Core Insights - The acceptance of private label products among Chinese urban households has increased significantly, with over 48% purchasing such products by Q3 2025, a 10 percentage point rise from the previous year [1] - Retailers are increasingly focusing on private label development as a key strategy for innovation and market penetration, leading to a surge in private label offerings in the retail sector [1][4] Group 1: Private Label Growth in Beauty Industry - Major beauty retailers like Sephora and Walgreens have seen significant success with their private label products, with Walgreens reporting a 75 basis point increase in market penetration to 17.8% in Q1 2025 [2] - Retailers such as Jin Jia Chong and beauty collective stores are transforming from channel operators to brand owners, with private label sales exceeding 60% in some stores [2][4] - The trend of private labels is also evident in convenience stores like FamilyMart, which leverage their extensive networks to enhance consumer access to beauty products [2][4] Group 2: Competitive Landscape and Challenges - The rise of private labels is reshaping the competitive landscape, putting pressure on traditional beauty brands to adapt or risk being marginalized [3][6] - Traditional brands are facing challenges in maintaining market share as consumers shift their focus from brand recognition to product quality and value [8][9] - Retailers are now taking on a more active role in product development, directly sourcing from manufacturers to enhance profit margins and consumer appeal [4][5] Group 3: Strategies for Traditional Brands - Traditional beauty brands are responding by reinforcing their core values and establishing deeper connections with consumers through innovative product offerings [9] - Some brands are investing in direct-to-consumer channels to gain better control over user data and experiences, thereby avoiding reliance on third-party retailers [9] - Emphasis on technological innovation and product diversification is crucial for traditional brands to maintain a competitive edge [9] Group 4: Quality and Market Positioning - The challenge for retailers lies in ensuring the quality of their private label products, as any quality issues could damage their reputation [10][11] - The competitive environment for private labels is intensifying, particularly in the lower price segments where established brands already exist [11] - Retailers must focus on filling market gaps with unique offerings rather than merely competing on price against existing brands [11][12]