After raising over $500 million in an initial public offering in Hong Kong (see WiC568), it didn’t take long for AI technology firm SenseTime to put some of the proceeds to use.
In early January, tech news portal Cyzone reported that SenseTime had made a strategic investment in Yingruo Technology (branded as IntelliMirror in English) for an unspecified amount. Yingruo collects data for brands and retail stores to streamline their operations. But the investment also came at a time when Yingruo is trying its luck in smart retailing itself. Last September, it launched B+ Tube, a cosmetics retailer with six outlets in Changsha in Hunan province. The stores use proprietary technology to identify skin tones and the skin conditions of shoppers.
After the analysis, the software makes customised product suggestions and offers tutorials on how to fix problems like blemishes and wrinkles. Matching skin colours with the B+Tube database, customers can find the best make-up products for their complexions. They can also try out the cosmetics through filters on the store’s augmented reality mirrors, without actually having to apply the make-up to their faces.
Some say the service feels like the “offline version of Li Jiaqi” – a reference to China’s biggest beauty influencer who is known for trying on a variety of make-up items so that audiences can see what the colour looks like on real skin (see WiC491).
The beauty retailer also adopts a largely self-service model as millennials often prefer to shop without sales pressure. To purchase products, they scan its QR code from the display and put it into their virtual shopping carts. After they have paid (no human cashier required), the purchases are waiting for them at the pick-up counter.
The whole shopping experience requires limited contact with other people. So far, the concept has been a success with customers. “Don’t go into B+ Tube. It is impossible to leave without buying something!” teased one fan on Xiaohongshu.
“SenseTime’s AI technology will provide technical support for the retail business of B+ Tube, while Yingruo Technology can also offer SenseTime with actual experience in smart retail,” Jiemian explains.
Other cosmetics retailers have been getting investment from venture capital firms. 36Kr, a tech portal, reported this week that Harmay (its Chinese name is 话梅, or salty dried plum) has concluded its Series C and D rounds, raising $200 million from investors that include General Atlantic and Hillhouse Capital.
Harmay has nine retail outlets, each with a theme to draw shoppers. Its Shanghai shop in Xintiandi is modelled on an industrial-looking supermarket. Beauty products are showcased inside refrigerators, next to bottled water and fruits. Two of the outlets in Beijing have taken the form of a cinema and a spaceship, while the design of another store in Chengdu is said to be inspired by verses from a Tang Dynasty poet.
Harmay and its rival Haydon (literally 黑洞 black hole in Chinese) have struck a chord with millennial shoppers by making a virtue of the shopping experience, following a long period in which bricks-and-mortar stores have lost share to online sales platforms.
Haydon also trades on its distinct style: retail stores like warehouses, featuring concrete ceilings and fluorescent lighting. The goods – from LaMer face cream to MAC lipsticks — are displayed across rows of steel shelves.
Unlike traditional beauty retailers, the two companies hire very few sales staff for their stores. Instead, they expect customers to do most of their own research prior to shopping. They also stock more niche and trendy foreign brands – popular with local beauty influencers – such as the cosmetics lines of American make-up artists Huda Kattan (Huda Beauty) and Kevin Aucoin.
The minimalist style and utilitarian presentation has impressed many of their shoppers. “There is no beauty adviser who keeps suggesting products or that looks you up and down to evaluate whether you can afford a $260 face cream,” one shopper at Harmay told Jing Daily. “But there are a few assistants around if you cannot find the product you are looking for.”
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.