Duty-free shops show highest cosmetics sales

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Duty-free shops show highest cosmetics sales


Boosted by the surging number of Asian tourists to Korea, major cosmetic brands now sell more at duty-free shops than local retail channels, like department stores and door-to-door sales.

Sales of Amore Pacific’s cosmetic products at duty-free shops accounted for 20.6 percent of its total sales last year, beating out department stores at 8.8 percent. In 2013, duty-free sales were 13.6 percent of the total.

Duty-free sales are the latest indication that local cosmetic brands are increasing their appeal overseas, especially in China, where K-pop and K-dramas are already hugely popular.

Many Chinese visitors, the largest tourist group in Korea, and tourists from other neighboring Asian countries flock to duty-free shops to purchase cosmetics. As a result, the location of domestic cosmetic makers in the shops has changed. While the luxury designer brands used to hold the prime spots, popular local cosmetics brands such as IOPE and The Face Shop are now displayed at the front.

The rise in sales at duty-free shops coincides with a downturn at other distribution platforms.

Door-to-door sales used to secure the highest share, but declined to 16 percent last year, from 21.4 percent in 2013.

Amore Pacific, the country’s largest beauty company, is making a comprehensive expansion in China to tap into their infatuation with cosmetics.

Five Amore brands - Sulwhasoo, Laneige, Mamonde, Etude and Innisfree - are currently sold in China, registering an average 30-percent sales growth annually over the past five years. The number of Amore stores in China stood at 2,958 as of last year.

Amore Pacific is not alone in seeing duty-free shop sales soar. LG Household & Health Care, whose brands include The Face Shop and herbal cosmetic brand Fu, saw sales at duty-free shops make up 15.3 percent of its total last year, a threefold increase from 2013 when the shops accounted for 5.9 percent. On the other hand, department store sales fell to 8.1 last year, from 9.2 percent in 2013.

Four local beauty brands made it to the top-10 selling brands list at the Shilla Duty Free chain, which said that the market share of domestic brands increased to 32 percent last year, up from 17 percent in 2012.

At Lotte Duty Free, LG’s Fu became the best-selling brand in October, and the retailer added twelve new Korean cosmetic brands last year when it renovated the Sogong branch of the duty-free shop in central Seoul. The new brands include IOPE, Beyond and Vidi Vici.

“The cosmetic section has become important at duty-free stores because foreign visitors consider the brands cool and appealing, often linking the glitz of the showbiz industry with beauty products,” said a representative for Lotte Duty Free.

The appeal of Korea’s beauty products has led to an overall increase in the exports of cosmetic items.

Combined exports of beauty products in the first half of 2014 increased by 34.5 percent to $740 million over the same period last year, according to a report by the Korea Health Industry Development Institute.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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