Korean Beauty Trends & Industry News: 23-11-03

End-of-Year Cosmetic Deals Amidst Rising Prices

As the year-end season draws near, retailers are launching large-scale cosmetics sales, responding to the growing demand for makeup as mask mandates are lifted post-COVID-19. Lotte Department Store is enticing consumers with 'Super Beauty Week,' offering discounts of up to 85% on over 130 brands and extra coupons. Similarly, Shinsegae Department Store and Coupang are engaging shoppers with 'Cosmetic Fair' and 'Mega Beauty Show,' respectively, providing limited edition sets and gifts. This comes as retailers anticipate increased sales during the lucrative end-of-year period, expected to be particularly robust this year.

Concurrently, the cosmetics industry faces price hikes due to global inflation and currency fluctuations. LG Household & Health Care has announced a 4-5% increase due to raw material costs, and Amorepacific's luxury 'Jinseol' line has increased by 10.6%. Despite rising consumer costs, beauty companies and department stores see this as an opportunity to boost sales. The sector expects these hikes to have a positive impact on fourth-quarter revenues, especially with the year-end shopping boom. Moreover, cosmetics stocks have risen post-announcement, suggesting a possible industry upturn.

Beyond cosmetics, Lotte and Shinsegae Department Stores are discounting a variety of items, including wine and fashion, and other retailers like CJ OnStyle, Coupang, and 11th Street are also conducting extensive discount events, promising a heated end-of-year shopping season.

Beauty Shopping in Cinemas: Coupang’s Mega Beauty Show

Coupang is introducing its new offline marketing strategy with the 'Mega Beauty Show' at Megabox cinemas nationwide. For the entire month of November, this event will take place across 8 Megabox locations, featuring popular beauty brands selected by Coupang BeautyDataLab.

Brands like Dalba, Tony Moly, Mediheal, Hanskin, and MerrySued are participating, offering 1+1 deals, gifts, and instant discounts. Customers visiting the Megabox COEX branch can win full-sized product samples by participating in on-site Instagram and membership events, while the other locations offer free cola at the concession stand.

Significant incentives, such as a beauty box worth KRW 130,000 for customers spending over KRW 20,000, are prepared at the COEX branch. The Mega Beauty Show Awards Virtual Store operates from noon to 8 PM, where customers can scan product QR codes and purchase via the Coupang app.

A Coupang representative noted this collaboration aims to leverage commonalities between mega-brands to create a natural synergy, providing a unique shopping experience in cinemas. This initiative signifies Coupang’s intent to enhance the accessibility of beauty products offline and generate new consumer experiences.

Korean Cosmetic Giants Face New Challenges

Amidst dwindling sales in China and delayed recovery of tourist spending at home, LG Household & Health Care and other South Korean cosmetics firms are facing significant performance downturns. This slump is exacerbated by a decrease in China's appetite for luxury cosmetics, a cultural shift away from ostentatious consumption ('guochao'), and improvements in local Chinese beauty products.

LG Household & Health Care, once a celebrated name in China with its premium 'The History of Whoo' brand, has seen a steep decline in its performance post the THAAD missile dispute and COVID-19 impacts, hitting a 52-week low in its stock price. Analysts pinpoint the company's reliance on high-end brands as a primary cause for its performance woes amid growing consumer preference for value-for-money beauty products. In response, the company is diversifying with a brand overhaul and focusing on strategic brands such as 'The History of Whoo', 'belif', 'CNP', and 'The Face Shop', but financial results are expected to take time to improve.

AmorePacific Group, too, reported a drop in operating profits and sales in the third quarter, with its main affiliates also experiencing sharp declines. This period calls for prudent long-term investment considerations among investors.

In contrast, the Thai beauty brand 'Petitfee' is gaining popularity among younger consumers in Southeast Asia, especially in Japan, with its combination of affordable prices and high quality, highlighting a global trend that values cost-effectiveness in cosmetics.

Despite the bleak performance in the Chinese market and uncertain prospects, South Korean beauty firms view China as a crucial opportunity, focusing on business strategy adjustments during the 'Singles' Day' sales events and aiming for profitability improvements. However, with China's economic slowdown, internal restructuring costs, resistance to new product price increases, and rising marketing expenses, a strategic reassessment is in demand across the industry.

Myeongdong: The Resurgence of a Global K-Beauty Hub

Myeongdong, a major commercial district in Seoul, is experiencing a resurgence in vitality in the cosmetics market due to the end of the pandemic and the resumption of group tours from China. As international tourists flock back, with visitors from Japan, the US, China, and Taiwan leading the way, K-beauty companies are rolling out diverse offline strategies to captivate this audience.

CJ Olive Young has launched the 'Olive Young Myeongdong Town', aspiring to grow as a global K-beauty O2O (online to offline) platform. With multilingual services tailored for the influx of foreign visitors and a focus on introducing small and medium-sized enterprise (SME) brands, Olive Young aims to broaden the reach of K-beauty.

Missha and A'Pieu, under the umbrella of Able C&C, have enhanced their competitiveness with the newly renovated 'Myeongdong Mega Store', attracting attention with shopper-friendly spaces and distinctive facade designs. The store has seen a significant increase in sales post-renovation. Additionally, the skincare brand Dalba is contributing to the expansion of the K-beauty experience by offering premium beauty travel packages in collaboration with Le Meridien Seoul Myeongdong.

Nature Republic has renewed its 'Myeongdong World Store', creating a nature-friendly atmosphere with a garden wall exterior and natural materials interior, providing international customers with an innovative shopping experience.

The daily foot traffic in Myeongdong has increased by 86% year-over-year, with Olive Young Myeongdong's foreign sales skyrocketing by 840% and Missha experiencing a 40% sales surge within a month of its store renewal. To sustain this momentum, the beauty industry is focusing on developing unique experiences, products, and content for foreign visitors, injecting new life into the Myeongdong district. Consequently, Myeongdong is solidifying its position as a center for K-beauty that caters to the evolving tastes of a diverse global clientele.