Rise of Discount Retailers' Private Label Beauty Brands: A Systematic Analysis of Challenges to Traditional Beauty Brands

Now, based on collected data and industry information, I will prepare a comprehensive, systematic analysis report for you.

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In early October 2025, the caviar essence series launched by Lacura, the private label beauty brand of German discount supermarket ALDI, attracted widespread attention on social platforms, with the reading volume of related topics exceeding 10 million in a short time, and some designated stores even sold out [1]. The pricing of this series is highly impactful: the essence tonic and facial cleanser are priced at 19.9 yuan, the essence serum and face cream at 49.9 yuan, and a 5-piece set of no-rinse masks only 14.9 yuan; the total cost for 7 core items is just over 200 yuan. For comparison, a certain luxury brand’s face cream frequently mentioned alongside it costs thousands of yuan [1].

This phenomenon is not accidental. As ALDI’s private label beauty brand, Lacura has a development history of over 30 years. Starting with a single moisturizing cream in 1993, it has now grown into a complete portfolio covering skincare, color cosmetics, hair & body care, and oral care [1]. In the Chinese market, ALDI’s private label products account for as high as 85%-90% of its offerings. Although Lacura was not developed specifically for the Chinese market, its contract manufacturers include local producers like Guangzhou Shifei, while in overseas markets, it adopts local production to control costs [1].

Besides ALDI, other retail giants are also accelerating their layout of private label beauty brands:

Retailer	Private Label Beauty Brand	Positioning Strategy
ALDI	Lacura	Affordable alternative with high-end ingredients, emphasizing alignment with first-tier beauty brands
Freshippo	Private Label Beauty Line	Viral, topic-driven products leveraging meme culture and contrast
7Fresh	Private Label Personal Care	Youth-oriented communication integrated with regional dialects
Sam’s Club	Member’s Mark	High-quality endorsement, exclusive for members
Walmart	Great Value	Direct communication with the positioning of “Simple & Fresh”

The core logic of hard discount retailers is to ensure low prices by optimizing the supply chain, and private label products are a key pillar of this strategy [2]. Data released by offline supermarkets such as Freshippo “Super Value NB”, 7Fresh, and Wumart shows that private label products generally account for around 60% of their offerings. Developing private labels has become a core strategy to break homogenization and build competitive moats [2].

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Consumer acceptance of budget beauty is undergoing a structural shift. According to KPMG’s 2025 China Beauty Market Industry Report, in 2024, products priced below 300 yuan dominated China’s online skincare market, with the 100-300 yuan segment accounting for nearly 30% of the market share, while high-end skincare products priced above 1,000 yuan held a market share of over 16% [3]. Notably, consumer preferences have changed: instead of blindly pursuing low prices, they now focus more on product practicality and value for money, with the market share of the 300-500 yuan segment growing by 1.8% [3].

In the color cosmetics market, products priced below 100 yuan account for nearly 48% of the market share, making them the dominant force; the 100-300 yuan segment also holds over 27% of the market share [3]. The continuous growth of the low-price segment further confirms the trend that cost-effective products are gradually becoming mainstream.

According to Kantar-Ocean Engine Quantitative Research on Daily Chemical Consumers, consumer decision-making for daily chemical products features “Five-Dimensional Factors” [4]:

Decision-Making Factor	Consumer Attention	Core Demand
Ingredient Characteristics	76%	Natural organic ingredients (40%), technologically researched ingredients (36%)
Efficacy Scenarios	83%	Multi-scenario efficacy vs single professional efficacy
Usage Experience	74%	Ease of use, innovative product combinations
Brand Origin	80%	History, cultural background, trust in place of origin
Product Style	25%	Appearance aesthetics, fragrance, expression of lifestyle

When purchasing cosmetics, consumers prioritize product ingredients (58.8%), followed by product efficacy (41.4%); brand (37.0%), price (35.4%), and specification (34.2%) are also important considerations [3]. This indicates that while pursuing quality, consumers also value cost-effectiveness and practicality.

“Insiderism” is becoming a new consumption trend. Consumers no longer blindly trust brand promotions, but instead compare product reputations through multi-dimensional grass-roots marketing platforms, and use red/black lists as important reference bases [3]. Faced with the rapid rise of domestic beauty brands, consumers have significant trust barriers toward emerging brands; KOL real reviews, effective ingredient concentrations, and professional institution certifications have become key decision-making factors [3].

This trend poses dual challenges to traditional beauty brands: on one hand, consumers’ “superstition” toward high-end brands is crumbling; on the other hand, the logic of “affordable alternatives” has shifted from being brand-led to retailer-led. As long as products are placed on shelves at a “reasonable price that requires no second thought”, consumers’ previous purchasing logic is completely changed [1].

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There are fundamental differences in cost structure between supermarket private label beauty brands and traditional beauty brands:

Cost Item	Traditional Beauty Brands	Supermarket Private Label Brands
Marketing & Promotion	High (celebrity endorsements, advertising placements, KOL collaborations)	Zero or extremely low
Channel Fees	High (department store counters, e-commerce platform commissions)	Low (own channels)
Brand Building	High (brand storytelling, image building)	Leverages retailer brand reputation
R&D Investment	High (patented ingredients, clinical verification)	Medium (aligns with mature formulas)
Channel Profits	Multi-layer distribution markup	Channel integration, direct-to-consumer

ALDI is positioned as a community fresh food supermarket, with personal care products accounting for less than 10% of its total SKUs. For ALDI, beauty products act more as a strategic tool to increase customer unit price, extend dwell time, and strengthen the “high cost-effectiveness” perception— as long as they do not incur losses and can drive repeat purchases, the mission is accomplished [1]. This gives supermarkets a pricing flexibility that traditional brands can hardly match: it does not need to rely on a single face cream to bear the cost pressure of the entire brand.

Traditional beauty brands rely on multi-layer channels such as department store counters, duty-free shops, and e-commerce flagship stores, while supermarket private label brands are directly embedded in consumers’ daily life scenarios. This channel advantage is reflected in:

1. Instant Accessibility
   : Consumers can purchase beauty products while buying fresh food and daily necessities, without needing to visit a counter specially or wait for e-commerce delivery
2. Trust Transfer
   : Consumers’ trust in retailers can “spill over” to their private label brands, lowering the threshold for purchase decisions
3. Low Trial Cost
   : The supermarket environment allows consumers to test products on-site, reducing the cost of trial and error

Perhaps the most critical point is: supermarkets do not need to make money from beauty products. ALDI UK publicly stated that the Lacura series is “attracting new consumer groups”, and during development, it “aligns with first-tier beauty brands to ensure quality meets standards, even surpassing them in some aspects” [1]. This strategic stance of “not needing to profit” allows supermarket private label brands to launch attacks with pricing close to cost, while traditional brands must maintain sufficient gross margins to support their brand operation systems.

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Despite the aggressive rise of budget beauty products, traditional beauty brands still hold significant advantages in R&D and innovation:

Brand/Group	Core Technology	R&D Barrier
SK-II	PITERA™	Over 40 years of dedicated research, 580+ beauty awards
SkinCeuticals	CE Complex Formula	Supported by dermatological literature, gold standard
La Mer	Miracle Broth™	Bio-fermentation technology, authority in skin repair
Helena Rubinstein	Marine Viola Stem Cells	Backed by L’Oréal Group’s scientific research

The core ingredients and formulas of these brands often undergo decades of research and verification, with extensive clinical data and patent protection. Although supermarket beauty products can align with similar ingredients, specific concentration levels cannot be inferred from external labels, and differences still exist such as “more complex formulas with additional barrier lipids or marine extracts, or better texture and mildness” [1].

Traditional beauty brands have accumulated profound brand equity through decades or even centuries of brand building:

• Historical Heritage
  : Brand stories, cultural connotations, and craftsmanship
• Emotional Identification
  : Emotional bonds between consumers and brands
• Social Attributes
  : Symbolic value of high-end brands
• Community Identification
  : Identity markers for specific consumer groups

The case of Laopu Gold is illustrative: five years ago, it had few loyal fans, but now it has successfully entered the camp of companies with a market value of hundreds of billions of yuan. What consumers are paying for with real money is not just the product, but also its inimitable craftsmanship features and brand tone.

Traditional beauty brands still have advantages in channel depth and service experience:

1. Professional BA Services
   : Counter beauty consultants provide personalized consultations and trial experiences
2. Member Systems
   : Points, exclusive events, and customized services enhance customer loyalty
3. After-Sales Guarantees
   : Return and exchange policies, allergy-free guarantees, etc., reduce purchase concerns
4. Scenario Experiences
   : Counter experience spaces, VIP rooms, etc., create immersive shopping experiences

Brands that offer “product samples + allergy-free return services” perform particularly well in first-time purchase conversion rates [3].

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Discount retailers’ private label beauty brands do pose substantive challenges to traditional brands in the following areas:

: For skincare beginners or price-sensitive consumers, supermarket beauty products offer a “low trial cost, sufficient efficacy” option. This group of consumers might have originally chosen emerging domestic brands or low-priced products, but now they have a more cost-effective alternative.

: Basic categories such as facial cleansers, toners, face creams, and masks have relatively low technical thresholds, and consumers perceive limited differences. Products like Lacura are most likely to capture market share in these categories.

: When the economic environment is under pressure, consumers will re-examine their consumption decisions, and the demand for “affordable alternatives” naturally rises. Nielsen IQ research shows that 68% of Chinese consumers say they will increase their color cosmetics spending in the next year, but some consumers are shifting to more cost-effective options [5].

However, it is difficult for supermarket beauty brands to pose systematic challenges in the following areas:

: Products like SK-II Facial Treatment Essence, Helena Rubinstein Powercell Skinmunity Serum, and SkinCeuticals CE Ferulic Serum occupy positions in consumers’ minds such as “multi-dimensional anti-aging benchmark” and “gold standard for antioxidant”. Their core lies in long-accumulated efficacy recognition and user word-of-mouth. The KPMG report shows that the market share of high-end products (priced above 500 yuan) and ultra-low-priced products (priced below 100 yuan) are both facing downward pressure, while the 300-500 yuan segment is growing instead [3], which indicates that consumers are pursuing “value for money” rather than just low prices.

: Color cosmetics have significant differences in color performance, texture, and long-wearing effects, and consumers have higher requirements for brand professionalism in these aspects. Nielsen IQ data shows that in 2024, the color cosmetics market presents a polarization trend, with high-end and economy brands growing rapidly, while mass brands are squeezed [5].

: For professional scenarios such as post-medical aesthetic repair and problematic skin management, consumers are more inclined to choose products with professional endorsements. For example, La Mer’s reputation in post-procedure skin repair is difficult to be replaced by budget products.

Supermarket private label beauty brands face the following structural constraints:

Constraint	Specific Performance
Category Ceiling	The positioning of supermarkets determines that beauty products can only be supplementary categories, making it difficult to invest a lot of resources for in-depth development
Brand Upper Limit	Consumers’ perception of their “affordable alternative” positioning limits the brand’s upward development space
Supply Chain Limitations	While they can control costs, there are technical bottlenecks in active ingredient addition and product stability
Trust Barriers	It takes time for consumers to change their perception of “supermarkets selling high-end skincare products”

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In the face of competition from affordable alternatives, traditional brands should continue to increase R&D investment and maintain leadership in core ingredients and formulas:

• Deepen Basic Research
  : Such as SK-II’s over 40 years of dedicated research on PITERA™
• Clinical Verification
  : Strengthen efficacy persuasion through human body tests, authoritative certifications, etc.
• Patent Layout
  : Build intellectual property moats

The transformation of Pechoin provides a useful reference: shifting from a nostalgic “traditional domestic brand” to a quality-oriented “tech-herbal brand”, launching the Lingyu Series limited gift box that deeply integrates Eastern aesthetics with cutting-edge skincare technology [6].

Industry experts point out that the current beauty industry is trapped in a vicious cycle: everyone is talking about the protein content of “protein powder”, but few mention the sensory enjoyment of “steak” [7]. The “Sensory Era” initiative calls on practitioners to pay attention to the incremental value brought by emotional experiences and values—the essence of beauty is never a “scientific laboratory”, but “feeling” and “beauty”.

Therefore, brands should:

• Tell Compelling Brand Stories
  : Go beyond ingredient narratives to build emotional connections
• Create Ritualistic Experiences
  : Skincare is not just about efficacy, but also an expression of lifestyle
• Strengthen Value Identification
  : Issues such as sustainable development and Eastern aesthetics

: Accelerate the layout of sinking channels to seize opportunities in markets not yet covered by discount retailers; develop new channels such as on-demand retail and flash delivery via food delivery platforms to shorten the distance with consumers.

: Strengthen member systems and private domain operations to increase customer lifetime value; optimize return policies to lower consumers’ trial thresholds; collaborate with high-quality retailers to launch co-branded or exclusive products.

In the face of consumption differentiation trends, brands should build a more flexible product matrix:

Price Range	Strategic Positioning
Entry-Level	Attract new customers, cultivate usage habits
Mid-Range	Main profit source, strengthen value-for-money perception
High-End	Brand image anchor, carrier of technological innovation
Luxury	Ultimate experience, exclusive for VIP customers

Za’s Four-Color Primer has undergone 6 iterations and upgrades, achieving multi-effect innovation of “one product replacing multiple products”, integrating six functions including primer, sun protection, tinted moisturizer, makeup base, whitening, and moisturizing, interpreting “value for money” with low price and high configuration [6].

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The rise of discount retailers’ private label beauty brands does pose a

to traditional beauty brands, but it is not yet sufficient to constitute a .

: Supermarket beauty brands have indeed diverted some consumers, especially entry-level consumer groups and basic skincare categories. This competitive pressure is real and ongoing, and traditional brands must take it seriously.

: The core moats of traditional beauty brands—R&D innovation, brand equity, emotional connection, and channel depth—have not been breached. Consumers’ demand for high-end products still exists, but they are more rational and pursue “value for money”.

It is expected that the beauty market will present the following evolution trends:

1. Intensified Market Stratification
   : The high-end market will continue to maintain professional and differentiated positioning; the mass market will face more intense price competition; the mid-range market will become a strategic battleground.

2. Blurred Boundaries
   : Traditional brands may launch entry-level product lines; discount retailers may test higher-end products; the boundaries between channels will further blur.

3. Value Chain Reconstruction
   : The rise of budget beauty products will drive the entire industry to optimize cost structures and improve efficiency.

4. Consumer Differentiation
   : Different consumer groups will form differentiated brand preferences and purchasing habits.

For traditional beauty brands, the rise of discount retailers’ private label brands is both a challenge and an opportunity:

• Short Term
  : Adjust pricing strategies, optimize product matrices, and enhance the perception of “value for money”
• Mid Term
  : Strengthen R&D innovation and brand building, and consolidate core barriers
• Long Term
  : Redefine brand value propositions, shifting from “efficacy competition” to “emotional competition”

As one industry observer put it: The real change is that the narrative of “affordable alternatives” has shifted from being brand-led to retailer-led [1]. This change requires all beauty industry practitioners to rethink the underlying logic of business models—when consumers no longer pay for stories and marketing, what can brands use to prove their value?

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[1] 36氪 - “The Founder of the ‘Poor Man’s Supermarket’ with Over 80 Stores is Disrupting ‘Luxury Beauty’” (https://www.36kr.com/p/3630426383090696)

[2] Socialbeta - “Forward-looking 2026: 12 Industry Panoramic Observations” (https://socialbeta.com/article/110852)

[3] KPMG - “2025 China Beauty Market Industry Report” (https://assets.kpmg.com/content/dam/kpmg/cn/pdf/zh/2025/11/2025-china-beauty-market-industry-report.pdf)

[4] Ocean Engine & Kantar - “2025 Ocean Engine Daily Chemical Industry White Paper” (https://pdf.dfcfw.com/pdf/H3_AP202501191642341029_1.pdf)

[5] Nielsen IQ & Ocean Engine - “2024 Ocean Engine Color Cosmetics Industry White Paper” (https://pdf.dfcfw.com/pdf/H3_AP202502261643511687_1.pdf)

[6] Zhimeng Consulting - “2026 Top 10 Consumption Trends in China” (https://www.digitaling.com/articles/1441005.html)

[7] Beauty Insider Podcast - “Industry Dialogue: If We Keep Competing Like This, Will the Beauty Industry Kill Itself?” (https://www.xiaoyuzhoufm.com/podcast/6344e36d9186d4e4c46a0e7c)