Following the large-scale closure of the House of Itti, another brand under Amorepacific has fallen into a wave of store closures. Recently, a reporter from Beijing Commercial Daily found that Innisfree Yinguan stores in many shopping malls in Beijing were closed. The relevant person in charge of Amorepacific, the parent company of Innisfree, said that the group is making strategic adjustments to the Chinese market, and its Innisfree stores will continue to be optimized in the future and is expected to be reduced to 140. According to industry insiders, with the development of the domestic market in recent years and the ebb of Hallyu culture, some Korean brands have to adjust their strategies and transform in order to win the market again.
Korean makeup closed shop trend
Recently, a reporter from Beijing Commercial Daily visited and found that the Innisfree store in the Link Plaza, Zhongguancun, Beijing was temporarily closed. The staff of the shopping center’s consultation office told reporters: “Innisfree has withdrawn from the store not long ago.” At the same time, it is located in Beijing. Innisfree in the Sun Palace CapitaMall Mall, Xidan Joy City, Huaifang Wanda and other shopping malls have also been closed and withdrawn.
In response to store closures, the relevant person in charge of Amorepacific told a reporter from Beijing Business Daily that the group is optimizing the channels of the Innisfree brand, and the number of stores will be reduced to 140, and such store adjustments will continue in 2022.
Earlier news flowed out: “Amorepacific Group will make a new round of strategic adjustments for the Chinese market. It plans to reduce its brand’s more than 800 stores in China to about 140, and close more than 600 stores.” Amorepacific related The person in charge also confirmed the news and pointed out that the “brand under the brand” mentioned in the above news refers to Innisfree.
“According to headquarters information, the group is indeed making strategic adjustments to the Chinese market, but some media have misunderstood the data on the closure of more than 600 stores. The group only optimizes and reduces Innisfree stores, and does not involve other brands.” The person in charge said .
Wu Daiqi, CEO of Shenzhen Siqisheng Company, said that large-scale store closures are inseparable from performance. In the past two years, with the shrinking of the department store retail industry and the development of online e-commerce channels, chain stores such as Innisfree have affected the flow of people and performed poorly. On the other hand, the rise of domestic beauty products has squeezed the Korean makeup market to a certain extent.
According to statistics, in 2020, Innisfree’s operating revenue decreased by 37% year-on-year to 348.6 billion won, less than half of the 770 billion won at its peak in 2016, making it one of the most dismal performing brands under Amorepacific.
In fact, it’s not just Innisfree that large-scale store closures have occurred. Prior to this, another brand of Amorepacific, the House of Itti, also conducted a large-scale store closure, and the brand completely closed all offline stores in the Chinese market in March 2021. At the same time, another Korean makeup giant LG Life Health also closed all offline stores in the Chinese market at the end of 2018.
In the eyes of summer, an angel investor in the daily chemical industry, Korean makeup represented by Innisfree, relying on the rise of Korean wave culture such as Korean dramas and idol groups, has set off a Korean wave and is quite popular among young consumers. However, the popularity of these brands is built on the basis of differentiated and conceptual marketing, not on the level of technology research and development and product efficacy. Therefore, with the retreat of the Hallyu in recent years and the entry of the domestic cosmetics market into a competitive mode dominated by technical effects, Korean cosmetics have naturally gradually become indifferent by consumers.
Power in the high-end
After the large-scale closure of the store, where will Amorepacific go? The relevant person in charge of Amorepac said that in the future in the Chinese market, the group will focus on the mid-to-high-end and online sectors.
It is understood that the mid-to-high-end products of Amorepacific are mainly based on brands such as Sulwhasoo and Heryan. Taking Sulwhasoo as an example, data shows that although Amorepacific’s sales in the Chinese market fell by 10% in the third quarter of 2021, Sulwhasoo’s sales have bucked the trend and increased by 50%.
It is worth mentioning that vigorous discounts and promotions seem to be one of the reasons Sulwhasoo’s sales have grown against the trend. A reporter from Beijing Commercial Daily found that on the Douyin platform, Sulwhasoo’s “Double 12” return event offered a ginseng suit to give away ginseng formal wear. In some Internet celebrity live studios, the regular price of 890 yuan for the nourishing muscle suit, the discounted price is 269 yuan. In the official flagship store of Taobao Sulwhasoo, the original price of 2180 yuan ginseng water and milk essence three-piece set, the discounted price is 1610 yuan.
While vigorously discounting promotions, Sulwhasoo also signed a group of spokespersons and KOLs, and continued to use online platforms to increase brand exposure. Since the beginning of this year, Sulwhasoo has not only officially announced the spokesperson of the Asia-Pacific region Deng Lun and brand ambassador Zhang Zhilin, but also announced the brand ambassador of Greater China Zhang Jiani. At the same time, Sulwhasoo is “full firepower” in terms of channel layout. In addition to e-commerce platforms such as Taobao and JD.com, Sulwhasoo has also entered short video platforms such as Douyin and Kuaishou, and has cooperated with a large number of Internet celebrity bloggers to live broadcast and attract traffic to attract traffic, including Zhu Zixiao, Guangdong couple, Duo He Maomao sister, Luo Yonghao, etc.
It seems that under the influence of vigorous promotion and star effect, Sulwhasoo’s sales have also risen. According to data from Feigua, on the Douyin platform, Sulwhasoo ranked first on the GMV list of beauty brands during the double 11 pre-sale period with a single live broadcast of 70 million yuan during the double 11 pre-sale period. On the Kuaishou platform, during the “Double 11” period, Sulwhasoo ranked second among the Top 10 skin care brands with a GMV of 14.96 million yuan.
Internal and external competition
However, in the summer, the popularity of Korean brands in the Chinese market has receded, so Korean makeup brands are also very anxious. High-end brands such as Sulwhasoo and Whoo Post have launched large-scale discount sales on platforms such as Kuaishou and Douyin, breaking the high-end market. Brand price system. In the short term, this kind of price war has indeed obtained certain development opportunities in the process of sinking the market, but in the long run, such preferential strength is difficult to support brand development for a long time.
In addition, the mid-to-high-end market for Korean makeup, represented by Amorepacific, is also facing competition from major international brands in Europe and the United States. According to Tmall data, brands such as Estee Lauder and L’Oreal have occupied the top five beauty sales lists on Tmall for many years. Take the 2021 Tmall beauty high-end line store rankings, brands such as Estee Lauder, Lancome, Aquamarine, Helena, and Guerlain are all ahead of Sulwhasoo.
In addition to European and American international brands grabbing the market, the domestic cosmetics brands that have emerged in recent years have also squeezed Amorepacific’s market to a certain extent. For example, Winona, Proya, Perfect Diary, Huaxizi, etc. On the Douyin platform, in the sales rankings during the “Double 11” period this year, Proya and Nature Tang both ranked ahead of Sulwhasoo, ranking second and fifth respectively. On the Kuaishou platform, Han Shu surpassed Sulwhasoo to rank first. (Reporter: Zhang Junhua)
Editor: Wan Yuhang
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