Last March, "Cosmetics Observer" wrote "Hot Sale Hype: New Opportunities in Discount Retail for Beauty Products" based on on-site visits, predicting that domestic discount retail will see a scaled expansion by 2025, and the beauty industry will also enjoy a larger market space.

Just one year later, we find that the winds have shifted.

One of the initiators of domestic "near-expiration discount" and "soft discount," Hot Sale, has surprisingly started selling vegetables. Following the opening of the first "OK Fresh Concept Store" in Shanghai in May, it recently announced the establishment of the first OK Fresh supermarket in South China in Guangzhou.

At the same time, the "Poor Ghost Paradise" for young people, HiTeBuy, has shrunk from its peak of nearly 500 stores to only 39 stores across the country, with the official mini-program suspended and suppliers collectively demanding payment.

In the trillion-scale market of discount retail, the approximately one trillion yuan-level "discount beauty" is experiencing a visible collapse. But is it the "discount" itself that is collapsing, or a specific form of discount? This is worth examining in detail.

HiTeBuy Shrinks Store Network

GoodTeSell Enters Fresh Produce Market

To understand the severity of this collapse, let's compare two sets of data first.

In August 2024, HiTeBuy founder Zhang Qiang boldly declared in public that "the number of stores is close to 500," and proposed that the company would strive for 3,000 stores in the future. By July 2026, according to data from Narrow Gate Catering Eye, only 39 of its nationwide stores were operating normally. In less than two years, over 90% of the stores were closed.

This was not a slow contraction, but a systemic collapse.

The 1,000-square-meter flagship store in Xidan Joy City, Beijing, was once the most dazzling showcase of HiTeBuy. When it opened in September 2022, La Mer Concentrated Serum, Estée Lauder Little Brown Jar were sold out, with about 8,000 boxes of medical masks sold in a single day, and the number of visitors exceeded 10,000 in two days.

Now, the glass door is covered with a notice saying "Store Optimization and Reconstruction," and the property management has added seals, the shelves are empty, and shopping carts are lying across.

The deeper failure is on the supply chain side. According to media reports, starting from 2025, HiTeBuy has been rumored to have been delaying payments to suppliers. On social media, several suppliers have also complained about being delayed payments, ranging from 300,000 to 1.6 million yuan.

HiTeBuy's parent company, Beijing Youpin Kuaile Technology Co., Ltd., has been listed as an executor multiple times, co-founder Dai Bingqian has resigned, and founder Zhang Qiang has not responded to media inquiries.

Although GoodTeSell's situation is not as severe, the signal of the tide receding is just as clear.

According to the "China Chain Top 100" list released by the China Chain Operation Association (CCFA): In 2023, GoodTeSell first entered the list, ranking 93rd with a sales volume of 36.37 billion yuan; in 2024, the ranking rose to 83rd with a sales volume of 48.5 billion yuan; by 2025, GoodTeSell had dropped off the list - at that time, the sales volume threshold for the 100th place was 34.09 billion yuan.

In the second half of 2025, news of GoodTeSell closing stores in many places across the country and stopping new加盟 in some cities emerged. The company responded that closing stores was a normal business choice for franchisees or direct stores, and the overall closure rate for the year did not exceed 5%. As for "stopping new加盟 in some cities," there was indeed "a voluntary slowdown," but it was not a complete halt to加盟, and it would continue to select partners that better fit the brand's business philosophy in the future.

In early 2026, Zhang Ning said in an interview that "GoodTeSell's user profile is people who are not anxious about cooking," but soon opened the first "OK Fresh Produce Concept Store" in Shanghai. A retailer that has always been based on discounted goods turning around to sell vegetables itself shows that the business of soft discounts is becoming increasingly difficult to do.

Cosmetic Discount Retail

From "Clearing Inventory" to "Promoting Customization"

In the category map of discount retail, beauty has never been an insignificant role.

From the store layout of GoodTeSell, cosmetics are usually placed at the entrance, which is the golden dynamic line of retail, with a display space ratio of about 15%-20%.

9.9 yuan for a mask originally priced at 39.9 yuan, 21.9 yuan for a facial foam originally priced at 79 yuan, 79.9 yuan for an essence originally priced at 368 yuan... By setting price comparison tags, the concept of "high quality at low price" is implanted in the consumer's mind.

However, for brands, the value of discount retail is not just the "sewer" channel, but also a testing ground for providing data insights and new product testing.

This positioning shift has already started to send signals at the brand end.

For example, Shanghai Home Chemicals proposed that by 2026, more brands and new products will be sold in discount stores, treating chain discounts as a fast-growing business format like convenience stores, growing together.

Baitaini revealed that 2025 is the first year of officially entering the discount store channel, mainly matching products with shorter shelf life to bear the function of inventory reduction; but by 2026, it has added facial mask products with customized specifications for channels, "not low-priced products, but customized specifications launched in combination with channel characteristics."

The shift from "clearing inventory" to "pushing customization" itself shows that the value of discount retail for beauty brands is changing.

Against the backdrop of rising online traffic costs and the full pressure on traditional offline channels, discount stores have become one of the few emerging offline channels that are still growing. The report by Zhiyan Consulting shows that the scale of China's discount retail market reached 2.28 trillion yuan in 2025, with a compound annual growth rate of 11.0% from 2022 to 2025, becoming the fastest-growing track in the retail industry.

But the premise of the "trillion-level narrative" is that the channel itself must be stable. When Haitegou collapsed from 500 stores to 39, suppliers were unpaid, franchisees lost all their investments, and 1.2 million member rights were reduced to waste paper—this is not only a channel loss for beauty brands, but also a trust crisis.

This is the deepest anxiety of the beauty discount channel at the moment: as the category is heating up, the infrastructure carrying the category is collapsing. What brands need is not a temporary "sewer," but a predictable and guaranteed long-term channel.

Rise of Hard Discounts:

Another Low-Price Logic

While soft discount players are struggling to survive, hard discount players have shown a completely different expansion trend.

Data shows that as of June, Mingming is busy (Snacks are busy + Zhao Yiming) has 26,405 operating stores, and by July, its signed stores have exceeded 30,000, becoming the first domestic leisure food and beverage chain to reach this scale.

O'Leary achieved a sales revenue of about 4 billion yuan in China in 2025, doubling year-on-year, with 88 stores. In 2026, its goal is to have a total of 150 stores across the country by the end of the year.

The fundamental difference between hard discounts and soft discounts does not lie in "who is cheaper," but in "where does the low price come from."

The low price of soft discounts is "picked up"—depending on the brand's expired goods and inventory overflow, the source is unstable, the quality is uncontrollable, and the price advantage is essentially the "surplus value" of the supply chain. Once the brand tightens supply, this advantage will disappear.

For example, Estée Lauder, when the group internalized the inventory digestion function into its own discount channel, The Cosmetics Company Store, the sourcing space for third-party discount retailers was narrowed accordingly, and both the cost of obtaining goods and the procurement threshold were doubled.

The low prices of hard discounts are "manufactured" — through direct sourcing from the source, streamlined SKU (usually controlled at 1,500-2,000, far less than the 20,000 of traditional large supermarkets), development of private brands, and minimalist operations, the channel costs are systematically compressed.

For example, at O'Leary, store area of 500-800 square meters, only 4-10 employees per store are needed, and the labor cost ratio is compressed to 4%, while the industry average is 10%-16%. This structural cost reduction is not "relying on the sky for a living", but a sustainable replicable supply chain capability.

Data shows that the hard discount market in China has exceeded 2 trillion yuan in 2024, but the penetration rate is only 8%, far lower than Germany's 42% and Japan's 31%. Previously, retail analysts predicted: the ceiling of soft discounts is around 1,000 stores, while hard discounts can go to tens of thousands of stores.

From "collapse" to "reconstruction":

The Future of Beauty Products in Discount Channels

If this change is only understood as "soft discounts are not working", it seems not accurate.

Global "soft discount ancestor" Grupo El Corte Inglés (group name: Pan-Pacific International Holdings) saw its revenue increase by 7.2% to 2.25 trillion yen in the fiscal year 2025 (July 2024 to June 2025); operating profit reached 162.3 billion yen, a 15.8% increase from the same period last year, achieving continuous revenue and profit growth for 36 years.

The parent company of the largest brand discount retailer in the United States, TJ Maxx, TJX, achieved net sales of $60.4 billion in the fiscal year 2026, for the first time breaking through the $60 billion mark; net profit was $5.49 billion, an increase of nearly 13%.

These discount retail giants that have crossed the cycle all have a common feature: the low price is not "picked up" by luck, but "manufactured" by the system. Their core capability is not "picking up the leftovers", but the decades of accumulated buyer system and supply chain integration capabilities.

In the Chinese market, soft discount stores were once the "sewers" — expired, unsold, and unsalable products were all thrown here. Now, brands need to rethink: what to sell in the discount channel, how to sell, and with whom to cooperate.

From the collapse of Heyitou and the transformation of Haotai, perhaps we can extract several survival logic of discount beauty products in the next stage:

Supply chain sovereignty is the premise of everything

The biggest problem with soft discounts is that the source of goods is not in their hands, and they sell what the brand provides. Once the upstream tightens, the whole model collapses. Hard discounts is exactly the opposite — through direct sourcing from the source, private brands, and selected SKUs, the pricing power and product stability are firmly held in their own hands. Therefore, a stable and reliable supply chain is crucial.

"Certainty" is more valuable than "explosiveness".

The lesson from HiTeBuy is that capital-induced rapid expansion will collapse instantly once the financial blood supply is lost. For beauty brands, channel stability means maintainable pricing systems, guaranteed consumer experiences, and controllable brand images. Therefore, "certainty" is more valuable than "explosiveness."

From "selling others' products" to "making our own products"

GoodteBuy's launch of the "OK" private brand and the fact that over 90% of O'Leary's products are private brands point in the same direction—the ultimate goal of discount retail is not "selling others' products cheaper," but "more efficiently producing our own products." For beauty brands, discount channels are not just distribution channels but can also become incubators for new brands and testing grounds for new products.

It can be said that the era of "dumping unsold goods into discount stores" has long passed. In its place is a new battlefield that requires a new understanding of channels, a new product design, and a new supply chain relationship.

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