AmorePacific exerts greater influence over duty free stores

Models check out skincare products at AmorePacific’s Laneige brand shop at the Lotte World Tower Duty Free store in southeastern Seoul. Korea’s largest cosmetics firm has become the largest business partner of Lotte Duty Free and other local duty free shops thanks to the growing popularity of its beauty products among Chinese tourists. / Courtesy of Lotte Duty Free

By Lee Hyo-sik

AmorePacific is exerting greater influence over duty free stores here as made-in-Korea beauty products have become a must-buy item for Chinese and other Asian tourists, according to industry officials Wednesday.

Sales of the country’s largest cosmetics maker have even exceeded those of the top three foreign luxury brands ― Louis Vuitton, Hermes and Chanel ― at major duty free outlets.

Doota and other newly opened duty free stores are reportedly having trouble attracting AmorePacific shops because the cosmetics firm now wields greater bargaining power.

According to Lotte Duty Free, AmorePacific accounted for 11 percent of the retailer’s sales in the first three months of this year.

Bluebell Korea, a local sales agent for Louis Vuitton, Fendi and a dozen other foreign luxury brands, ranked second with 8 percent.

Cosmetics goods produced by LG Household and Health Care accounted for 7 percent of Lotte Duty Free sales, followed by French fashion brand Chanel with 3 percent.

AmorePacific has five major cosmetics brands: Sulwhasoo, Hera, Iope, Innisfree and Laneige. The company has also been promoting Etude and other brands which have gained growing popularity among Asian women.

“AmorePacific brands have become a household name for many Chinese and other Asian consumers who are increasingly fond of made-in-Korea beauty products,” said an official at a Seoul-based duty free shop. “Besides its high product quality and reasonable prices, the company has been riding high on the Korean cultural wave sweeping Asia.”

Many Chinese and other Asians want to use cosmetics items promoted by their favorite Korean stars, the official said. “They want to look like their Korean idols. When they come to Korea, they rush to duty free stores or other retailers to buy beauty products. This trend will likely continue and further boost AmorePacific’s sales.”

The firm’s sales at local duty free stores exceeded 1 trillion won in 2015, up sharply from 703 billion won in 2014 and 348 billion won in 2013.

Thanks to its growing brand power, AmorePacific has begun exerting more bargaining power when it negotiates with newly established duty free stores.

It was a norm in the past that AmorePacific shops were ready to greet customers when the stores opened. But Doota Duty Free in Dongdaemun, which opened its doors on May 20, hasn’t yet been able to bring in the cosmetics firm.

“We are currently negotiating with AmorePacific over contract terms. The process is taking longer than expected,” a Doota Duty Free official said. “We expect the cosmetics maker will soon have a presence here. It’s just a matter of time.”