamers, play games, and listen to music from spokesperson K-pop group ITZY.

This decision marks a new step in the digital transformation of the brand. In July, the New York-based cosmetics company confirmed it would close 14 stand-alone physical stores Across the country, citing a need for “adapt to changes in the market and consumer demand.” The products will still be sold through multi-brand pharmacies such as Watsons, as well as online flagships on Tmall and JD.com.

Maybelline launched City of Rhythm on Tmall to celebrate Double 11. Photo: Maybelline

“Compared to e-commerce, offline retail, especially offline retail that does not provide obvious experience value, does not have advantages in terms of consumer marketing coverage, rate conversion and cost structure,” explained Lutina Gu, project manager at Daxue Consulting. “For brands like Maybelline that are focused on affordable consumption, prioritizing digital marketing might be a better bet than opening a bunch of brick-and-mortar stores to appeal to young tech-based consumers and consumers in many markets. in decline.”

Maybelline isn’t the only brand to shut down brick-and-mortar counters in China. K-beauty brand Innisfree plans to reduce its network of stores there by 80 percent while Etude House and Hera withdraws completely from the market. Fashion houses have also started to retreat: earlier this year, the Danish brand Some closed the 1,300 of its offline stores, fast fashion giant H&M quietly closed its three-story flagship in Shanghai, and Gap closed more than 10 stores – then announced that he was selling its Greater China business to e-commerce solution provider Baozun.

Affordable beauty brands, in particular, have faced many challenges in the market, from pandemic-induced disruptions to the rise of domestic competitors. Indeed, in a classification of top selling makeup brands on Tmall at this year’s 618 festival, three national names cracked the top five: Florasis, Colorkey and Perfect Diary (Maybelline ranked #15). According to research firm Qianzhan, Maybelline’s market share in China fell from 10.7% in 2018 to 4.8% in 2021.

“New Chinese beauty brands are often affordable, and [their] overall design and quality received positive sentiment,” commented Humphrey Ho, managing director of digital marketing agency Hylink USA. “Maybelline has always been a value player, and that doesn’t work in China. No “pharmacy brands” in China. »

But rather than withdraw from China’s $81 billion skincare and beauty market, Maybelline’s foray into the metaverse offers an opportunity to reintroduce itself to younger consumers. According Small luxury pavilion, sales of luxury products with 3D and AR capabilities saw double-digit year-over-year growth in 2022, with consumers spending twice as much time looking at these products. Presenting its flagship products in this unique environment allows the historic player to revive its brand image while learning more about its target audience.

Maybelline’s virtual world highlighted key products like the Hypersharp Laser Liquid Pen eyeliner. Photo: Maybelline

“The Metaverse is an opportunity for discovery and relationships for brands and consumers,” Ho continued. , which is an opportunity to establish or reconfirm consumer loyalty.”

Other beauty brands have also incorporated Web3 into their China-focused digital strategies. In April, the property of Shiseido Nars Cosmetics created a limited-time virtual world exclusive to China Duty Free Hainan, allowing Chinese customers to customize avatars, try on new products and hairstyles, and earn virtual currency to redeem gifts for purchases. Meanwhile, Laniege and MAC collaborated with Chinese virtual influencers Chuan and Ayayi, respectively, promoting their makeup through these hyper-realistic faces.

In the limited-time “Nonstop Nars Virtual World”, users could try on the newly available makeup products with their avatar. Photo: The Drum

That said, the metaverse “plays a more obvious role in marketing and reaching potential users than actually converting customer orders,” Gu noted. However, as more and more global names pile into the space, “doing the Metaverse can go from something of a nice to have to a must-have.”

But even so, the American brand best known for its iconic mascara will need more than flashy marketing tactics to boost sales and reclaim market share. As Ho summed it up, “The metaverse and other channels are just ‘anecdotal lipstick on a pig.’ What Maybelline needs to do is go back to China with its brand clearly positioned as a top brand. of range worthy of the European price, to leave the distribution channel of the pharmacies and to offer a true superiority of product.