With a new brand positioning, Korea’s Etude House has been making inroads in the global cosmetics market this year.
Previously tagged Princess Fantasy, its new positioning line is Sweet Dream. Its makeover includes more sophisticated visuals in its advertisements and packaging designs, plus a new slogan, “Life is Sweet”. The aim is to symbolise the positive energy and values of people in their 20s as Etude House works toward its vision of becoming the “global No. 1 young makeup brand” through overseas expansion, digital content development, new services and innovative products.
Etude House, owner by Amorepacific has about 230 stores in 12 Asian countries, and by 2020 aims to have increased its number of overseas stores by 50 per cent.
From June, Etude House has been managing a multi-channel network, the Beautizens Club, to support the development of new beauty content creators. This has led to 25 content creators from Asia being chosen as “beautizens” to receive makeup tutorials.
Etude House also has a new mobile app that lets customers administer their account. It also contains digital content that analyses purchasing patterns and draws on age-group general preferences to suggest colours.
In co-operation with the Seoul Metropolitan Rapid Transit Corporation, the brand offers customers the option to pick up their online-ordered products at lockers inside subway stations.
South Korea’s department store sales rose for a third straight month in August thanks to widespread discounting ahead of a major public holiday this month, government data showed on Thursday.
Combined sales at department stores run by Hyundai Department Store, Lotte Shopping and Shinsegae Co rose 4.1 percent on-year, data from the Ministry of Trade, Industry and Energy said.
This followed a 7.0 percent jump in July.
Sales of all individual categories at department stores rose in August, with the exception of men’s clothing.
The same data showed August sales at discount stores fell 1.3 percent from a year ago after rising for two months previously. In August, sales rose 2.1 percent.
The decline was attributed to a 14.8 percent slump in sports-related goods as the unusually hot summer weather this year discouraged customers from seeking them out, the monthly report said.
Online open market sales growth at websites owned by eBay Korea Co Ltd and others slowed slightly to 22.4 percent in August from 31.2 percent in July.
Retail sales overall in August mainly saw demand for household electronics like air conditioners and gifts ahead of the Chuseok holiday season, the data said.
South Korea kicked off a nationwide shopping event on Thursday with a variety of promotions, cultural and entertainment events to draw more shoppers at home and abroad and revive the sluggish domestic consumption.
The massive shopping campaign called “Korea Sale Festa” runs until Oct. 9, involving major retailers, manufacturers and traditional markets, while cultural and entertainment programs for foreign travelers will be held throughout October.
The shopping festival is jointly hosted by the Ministry of Trade, Industry and Energy and the Ministry of Culture, Sports and Tourism to tie up the retail industry with tourism and cultural sectors to unleash pent-up demands in time with the major Chinese holiday season.
A total of 249 retailers, manufacturers and online malls provide discounts and promotions at 59,000 stores across the nation, offering much wider options compared with last year’s fall shopping season when “Korea Black Friday” and “Korea Grand Sale” were held between September and October.
This shopping season isn’t just limited to malls and online retailers. Consumers looking for a new vehicle, phone or television will find some attractive bargains at car dealerships and electronics stores as major companies join the shopping season. Among the big names are Samsung Electronics, LG Electronics, Hyundai Motor, AmorePacific and LG Household & Healthcare.
A sales manager at Samsung’s electronics store in Seoul explains discount deals on a refrigerator on Sept. 28, 2016, in this photo provided by the company.
Three car makers — Hyundai Motor, SsangYong Motor and Renault Samsung Motors — offer up to a 10 percent discount on cars during the period, while Samsung Electronics and LG Electronics give half priced deals on best-selling home appliance items. Consumers can get up to a 670,000 won discount (US$612) on Samsung’s Galaxy S6 Edge Plus smartphone.
Department stores give deep discounts on luxury goods, fashion items and cosmetics, knocking down price tags by up to 80 percent.
Among the top price for a giveaway event is a 700 million won apartment offered by Lotte Department Store, the retail unit of Lotte Group.
Online malls and social commerce sites, including Coupang and Ticket Monster, are also offering cyber deals during the period, with the government supporting part of their delivery fees to boost sales.
About 400 traditional markets nationwide will hold various events and unique festivals in October to catch the eyes of visitors and spur the local economy.
The event held ahead of the year-end holiday season is raising expectations among local retailers as it overlaps with a Chinese national holiday that runs from Oct. 1-7. It’s when deep-pocketed Chinese travelers hop on planes to go on a holiday shopping spree.
According to industry officials, about 250,000 Chinese tourists are expected to visit South Korea during the weeklong autumn holiday.
With so much money up for grabs, local retailers have prepared a bunch of promotional events and giveaways targeting Chinese patrons.
Myeongdong, the busiest shopping street in downtown Seoul, has transformed to embrace Chinese travelers, supplementing Chinese-speaking shop assistants and putting up Mandarin signs for the latest beauty products.
Duty free stores, which heavily rely on Chinese travelers, also offer promotional and entertainment events, teaming up with credit card companies.
Shinsegae Duty Free holds “K-beauty and fashion week” during the Chinese holiday at its Myeongdong branch to attract those who are interested in beauty know-how and encourage purchase of Korean beauty products.
Market watchers say the influx of Chinese tourists will give much-needed momentum to revitalize the tepid domestic consumption, which will in turn drive up shares related to consumption and leisure.
“While last year’s sales event was mostly about offering discount deals, Korea Sale Festa is more systematic with wider discounts and cultural events for foreign travelers,” Nam Ok-jin, a researcher at Samsung Securities, said. “Special offers given during (China’s) National Day is expected to maximize the effect.”
Ticket Monster (T-Mon), Korea’s leading social commerce platform, announced Thursday that it will be supplying convenience store franchise CU with Xiaomi products for offline distribution.
CU outlets have already been selling Xiaomi portable battery packs (5000mAh) since the beginning of September, which were also supplied by T-Mon, but they will now have nine other products from the Chinese company on offer, including ear phones, selfie sticks, LED lights, and USB fans.
The move is a win-win for both CU and T-Mon.
“With the widespread use of smartphones, sales of smartphone-related products such as portable battery packs have increased by 69 percent this year,” said official.
“We’ll be increasing our Xiaomi inventory at outlets closer to universities, offices, and entertainment districts, while also targeting Chinese tourists at our stores near tourist attractions like Myeongdong and Gwanghwamun.”
As for T-Mon, it will be securing an offline distribution channel to further expand its revenue stream.
“By allowing offline sales of products that used to be sold exclusively online, we’ll be offering our partners new opportunities to increase their profits,” a T-Mon official said.
Xiaomi products have grown increasingly popular on Korea’s ecommerce platforms for their affordability. The company’s 5000 mAh battery pack, in particular, makes up about 80 percent of all portable battery sales on T-Mon.
Although the Chinese electronics giant has yet to introduce its smartphones to Korea, the brand has gained widespread recognition with massive popularity on ecommerce platforms like T-Mon and Coupang.
Xiaomi made its official entrance here in March through an exclusive deal with local distributor Youmi, and has since been selling a wide range of electronics and consumer goods including the Mi Band (fitness wearable), an air purifier, Bluetooth speakers, a bicycle, and even backpacks.
The company also opened its first offline store at the Yongsan Electronics Market in June, and is rapidly expanding its outlets across the Seoul Metropolitan Area.
Galaxy Note 7 smartphones caused headaches and occasional burns to their owners, but only 60 percent of the defective devices sold in South Korea and the U.S. have so far been exchanged with new models, Samsung says.
This means that 40 percent of the potentially explosive handsets are still in consumer hands, despite the fact that Samsung issued a worldwide recall on the smartphone almost a month ago.
The percentage shows that the successful exchanges in the U.S. are slowing down.
At the middle of last week, Samsung reported that 50 percent of the potentially hazardous smartphones were replaced with new models in the U.S. It would seem that the number of returns increased by 10 percent in five days, but keep in mind that the total figure takes into account South Korean returns as well.
Last week, reports from South Korea indicated that the return percentage in the country is north of 50 percent.
Samsung tried its best to motivate South Korean retail stores to accelerate the replacement of faulty Note 7 phones, and it even put financial incentives on the table. The Korea Times reports that vendors can earn 20,000 won (about $18) per exchanged phone. Stores can get an additional $18 per phone should they top an 80 percent exchange rate of the Note 7 handsets prior to the end of September.
Even with the financial motivators in line, mobile customers in South Korea seem rather reluctant to let go of their Galaxy Note 7s. In the OEM’s home country, it took five days to see half of the Note 7 stock exchanged, whereas in the U.S. and Singapore the switch only took two days for 50 percent of devices.
Singapore customers wasted no time and swiftly returned the fiery Note 7 models. Samsung’s recall program was open for 10 days in the country and it already ranked an 80 percent exchange of the Note 7.
The recent battery scandal dented Samsung’s reputation as a reliable electronics manufacturer as well as its share value. However, 90 percent of Note 7 customers choose to replace their phones with a safe version of the same device. Of South Korean clients, only 4 percent chose a refund over an updated Note 7.
As a reminder, the biggest smartphone builder announced on Sept. 2 that at least 2.5 million Note 7 smartphones are being recalled due to faulty batteries that can overheat while charging, causing some phones to burst into flames.
According to the OEM, the replacement devices that are in stores are sporting safe batteries.
August shopping data from tax refund specialist, Global Blue, indicates a downward trend in tax-free in-store sales of -13% (year-on-year) – the worst decline since the start of the year and a big fall compared with July’s 0% change.
There are stark differences in August tax-free sales, largely because of the beneficial ‘MERS effect’ in Korea.
While transactions rose significantly in August by +25%, the decline of average spend at -30% clearly shows that individual travellers are spending less and this is probably due to a combination of factors ranging from China’s customs clampdown, a different passenger profile, and currency influences.
Global Blue says: “The rise of less affluent middle class Chinese travellers continues to bring down the average spend of tax-free shopping globally, with a sizeable impact in Asia. Across the region more ‘value seekers’ from second-tier and third-tier cities are growing their transactions, but with less affluent spending patterns.”
Duty free and travel retailers can take comfort from the rising number of travellers in Asia, which correlates with higher numbers of transactions in South Korea, Japan and Singapore. But, says Global Blue, the overall sales performance in the region is significantly limited by the headwinds of a stronger yen in Japan and Chinese spending in the region increasingly being driven by value-seeking shoppers who spend less.
COMMON THEME IS LOWER SPEND POTENTIAL
The travel boost is not compensating for the spending fall in key duty free and travel retail locations such as Singapore and Japan – while Hong Kong (downtown) does not even have the benefit of rising traveller numbers.
All Global Blue’s Asia tax-free shopping destinations rely on increased arrivals and traffic, yet the common theme is lower spend potential. With -33% sales in August, Japan has been affected by the strong currency, which has negatively impacted the number of transactions.
Transactions are strongly up but average spending is even more strongly down.
Global Blue estimates that 23% of Japan’s negative sales performance this month is driven by the softer yen and the other 10% is due to increased numbers of less affluent Chinese shoppers arriving in Japan (+20 to +30% more in the first half of the year at Narita airport) from second-tier and third-tier cities.
South Korea’s sales performance of +44% this month (versus an impressive triple-digit growth of +215% for July) is on the back of highly beneficial comparisons to last year when the MERS virus took a big toll on traffic.
ASIA YEAR-TO-DATE DOWN -21%
Transaction numbers are significantly up across all globe shopper nationalities in Asia, except for Hong Kong (-10%), reflecting the increase in air arrivals across Japan and South Korea. Taiwanese globe shoppers (+43%) showed the highest transactions growth in the region in August, followed by Chinese (+28%), with Thais and Indonesians up too. However, the decline in average spend per transaction is a long-term trend.
Global Blue estimates that the new Chinese value seekers are having a negative impact of between -6% and -10% across Asia as their demand for regional travel increases, driven by the Chinese government’s strategy of strengthening the economy by localising discretionary spending.
Year to date tax-free sales performance across the region is flat and average sales are down -21%. A less favourable economic situation in mainland China is also not helping travel spending: for example Japan’s current picture YTD is a +26% increase in transactions and a decline of -25% in average sales.
Seoul police busted four retailers Monday for selling counterfeit products of luxury brands in Myeongdong, one of the busiest tourist and shopping districts in Seoul.
The gang launched operations in April, and has since sold 40-million-won ($36,245) worth of knockoff products from 41 brands that included luxury brands Louis Vuitton and Rolex. Converting the sales figure to the retail value of their respective genuine products, they were worth over 8.3 billion won, the police said.
The suspects displayed the products without the logo engravings to evade police crackdowns. Instead, they sold the final products with the logos at a separate storage area only when visiting customers asked for counterfeit products.
“Counterfeit products can badly hurt the image of Myeongdong, so we plan to continue our crackdown operations jointly with the local government and the intellectual property office,” said a police official.
Perry Ellis has signed a licence agreement with Doctorstick Korea Co to design, manufacture, market and distribute men’s and women’s contemporary sport and casual shoes under the Perry Ellis brand.
Currently the US brand has 37 product categories, spans more than 50 countries and generates almost $1 billion in global retail sales annually.
“We are confident this joint effort will provide us with a platform consistent with our strategic initiative to expand the Perry Ellis brand globally,” says Perry Ellis International executive chairman George Feldenkreis.
Doctorstick Korea plans to launch the footwear program through eCommerce platforms and television shopping channels in Korea in spring next year, and target an introductory full collection by the middle of the year.
Established in 2007, the company also licenses the Flying London and Mono Cross brands in Korea.
Apple Korea is to open the brand’s first official store in Seoul, but no date has been revealed.
A lease has been signed for a property in Garosu-gil Road, an upmarket, tree-lined street, with Apple Korea paying a 1.6 billion won (US$1.44 million) deposit for the lease, which runs to February 29, 2036.
Without an Apple Store in Korea, consumers have had to turn to third-party suppliers, leading to complaints about delays and poor service, reports the Korea Times.
In response, the Korea Fair Trade Commission told Apple in December to rectify its policy.
Apple has started recruiting staff for the Seoul store, advertising positions covering marketing, store crew and customer service.
Bangkok is the top-ranked destination city by international overnight visitor arrivals, according to the annual Mastercard Global Destinations Cities Index.
Ranking 132 cities, the index projects visitor volume and spend estimates while delivering insights into how people travel and spend around the world.
As cross-border travel and spending continue to grow at a faster pace than the world GDP, the world’s cities continue to be engines of broader economic growth, says Mastercard.
According to the study, Bangkok is projected to receive 21.47 million international overnight visitors this year, just ahead of London (19.88 million visitors).
Also in the top 10 cities are:
• Kuala Lumpur, 12.02 million visitors
• Paris, 18.03 million visitors
• Istanbul, 11.95 million visitors
• Dubai, 15.27 million visitors
• Tokyo, 11.70 million visitors
• New York, 12.75 million visitors
• Seoul, 10.20 million visitors
• Singapore, 12.11 million visitors
Hong Kong was 11th.
“The way people travel and spend across borders indicates just how interconnected and important the world’s cities are,” says Mastercard president of international markets Ann Cairns.
As well as the top 10 cities, Mastercard names the top 10 fastest-growing destinations, which indicates the increasingly importance of Asia Pacific to the global economic landscape.
Osaka new star
Osaka has shown the strongest growth in international visitors (24.15 per cent) over the past seven years. Other cities that make the fastest-growing list:
• Chengdu, 20.14 per cent
• Taipei, 14.53 per cent
• Abu Dhabi, 19.81 per cent
• Xi’an, 14.2 per cent
• Colombo, 19.57 per cent
• Tehran, 12.98 per cent
• Tokyo, 18.48 per cent
• Xiamen, 12.93 per cent
• Riyadh, 16.45 per cent
For the first time, the index explores whether visitors travel for business or leisure, giving broader insights into spending on dining, lodging and shopping. The index shows that more people are travelling to the top 20 cities for leisure with Shanghai being the sole exception.
Visitors to the top 20 cities overwhelmingly spent more on shopping, as opposed to dining, says the index.
Asia Pacific dominates both the global top 10 (five cities) and top 10 fastest-growing destination cities (seven cities).
Public data is used in deriving the international overnight visitor arrivals and their cross-border spending in each of the 132 destination cities for the index. Mastercard volumes or transactional data is not considered.
CJ Group says it has withdrawn from the bidding process for franchise rights for McDonald’s Korea.
The Korean multinational gave no reason for its loss of interest.
McDonald’s US is seeking buyers for 20 year franchise rights for its business in China, Hong Kong and Korea as it moves to a franchise partnership model outside the US.
CJ Group, whose interests include cinema chains in Asia and the Tous Les Jours bakery chain, said this week it had not entered the latest round of bidding for the business.
That leaves a consortium including Maeil Dairy Industry and another group with KG Group and NHN Entertainment Corp as the last two potential buyers on the shortlist.
McDonald’s hopes to earn about US$280 million from the Korean master franchise rights.
Swedish home furnishing company Ikea is launching kitchen products for the first time in Korea.
“We have 700 articles in the cooking and eating area, completely new for the Korean market,” Andre Schmidtgall, country retail manager at Ikea Korea, said Thursday during a press briefing at the Times Square shopping mall in Yeongdeungpo District, southwestern Seoul.
Although Ikea entered the Korean market in 2014, sales of kitchenware such as dishes and cups from the Swedish home decor maker were not permitted due to legal restrictions related to product labeling. After the Korea Food and Drug Administration eased up on the restrictions this year, the company was able to bring in the full set of its items to Korea.
Ikea’s store in Gwangmyeong, Gyeonggi, includes a 1,000-square-meter (10, 764 square foot) space devoted to kitchen products and began sales on Sept. 9. The new promotional campaign for the product line begins next Tuesday and runs through Nov. 12 at Times Square. The mall will include a venue set up with an Ikea kitchen and allow visitors to cook food there.
Even as the company rolls out its new products here, Ikea is still working on cleaning up its stained image in Korea after delaying a recall of drawer chests that killed several children after tipping over.
“We have tested drawer chest products and suspended another 15 models a day before yesterday,” Schmidtgall said.
The company already halted sales of 15 drawers including the MALM drawer on Sept. 9, following recall orders from the Korean Agency for Technology and Standards under the Ministry of Trade, Industry and Energy.
“We put safety and security as the utmost priority,” Schmidtgall said. “Tipping risk is an industry-wide problem.”
According to Ikea, particular models of its drawer chests are banned from sale only in three countries – the United States, Canada and Korea – and in other markets, the article is sold with recommendations that the drawer be anchored to the wall for safety.
Ikea Korea in the latest financial year from Sept. 2015 to Aug. 2016 recorded 345 billion won ($309.4 million) in revenue. From January to August 2016 compared to the same period last year, revenue rose 17 percent.
The company is working on a second Korea branch in Goyang, Gyeonggi, set to open by the latter half of next year. It plans to build up to six stores in Korea by 2020. Likely locations include the Seoul metropolitan area, Daejeon and Chungcheong in the country’s central region, and Busan in the southern region.
Apple Inc. has made inquiries about opening its first retail store in South Korea, in a signal that the technology company might be looking to step up competition in the backyard of smartphone rival Samsung Group.
Apple looked at sites across the street from the group’s longtime headquarters in Seoul, according to people familiar with the matter.
The Cupertino, Calif., company, which is Samsung Electronics Co.’s biggest rival in the mobile-phone market as well as a major customer of its smartphone components, is looking at locations near the South Korean company’s own three-story global flagship store in Seoul’s upscale Gangnam neighborhood, the people said. The company has sent retail executives to South Korea in recent months to check out potential sites for the store, they said.
The people warned that Apple’s plan hasn’t been completed and a store opening could take about a year.
“We have made no announcements about a store there,” a spokesman for Apple said.
A spokeswoman for Samsung Electronics declined to comment.
South Korea, Asia’s fourth-largest economy, has long been a tough market for Apple. Smartphone sales are dominated by hometown favorites Samsung and LG Electronics Inc., who together account for about 80% of the smartphone market in the country. Apple doesn’t break out sales for South Korea separately.
After the launch of the larger-screen iPhone 6 and iPhone 6 Plus in late 2014, Apple jumped to about one-quarter of the market, before its share fell below 10% in the second quarter of 2016, according to data tracker Strategy Analytics.
Opening a glitzy flagship store would send a message that Apple intends to compete hard on Samsung’s home turf.
From a glass cube on New York City’s Fifth Avenue to a Norman Foster-designed store in Istanbul, Apple has used its prominently placed retail stores to attract buzz for the brand and to sell premium handsets. In Seoul, Apple has scouted potential locations around the Gangnam subway station, Seoul’s busiest and home of the headquarters of Samsung Group, as well as another site on Seoul’s fashionable Garosu-gil shopping street, according to the people.
In South Korea, Apple relies on third-party retailers who apply for licenses to operate as authorized Apple resellers, as well as carrier partners.
In mainland China, a critical market for Apple, the company has opened 36 Apple stores, including in Shanghai and in second-tier cities such as Nanning, Fuzhou and Jinan. It has six Apple stores in Hong Kong and seven in Japan.
Apple’s hunt for retail real estate in Seoul comes as Samsung grapples with a recall of its latest smartphones amid reports of batteries in the Galaxy Note 7 catching fire. Analysts estimate the recall of 2.5 million devices could cost
Samsung more than $1 billion.Before the Note 7 recall, Samsung reported its most profitable quarter in two years in July as Apple suffered a 27% drop in quarterly net profit compared with a year earlier.
Samsung’s share of the global smartphone market rose to 22.3% in the most recent quarter from 21.8% a year earlier, according to research firm Gartner. Over the same period, Apple’s share fell to 12.9% from 14.6%.
Pei Wei Asian Diner, the fast casual pan-Asian US restaurant chain, has opened the first of 11 restaurants planned for South Korea.
Known for bold flavors and an affordable Asian-inspired menu, the US company has partnered with ELX Food & Beverage, led by chef Justin Choi for its first foray into Asia.
The inaugural store has opened at Starfield Hanam, the country’s largest shopping mall. The company is planning to open 10 more Pei Wei locations by end of 2017 including Daejeon Galleria Department Store and Busan Seomyun Lotte Department Store.
Choi will supervise the brand in Korea and Pei Wei will offer its characteristic ‘scratch and open kitchen’, which allows customers to see the cooking process that includes Chinese woks.
Pei Wei is the second brand of the globally popular P F Chang’s which was brought by ELX F&B to the South Korean market.
“South Korea’s sophisticated yet practical customers are a perfect target for Pei Wei’s simple, yet healthy and high-quality dishes,” said Kwak Ki-hoon, CEO of ELX F&B. “Through our insights and experience behind our successful launch of P F Chang’s, I look forward to leading local dining trends through Pei Wei’s flavorful selection and fresh offerings.”
The Pei Wei menu in Korea will feature the same items popular in the US, including its signature Lo Mein and Quinoa & Fire Chicken, in addition to the ‘Wok Classics’ Noodle & Rice bowl options, soups, salads and Small Plate offerings.
Founded in 2000, in Scottsdale, Arizona, Pei Wei owns and operates more than 200 restaurants in the US, Middle East, South Korea and airports.
Seoul’s Incheon Airport not only tops the Asia-Pacific rankings for retail spending – it has the highest turnover of any airport in the world.
Which is remarkable given it ranks 10th in the region by passenger numbers, according to Airports Council International data, with 49,281,220 people passing through in 2015, compared to more than 90 million in Beijing and 55 million in Singapore.
Asian airports dominate the world top 100 airport retail rankings measuring shopper spending, according to data collected by Swedish company Generation Research for 2015. While the tables lists the world’s top 100 and Asia-Pacific’s top 50, it does not provide any actual figures for spending. Sales from around the world were converted into US dollar value.
In the global airport retail rankings, Incheon leads Dubai Airport, with Singapore Changi third.
In the Asia rankings, published below, Singapore leads Bangkok – something of a surprise third-place getter given it is generally regarded as an expensive airport for ‘duty-free’ goods, and Pudong, Shanghai in fourth. Hong Kong makes it only fifth on the table, despite its huge passenger throughput and broad retail offer.
Tokyo Narita, Beijing Capital, Taipei Taoyuan, Cheju and Osaka Kansai complete the top 10.
On the global rankings, those Asian airports take fifth, sixth, seventh, eighth, 10th, 12th and 14th places.
London Heathrow takes fourth place, Paris de Gaulle ninth, and Frankfurt 13th.
