China’s economy has entered a cold winter, with a wave of closures and transfers of beauty salons in various places such as Zhejiang and Shanghai. According to a source from the Zhejiang Chamber of Commerce, due to the impact of economic downturn, hundreds of beauty salons in the province have closed or been transferred this year, reflecting a shift towards more conservative and frugal consumption habits among middle-income families. This change is particularly evident in some cities.
As China’s economy weakens, the beauty industry, once considered a “pillar of domestic demand,” is beginning to contract. An article from Sina Finance on November 20 reported that the beauty industry has a market size of nearly 500 billion yuan, with about 90% of the nearly one million beauty institutions nationwide operating as individual stores. However, the industry’s structure has started to decline, and changes are happening more rapidly.
According to data from the “China Beauty Industry Report (2024)” cited by Shikuanet, the closure rate of beauty stores in the first half of this year reached 37.8%, indicating that many stores are struggling to cope with the operational pressures.
This wave of industry closures also impacts ordinary consumers. In Beijing, Ms. Wang, a manager at a department of the Bank of China, stated that a beauty salon in Haidian District where she frequented suddenly closed in early November. She expressed her anger at the abrupt closure, as she had just renewed a membership card worth over ten thousand yuan, which she felt was lost without any prior notice.
Ms. He, who is engaged in the distribution of Korean beauty products in Shanghai, mentioned that customers have significantly decreased this year, making it increasingly challenging to operate the stores. She noted a decrease in orders since the beginning of this year and highlighted the pressure on families with monthly incomes of around five to six thousand yuan. As a result, they are reluctant to sign up for or renew membership cards.
Shanghai and Hangzhou used to host a large number of foreign businesses and were among the areas with the highest concentration of high-income earners in mainland China. With diminished job opportunities and declining income expectations, some middle-class families are starting to reduce non-essential expenses on beauty and care, leading to a decline in the number of beauty salons.
Mr. Wang from the Zhejiang Chamber of Commerce mentioned that their research on the beauty industry in the province this year revealed a more pronounced trend of closures and transfers compared to previous years. According to him, about four to five hundred beauty salons have closed or been transferred in Zhejiang Province, based on their visits to chain stores in Hangzhou and Wenzhou, which indicated a much tougher situation this year than the previous one, with some chain stores unable to sustain their operations.
Beauty consumption has traditionally relied on the middle-class group, but once incomes become unstable, beauty care is often the first to be cut back. Mr. Wang stated, “When incomes are unstable, the first thing families cut back on is beauty care. Coupled with widespread layoffs in companies, many families have to rethink their budgets, and beauty services, being optional, are among the first to be suspended.”
He further explained, “Pressures such as rent, employee social security, and taxes are especially heavy. Many business owners have shared that now they need two to three thousand yuan in daily revenue just to stay afloat. The recent surge in ten-yuan barbershops indicates a downgrade in male grooming consumption.”
After the end of the pandemic in 2023, China’s beauty consumption briefly rebounded, but with weakening employment and income prospects, middle-class families have started to cut back on “self-indulgent consumption.” Many operators have noticed a significant drop in foot traffic since March this year, elongated repurchase cycles, fewer new card sign-ups, and store revenues struggling to cover costs.
Ms. Zhan, who has run a store in Hangzhou for more than a decade, mentioned the notable decrease in customers this year. She noted, “It used to be normal for a customer to visit once a month, but now even coming once in six months is considered diligent. People have started budgeting meticulously, especially this year when customers have decreased significantly.”
Ms. He, who imports beauty products from Korea, also expressed experiencing clear signs of reduced spending. She stated, “Those who could afford Korean makeup and skincare were supported by their family’s overall income. Before, it was like, when the husband had money, the wife would go to the beauty salon. But now, when the family is under financial strain, beauty care is definitely the first to go. I’ve also seen a reduction in my regular customers; it’s not just an issue for one or two stores but a shift in overall consumer mindset.”
The beauty industry has always been considered an essential part of urban middle-class consumption. With a large number of stores closing, Ms. He believes this reflects a microcosm of the decline in China’s service industry.
Several scholars have pointed out that the recent closures and transfers of beauty stores in China are related to the current economic environment, industry competition, operational pressures, and changing consumer mindsets. Some scholars have highlighted to the press that the downward trend in the economy, consumption downgrading, and other factors are directly influencing the situation. They mentioned that with overall income shrinking, many families have less disposable income, leading to more cautious spending. Beauty services, especially high-end ones, are often seen as expenses that can be delayed. As expenditures tighten, this type of “self-indulgent consumption” like beauty care is the first to be halted, resulting in reduced foot traffic, slower repurchases, and stores struggling to keep up with income.