SOUTH KOREA REPORT: SHINSEGAE DUTY FREE


putting in new cosmetics brands while existing cosmetics brands will grow.” Hong expresses optimism that


Chinese group tourists will start returning to South Korea later this year, as Seoul’s relations with Beijing gradually improve. Southeast Asian visitor numbers


also will rise, further lifting sales of South Korean cosmetics and fashion brands. Chinese customers account for


70% of total sales in Shinsegae Duty Free’s Myeong-dong store, while South Korean customers represent a further 20% of the store’s sales. “The Chinese average spend per


customer is over $1,000, the South Korean customer average spend is about the same,” Hong notes. “The Japanese customer average spend is from about $500 to $600.”


Japanese beauty focus With its Myeong-dong store’s luxury brands’ collection almost complete, Shinsegae is planning to expand its collection of Japanese skincare and make-up brands, which are popular among foreign customers. “We are looking at Japanese


cosmetics, we have a few brands already,” Hong remarks. “We know there is continual


demand for Japanese brands from Chinese customers, so we are seeking more high-end and medium range Japanese cosmetics. “There are a few candidates for


different positions. There will be a rearrangement, as we don’t want to out existing cosmetics brands. “Our cosmetics zone is pretty


much complete. We are now looking for a few South Korean and Japanese brands that are becoming popular among Chinese visitors.” Perfume and cosmetics account


for a 55% share of sales at Shinsegae’s flagship downtown store, the revenue share remaining unchanged for the past 15 months. Fashion, watches and jewellery combined represent a further 30% share of sales. Meanwhile, electronics, leather


goods, confectionery and souvenirs account for the remaining share of revenue.


MAY 2018


The South Korean brand share of total perfume and cosmetics sales is much higher in Shinsegae’s Incheon Airport shops than in its downtown stores. “The South Korean brand share


of cosmetics is 15% downtown while 80% are imported brands,” Hong explains to TRBusiness. “At Incheon Airport the South


Korean brand share is much higher; it’s almost over 50%. The 15% downtown South Korean brand share is pretty average for downtown duty free shops.” The flagship store’s South Korean


cosmetics collection continues to change regularly as new brands come in, while others disappear.


Diversified assortment Sulwhasoo, The History of Whoo and other big local brands continue to perform well, Hong notes, along with South Korean facial mask products. “A few South Korean colour make


up brands have entered the market including Vidivici, a high-end brand,” says Hong. “Traditionally South Korea’s duty


free cosmetics market has been driven by skincare, there are many good brands. “South Korea relies on imported


brands for colour make-up, but since Chinese visitors are looking for more colour make-up, South Korean cosmetics companies are looking and diversifying.” The recent trend among Chinese


customers to buy colour make-up in Shinsegae Duty Free shops reflects the growing number of younger female Chinese tourists who have recently begun to visit South Korea. “Our Chinese customers are


getting younger and younger; ladies are bigger users of colour make- up than our previous customers,” comments Hong. “We will strengthen our collection


and order more of these items and look at new colour make-up brands.” The growing popularity of colour


make-up is expected to boost overall cosmetics sales. Customers who previously purchased skincare products are now increasingly likely to buy skincare and colour make-up items.


“South Korea relies on imported brands for colour make-up, but since Chinese visitors are looking for more colour make-up, South Korean cosmetics companies are looking and diversifying.”


Hong Seok Ho, Shinsegae Duty Free


Most colour make-up purchases include several – rather than single – items, further increasing the likelihood of higher customer spending.


Beauty device appeal Beauty devices are also selling well. ReFa and Foreo are Shinsegae’s current top- selling beauty device brands. “We are looking more into beauty


device products,” says Hong. “There is demand for new


devices among Chinese and South Korean customers, so we will have more brands. Although interested in expanding


its beauty device collection, new brands are expected to be scattered around the perfume and cosmetics zone rather than displayed in a single designated area. “We are thinking of introducing


two or three more beauty device brands this year,” Hong states. “We are still assessing brands as


some are well known internationally but not well known in China. We are thinking of timing, when Chinese customers have interest in these devices.” «


South Korea’s duty free beauty market has traditionally been driven by skincare.


TRBUSINESS 111


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