Small luxuries generate big money
Ultherapy, a nonsurgical procedure that lifts and tightens the skin, costs more than 1 million won ($966).
She was hoping the dermatologist could reduce her wrinkles, but the expense was too much for her, especially at a time when she has been tightening her belt.
Feeling disappointed, Kim dragged herself to a nearby department store to settle for a set of cosmetics and a spring jacket. But after calculating that it would cost her hundreds of thousands of won, she left the store.
Feeling depressed, on her way home she visited a large discount store and bought hair dye for less than 20,000 won.
At home, Kim colored her hair and eyebrows a natural brown and the next day at work she was all smiles after hearing compliments from her colleagues.
“With only about 10,000 won, you can make changes to your appearance and feel all new,” Kim said. “You don’t necessarily need to spend much money.”
With the ongoing economic slump, a growing number of consumers are searching for a bit of “small luxury,” like Kim. And items like hair dye, perfumes and beauty equipment have emerged as popular goods with low prices that can be highly satisfying at times when there is a desire for something different.
Sources in the cosmetics industry note that the hair-dye market in particular is growing and gaining attention because consumers want to change their appearance for small amounts of money. According to L’Oreal Korea, the nation’s hair product market in 2010 was 2.22 trillion won. In 2012, it was 2.86 trillion won.
With the growing market, companies are releasing new products. Aekyung, a manufacturer of cosmetics and everyday care items, released eight types of Kerasys Salon Care Hair Dyes last month. In January, Kwang Dong Pharmaceutical introduced two natural hair-dye products. L’Oreal Korea also started selling Alluria, targeting Asian women.
LG Household and Care also saw sales of hair-dye products jump 23 percent last year compared to the previous year.
“People in Korea have the desire to look after their appearances,” said an official from LG Household and Care. “In times of economic difficulty, they tend to search for more affordable beauty items. This is the reason why sales of do-it-yourself hair-dye products that cost about 10,000 won have increased remarkably.”
Another item cost-conscious consumers turn to is perfume
“Although the number of perfume products and manufacturers is growing, sales of each individual manufacturer is on a growing trend,” said an industry official.
According to Shinsegae Department Store, sales of makeup items grew 23.2 percent in 2010 compared to the previous year, but in 2012 the growth rate fell to 3.1 percent and in 2013 to 0.4 percent.
On the other hand, sales of perfume increased by 32.7 percent in 2011 from the year before and 10 percent annually since, despite the bad economy. The retailer under the Shinsegae Group noted that sales of premium perfumes like Jo Malone, Diptyque, Creed, and Acqua Di Parma in particular has grown in recent years. Last year, sales grew by 212 percent.
Beauty devices like vibrating foundations that first appeared in 2011 are also gaining popularity among consumers. Rather than visiting a dermatologist or massage shops, consumers are able to look after their beauty and health by using devices such as air-cushion foundations, face cleansers, wrinkle lifters and anti-aging lasers.
LG Household and Care in April last year introduced a new beauty device brand called Tune Age. Its Smart Patting Ceramic Lifter aids in makeup absorption. Lancome’s Genifique Eye Light-Pearl comes with an illuminating serum and a seven-millimeter (0.28-inch) massaging applicator that can massage difficult-to-reach eye areas.
Meanwhile, with more diverse self-beauty products being introduced, low-cost cosmetics brands like The Face Shop, Innisfree and Nature Republic are struggling to find their market niche. Also, amid enhanced competition, they have been aggressive with sales events that dampen operating profit.
The operating profit of Missha last year, for example, was 13.2 billion won, a 75.4 percent drop from the previous year’s 53.6 billion won. Net profit also fell 70 percent from 42 billion won to 12.6 billion won. Sales also dropped 2.2 percent from 452.3 billion won to 442.4 billion won over the same period.
Industry sources note that falling operating profit is because low-cost brands are offering sales events too often to remain competitive in the expanding market. In fact, in 2012, Etude items went on sale for about 30 days, but in the following year, the number of sale days doubled to 60. Nature Republic also designated 40 days for sales in 2012, but last year items were on sale for more than 70 days.
“For brands like us, the most important strategy is to develop brand-representing items to survive the fierce competition,” said an official from Missha.
BY chae yoon-kyung [firstname.lastname@example.org]
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