 Shoppers pass by the Aritaum shop in Myeong-dong. / Courtesy of AmorePacific |
By Cathy Rose A. Garcia
Korean women’s obsession with beauty products will show no signs of waning throughout next year. According to a report by Korean cosmetics giant Amore Pacific, Monday, sales in the domestic cosmetics industry will jump by 6.5 percent to 8.4 trillion won in 2011.
The upcoming 12 months will prove brighter for economic recovery, and increased consumer spending will push the sales of cosmetics and beauty products higher. The cosmetics market remained strong this year, with early estimates of 7.8 annual growth, on the back of strong sales at department stores.
Korea is considered a high-growth cosmetics market, with an average annual growth rate of 9.7 percent in the last four years. This is significantly higher than the 0 to 1 percent growth in stagnant markets like Japan, U.S. and France.
AmorePacific said the prospects for growth in 2011 will be solid and boosted by the expected economic recovery, although it will be affected by higher inflation. However, the company sees enough growth potential for expansion in the local market.
There has been a noticeable shift in Korean consumers’ preferences in where they buy their cosmetics and beauty products.
In 2010, cosmetics sales at department stores, supermarkets and so-called ``road shops’’ or franchised shops showed higher growth.
``Road shops,’’ or franchise stores such as Aritaum, Innisfree and The Etude House, are emerging as bright spots in the cosmetics industry. Multi-brand shops like Aritaum showed the highest growth rate at 20.1 percent, while one-brand shops like Innisfree and The Etude House grew by 13.1 percent this year.
In 2011, there is expected to be strong competition among various road shops, with sales growth forecast at 8.8 percent to over 2 trillion won. Other road shop brands include Missha, The Face Shop, Nature Republic and Skin Food.
More Korean customers increasingly prefer to shop online for make-up and other cosmetics because of ease and convenience. Sales through Internet and home shopping channels grew by 12.1 percent and 14.1 percent, respectively in 2010. This trend is expected to continue in 2011, with combined Internet and home shopping sales forecast to grow by 9.1 percent.
In contrast, general cosmetics shops registered a significant 30.3 percent drop in sales this year, and will likely contract by 2.9 percent in 2011.
Environmentally friendly products are becoming more popular. Innisfree introduced a new Jeju Volcanic Pore Clay Mask, which proved to be a hit among college students and working women.
At department stores, the high-end luxury brand Sulwhasoo continues to be a steady seller among the older generation. In contrast, Etude House successfully targeted younger customers with its line of low-priced cosmetics in cute pink packaging.
Foreign tourists are also buying more cosmetics in Korea. Chinese and Japanese tourists have been buying luxury Korean brands like Sulwhasoo at department stores, and mid-priced brands like Laneige at road shops.
As more Korean consumers switch to smartphones, AmorePacific sees a boom in digital consumer spending through websites and applications. Consumers are also seen to demand more efficient, environmentally friendly, affordable and high quality products next year.
Korean cosmetics companies have already made inroads in the overseas markets, with exports growing by 38.7 percent in the first half of 2010. Annual exports of Korean cosmetics are estimated to exceed $400 million by the end of the year.
In the future, more aggressive expansion of Korean cosmetics brands is expected to continue in China and other emerging Asian markets.
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