Sephora struggling to settle in Korean market
People shop at Sephora's first outlet in Parnas Mall in Seoul, in this 2019 file photo. / Korea Times file photo
By Kim Jae-heun
Sephora Korea CEO Kim Dong-ju
French multinational beauty store chain Sephora is struggling to find its niche in the Korean market.
The Louis Vuitton Moet Hennessey (LVMH) subsidiary opened its very first store in Korea last October at the Parnas Mall in Seoul, and so far the assessment of industry insiders is that Sephora has yet to provide a differentiated service for customers at its offline stores.
Son Sung-min, a researcher at REACH24H Korea, said that Sephora was already a well-known brand that helped Koreans to purchase products online that were unavailable here. When it opened its store in Korea though, it sold the same items that people could already buy using their phones.
“Korean customers could not see the need to visit the offline shops. If Sephora wants to bring online customers to offline shops, they have to sell more exclusive items at offline stores,” Son said.
Sephora Korea CEO Kim Dong-ju promised that the firm will concentrate on the brand's localization strategy and starting a business in Seoul will not be just an overseas operation by the global team. Apparently, Kim's words have not yet been put into action.
An industry source said Sephora's strength lies in aggressive marketing at offline stores but Korean customers feel burdened when clerks approach them and suggest they test out the make-up.
“Sephora is failing to play to its strengths because of cultural differences here. Koreans like to be left alone at stores and shop on their own. This goes against Sephora's service strategy in America and many other Western countries where a clerk will take care of a customer one-to-one as soon as they enters the shop,” a source said.
However, the source said Sephora needs time as it has been less than a year since it started its business here.
“The time is too short to judge Sephora's performance in Korea. However, I think it is starting slow compared to the speed of growth in other countries,” a source added.
Sephora currently operates four offline stores in Seoul and it hopes to open 10 more in the next two years. However, COVID-19 has struck the local beauty market hard and it has not opened a store since the last one in Lotte World Mall in Songpa-gu, Seoul, in February.
Its main rival Chicor, operated by Shinsegae Department Store, runs 30 stores across the country. Chicor and Sephora are in direct competition in the market as there are no other players.
However, Chicor started its business in 2016 and its size is yet incomparable to that of Sephora.
“We are closely watching Sephora's performance in the market but they just started last year so we cannot judge their performance. We are expecting a healthy competition with Sephora,” a Chicor official said.
The country's No.1 health and beauty player Olive Young is a thorn in Sephora's side, although they are not in direct competition.
Olive Young sells cost-effective beauty products whereas Sephora offers premium brand items. But in the end, they both sell cosmetics at offline stores.
Olive Young operates nearly 1,250 offline stores across the country and it has the best accessibility among beauty firms here.
“Of course, we both sell cosmetic products but we have different customer segments. We offer a different concept and a different strategy. However, we are watching Sephora with interest,” an Olive Young official said.
If Sephora cannot offer better prices to those of Chicor and Olive Young, it will not able to expand its business here.