KK Group, a leading domestic new retail ecological enterprise, has recently completed 1 billion RMB round E financing. This new round of financing was led by CMC Capital, followed by Aplus Capital, Kamet Capital, Black Ant Capital, and Yangce Capital. In addition, some old shareholders such as Matrix Partners China also continued to follow up. Lighthouse Capital acted as the exclusive financial advisor for this round of financing. Prior to this, N5Capital was an institutional investor in the round C and round D financing of KK Group.
KK Group was founded in 2015 and owns many chain retail brands such as “KK Hall”, “KKV” and “THE COLORIST”. Among them, “KK Hall” focuses on the collection of imported goods and is currently the largest collection of imported goods in the country; “KKV” focuses on lifestyle collections and is currently one of the most popular main store brands in shopping malls; “THE COLORIST” is more representative, as the founder of the domestic make-up collection store format, it is also the brand with the largest market share and influence, and was once reported by foreign media such as “Nikkei MJ” as a typical case of domestic recovery after the epidemic .
From the early single-brand entry into the retail innovation market, to the current successful incubation of multiple explosive brands, focusing on the development and focusing on core business has become the main theme of the KK Group in the past 6 years. Relying on a series of “innovative breakthroughs + rapid iteration + data-driven + efficient execution”, KK Group’s brand stores have expanded from the early Pearl River Delta region to hundreds of top class A shopping malls in more than 100 cities across the country.
Not only that, KK Group also went abroad for the first time, taking a solid step towards internationalization. In March of this year, KKV successfully landed its first overseas store in Central Park, one of the four major shopping malls in Indonesia, and won the triple crown in popularity, performance, and order volume. Chinese brands and supply chain strengths are constantly emerging in overseas emerging markets, and the desire for a better lifestyle transcends national boundaries.
Affected by the epidemic, 2020 will undoubtedly be a difficult year.
Choosing KK Group, firstly benefited directly from the company’s own fundamentals. Taking its brand KKV as an example, according to the “Chengdu Daily” report, in March, which had not fully recovered after the epidemic, its Chunxi Road store had sales exceeded 5 million RMB for that month and the first store in Gansu, Lanzhou Center Store, KKV also continued its monthly average performance of 5 million RMB. This is not an exception, whether it is Beijing Heshenghui Shopping Center or Shanghai Longzhimeng Shopping Center, or Shenzhen Daqianli Shopping Center, has received good market feedback.
This is a typical case of dislocation war. In the past, whether it was Sephora or Watsons, skin care was the main category in the store, and the Colorist chose to use make-up as a breakthrough point and created the first domestic collection store format focusing on make-up. At the same time, the brand is biased towards the young mass market, choosing domestic and foreign affordable and light luxury makeup, plus more than 80% of exclusive brands of various types, such as Morphe, Pony Effect and other exclusive well-known fashion brands, coupled with “free trial”, “no BA disturb self-service shopping” and other experience types labels are naturally more attractive to young female customers of Generation Z. Undoubtedly, this is the consumers most wanted by shopping malls which are completed deserted after the epidemic.
Thanks to the above competitive advantages, the Colorists are accelerating taking more shops during the post-epidemic recovery period. Within two months after the epidemic, nearly 100 stores have been added. It is expected that by the end of August, the number of the Colorists in the country will reach 200+, and this is less than a year away from the birth of its brand.
In the general sluggish environment of the overall primary market, N5Capital values its steady expansion speed and good hematopoietic ability. Of course, from a more macro perspective, the accelerated accumulation of ammunition also indicates to a large extent the enthusiasm of the new consumer sector where KK Group is positioned.
With the per capita GDP passing the 10,000 RMB mark, China’s commercial society has entered a new normal. After the economic growth slows, the economic growth model will also shift from investment-led to consumption-led. The leading consumer companies in China like KK Group most need to concentrate on their operations and keep walking. For them, this is the best time.
N5Capital Partner Qian Kun：
I have known the founder Wu Yuening for many years and I can see the basic qualities of a good CEO in him: detail-oriented, strong execution, logically based, especially love to learn and actively organize, clear of the real situation and development stage of the company , and lead the team to make continuous breakthroughs. He adhered to the concept of “innovating on the shoulders of giants”, which allowed KK to avoid many detours and lay a solid foundation for rapid development.
Qian Kun led the KK Pavilion’s Series B investment in the previous fund, and after joining N5Capital, he participated in KK’s Series C and D financing. In this process, I have maintained a relatively high frequency of communication with the founder, and we can see more clearly that the KK team has been thinking about how to upgrade and innovate its own products. At the beginning, the company only had a standard store-shaped KK pavilion of about 200 square meters. The brand, and then iterated to the flagship store flagship brand KKV of about 1,000 square meters, from the initial “operation to win” (KK Pavilion), rapid upgrade “grasp the advantage of the shopping center dividend” (KKV). While the 200-square-meter standard store was upgraded to the 1,000-square-meter main store, KK was still able to maintain the level of performance and return on investment. This is the team’s internal discussion in the first half of 2019 that “the larger the area, the stronger the premium ability” cognition, the driving force for rapid adjustment.
The birth of The Colorist is the wisdom and action of the “category winning” team. N5’s internal research found that there are generally systematic opportunities for cosmetics. From 2018 to 2019, the national cosmetics category has developed greatly, and various cosmetics brands have appeared in succession. 95% of brands have risen online, but there is no way to expand offline. In mid-May 2019, I discussed with Wu Yuening whether KK could be an offline makeup channel brand, and the company had this intention two years ago, and then the team conducted discussions, market surveys, product design, and the Colorist came out after three months. The division’s first store was officially opened, and it has achieved extremely popular market effects, with first-class product design and execution. At present, The Colorist is widely loved by consumers, and major commercial real estate companies also attach great importance to it. It has always maintained its leading market share in the cosmetics field.
Now the various product lines of KK Group have realized the positive cycle of “suppliers supply good products-large numbers of consumers buy-shopping malls invite one after another”.
The development of KK is in line with our expectations. The reason is attributed to the insatiable innovative spirit and super execution power of the founder and team. The team has been constantly upgrading itself, upgrading products and innovation. Since I invested in KK, I have been in frequent communication with the CEO. After each communication, both parties have gained and promoted mutual achievements.