Renowned Brand Benefit Cosmetics to Exit the Chinese Market! Sales Associate: The Fundamental Reason is Poor Sales

“The withdrawal is scheduled around the end of March, and the fundamental reason is poor sales.” On March 3, only a selection of Benefit Cosmetics’ best-selling makeup products were displayed on the counter at the Sephora store in Beijing’s Sanlitun, with even samples not fully stocked. The sales associate confirmed to the media reporters the imminent withdrawal of the Benefit brand from the store. Recently, market reports have indicated that Benefit Cosmetics, a makeup brand under the world’s largest luxury goods group LVMH, will completely withdraw from the Sephora channel and exit the Chinese market by the end of June or early July 2024. Notably, at the end of 2023, Benefit announced that its official flagship stores on Tmall, JD.com, and Douyin would close, ceasing to accept new orders after January 28, 2024. Consequently, Sephora has become the brand’s sole sales channel in the Chinese market.

When media reporters inquired about the rumors of exiting the Chinese market, the brand did not directly respond to the exact timing of its complete withdrawal from offline stores in China, merely stating that “Benefit is adjusting its business scale and development focus in Mainland China.” As the once global leader in eyebrow products, boasting a sale “every two seconds,” why is Benefit choosing to leave after more than 16 years in China? In recent years, several overseas beauty brands like Too Faced, e.l.f., and Revlon have also left the Chinese market. What are the underlying reasons for the failure of foreign beauty brands in China? How has the rise of new Chinese domestic brands impacted foreign brands? What types of beauty brands are suitable for the Chinese market?

1. “Unsellable,” The Final Step in Benefit’s Withdrawal For Benefit, the “world’s number one eyebrow pencil brand” title has dimmed here. Stepping into the Sephora store in Beijing’s Sanlitun, sales associates no longer recommend Benefit as the first choice for eyebrow products, suggesting instead, “Look at these few eyebrow pencils from other brands, which are quite popular.” As one of the few stores still featuring a Benefit counter, this Sephora outlet has a Benefit Brow Bar offering eyebrow shaping and grooming services. The store displays Benefit products mainly focused on eyebrow makeup, including highlighters, lip products, and mascara, but almost every product category faces sample shortages. The sales associate told media reporters that the store’s Benefit counter is set to withdraw, “around March, by the end of March at the latest,” “The fundamental reason is poor sales.” Reporters also visited two other Sephora stores in Beijing, where Benefit counters had already disappeared, “They were gone last year, and I heard that the products will soon be removed from stores in China.” Recently, several Benefit members have posted on Xiaohongshu, claiming that brand brow artists informed them Benefit would exit the Chinese market by the end of June or early July this year. If eyebrow cards are not fully used by then, they can be exchanged for equivalent products from the brand. In interviews with media reporters, Benefit did not specify the details of its market withdrawal in China, only indicating that Benefit is adjusting its business scale and development focus in Mainland China. Customers can continue to visit Sephora’s offline stores and official online flagship stores on various platforms to purchase Benefit products. After continuous reduction in offline counters and the closure of all online shops, Sephora, under the same group, remains the last bastion for Benefit in the Chinese market. In 2007, this American cosmetics brand founded in the 1970s entered the Chinese market, setting a sales record for the brand on the opening day of its first counter in Shanghai. Over the following years, Benefit expanded its counters across the Chinese market. According to Interface News, by the end of 2020, Sephora had entered 81 cities in China, with a total of 275 stores, including potential consumer cities like Foshan, Linyi, Jiujiang, Ganzhou, Yangzhou, Jiangmen, and Dazhou. Until March 2021, Benefit consumers in different cities received messages that counters in department stores would cease operations on March 31 that year. Benefit explained to reporters that it was adjusting its channels but not completely withdrawing from offline, “Sephora will become our main sales channel offline.” Meanwhile, Sephora’s online channels were also permanently closed after several adjustments. In 2017, Benefit returned to Tmall after a six-month trial in 2011 and opened an official flagship store on JD.com, later joining Douyin e-commerce. However, all three online channels were closed simultaneously at the beginning of 2024. Now, the collective withdrawal of Sephora counters appears to be the last step in Benefit’s gradual retreat from the Chinese market.
2. Why Can’t “Benefits” Cut into the Chinese Beauty Market Cake Anymore?

Benefit’s performance in the Chinese market can be seen as a facet of LVMH Group’s overall development. The latest financial report shows that LVMH Group’s sales revenue for the full year of 2023 was €86.153 billion, a 9% increase year-on-year. The perfumes and cosmetics division, which includes Benefit’s performance, achieved a 7% increase in revenue to €8.27 billion in 2023, with an organic growth of 11%. However, in 2023, the division’s revenue from Asia, excluding Japan, accounted for 33% of the total department’s performance, lower than in 2022 and 2021. Benefit, repeatedly falling behind, had significantly less presence in the financial report compared to other brands in the same division like Dior, Guerlain, and Givenchy. Why can’t the former global “eyebrow makeup king” succeed in the Chinese market? “The departure of Benefit is not due to a lack of confidence in the Chinese market but rather a necessity,” said Zhang Yi, CEO and Chief Analyst at iMedia Research, in an interview with media reporters. The Chinese beauty consumption market has undergone revolutionary changes, especially among the consumer demographic, and Benefit has not kept up with the changing consumer demands of young people. Cosmetics management expert Bai Yunhu told reporters that niche international makeup brands like Benefit face significant operational pressures in the Chinese market. The core reasons are their lack of competitive advantages in channel pricing, product innovation speed, and interaction methods with consumers compared to Chinese domestic makeup brands. Taking Benefit’s flagship eyebrow pencils as an example, priced around 150 yuan each, data from the e-commerce data analysis platform Magic Mirror Insight shows that the average price for eyebrow pencil products on Tmall and Taobao for the entire year of 2023 was around 30 yuan. Among the top ten brands in sales volume, eight were Chinese domestic brands, with Benefit ranked 14th, holding only a 1.9% market share. The popularity of hot-selling products like “Counter-Strike Primer” and “Dandelion Blush” has also been depleted due to Benefit’s delay in launching new products and the exponential growth of similar products externally. In connecting with young consumers, Benefit’s Xiaohongshu account currently has 78,000 followers, with likes on posts ranging from 20 to 100. In contrast, the Chinese domestic beauty brand JUICE has over 440,000 followers on its official Xiaohongshu, with many posts receiving thousands of likes. This indicates that Benefit has also failed to capture the new consumer group in its online operations. In fact, Benefit’s departure from the Chinese market is not an isolated case, as many overseas beauty brands have encountered similar dilemmas. According to incomplete statistics from media reporters, over the past two years, more than 20 skincare and makeup brands have exited the Chinese market or made significant strategic adjustments to their channels in China, including brands that have operated in the Chinese market for over 20 years. “Compared to Benefit, other internet celebrity makeup brands have even lower recognition in the Chinese consumer market. Except for achieving basic sales through cross-border models, the marketing costs and sales prices on other channels are unbalanced. Therefore, exiting the Chinese market was expected,” Bai Yunhu said. In his view, for makeup brands, grasping color trends, innovating product packaging, and enhancing consumer experiences are ways to improve core competitiveness. “As for pricing, whether it’s the lower-end market or the mid-to-high-end market, there’s sufficient consumer demand, and brands need to segment the market.” For LVMH Group, China is a market that must be conquered. The 2023 financial report shows that Asia, including China (excluding Japan), is the group’s primary market, accounting for 31%. Meanwhile, the appointment of the former CEO of L’Oréal China as the CEO of the group’s beauty department and the personnel changes among the management of several beauty brands within the group all indicate LVMH’s focus on and expectations for the Chinese beauty market. Whether Benefit will completely become a discarded piece or return as a useful piece in the strategic reshuffle targeting the Chinese market remains uncertain.