Guojin Securities: AI boosts beauty sector efficiency, niche markets show growth potential
Guojin Securities reports that the beauty industry is entering a phase of refined, existing-customer-focused operations. While the 618 shopping festival saw a slight scale decrease, its structure improved, with brands prioritizing repeat purchases and profitability. Upgraded categories like color cosmetics and fragrances are emerging as growth drivers. Government policies are now including beauty sector subsidies, specifically supporting leading domestic brands and high-end efficacy-focused products. The report highlights that Artificial Intelligence is delivering cost reductions and efficiency gains across the entire value chain, with notable improvements in profit margins through automated content generation and ad management. In terms of channels, Tmall and Taobao remain the core base for domestic brands, while Douyin has become the primary battleground for foreign brands to regain market share. Consequently, domestic brands are advised to establish strongholds by deeply cultivating niche segments such as efficacy-focused skincare and Chinese-style color cosmetics. Guojin Securities recommends focusing on three types of targets: those showing Q2 earnings recovery, those with stable high-end brand perception, and those offering strong value for money in the mass market, to capitalize on structural opportunities.
The beauty industry's shift toward refined operations and profitability, driven by AI integration for cost reduction and efficiency, signals a maturing market. The emphasis on niche segments and efficacy-focused products suggests a strategic response to evolving consumer demands and competitive pressures. Government support for domestic and high-end brands indicates a policy direction aimed at fostering national champions and premiumization. The evolving channel dynamics, with Douyin as a key battleground for foreign brands, underscore the platform's growing influence and the need for adaptable market entry strategies. Looking ahead, the industry's ability to leverage AI for personalized marketing, sustainable sourcing, and innovative product development will be critical in navigating the competitive landscape and meeting consumer expectations in the next decade.
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