According to reports, Amorepacific smartly conveyed its comprehensive plan to actively expand the Western travel retail market during the TFWA exhibition in Cannes.
They plan to introduce their brands such as Sulwhasoo, Laneige, and Hera into the duty-free channels in the United States and Europe, marking another positive advancement in the "reshaping global balance" strategy.
This October, Laneige will make its debut at Kennedy International Airport, officially stepping out of the Asian travel retail market's scope.
Park Doo-bae, Executive Director of Amorepacific Travel Retail, stated: "The global duty-free market is undergoing rapid changes. By strengthening cooperation with major partners during the TFWA event, we ensure a vision for steady business growth."
The group ensures the successful entry into new markets through a series of strategies, maintaining leadership in existing markets, and promoting love for Amorepacific brands among multinational customers, all of which lay a strong foundation for the long-term sales and profit growth in the global duty-free market.
Determination to push into the European and American markets
Amorepacific Group Chairman Suh Kyung-bae stated publicly that they will focus on cultivating the vast potential of the North American and European markets. Especially by entering duty-free channels, it demonstrates a firm determination and meticulous layout to push into the European and American markets.
Since 2017, several brands of the group have entered the European and American markets, such as Sulwhasoo opening its first counter store in Paris, France, while Innisfree's first US store opened in New York, and Laneige also successfully entered the American market.
In the past two years, Amorepacific's influence in the European and American markets has become increasingly significant. Sulwhasoo launched a brand renewal strategy starting in 2022, removing the classic "Sulwhasoo" Chinese character logo on the packaging, and using a bright orange "Sulwhasoo" instead. They also appointed international brand ambassadors like Chinese actress Song Jia and renowned British actress Tilda Swinton.
Sales channels continue to expand
According to industry data, Sulwhasoo has been on US e-commerce platforms Dermstore and SkinStore since early last year, and gradually entered selected Sephora stores and the Amazon sales platform. Laneige officially landed on Amazon in the first half of last year, ranking high in the beauty and personal care category. Meanwhile, Innisfree is actively expanding into Sephora and Kohl's department stores.
Brand Acquisition and Strategic Reshaping
While expanding its existing brands, Amorepacific is also focusing on acquiring popular brands in the North American and European markets. For example, in 2022 and 2023, it acquired the American premium skincare brand Tata Harper and COSRX.
Currently, Amorepacific is "reshaping global balance" and redefining its core business areas and work methods, including establishing the U.S., Japan, the U.K., and India as markets with global growth potential for focused cultivation.
To adapt to this strategy, Amorepacific is also making bold adjustments to its organizational structure.
Since April this year, the senior management teams in China, North America, and Japan have undergone changes.Especially in North America,executive Giovanni Valentini, with his extensive professional experience and good reputation in the industry, has become a favored leader.
This also reflects the company's high focus on the North American market.
These strategic moves have been validated in Amorepacific Group's financial reports.
In the second quarter of 2024, Amorepacific's overseas market sales increased by 2.5% to 381.5 billion KRW, approximately 1.979 billion RMB, accounting for 42.2% of the total sales.
The strong performance in the global market comes from an 82.7% growth in the Americas, Europe, the Middle East, and Africa, with sales in the Americas growing by 65%, and sales in the EMEA (Europe, Middle East, and Africa) region nearly quadrupling, increasing by 182%.
Compared to the growth in the European and American markets, Amorepacific faces greater challenges in the critical Chinese market.
According to the brand's official website data, a comprehensive analysis of financial information from recent years shows that in 2023, the group's operating revenue declined by 10.5%, reaching 4,021 trillion KRW (216.3 billion RMB), with operating profit also down 44.10% year-on-year to 152 billion KRW (8.18 billion RMB).
Operating revenue in the Asian market decreased by 16% year-on-year, with the Chinese market accounting for 50% of Asian sales, and sales in China decreased by about 20%.
In the second quarter of 2024, Amorepacific's performance in the Chinese market further worsened, with sales falling 44.3% to 107.7 billion KRW, approximately 559 million RMB.
The main reasons are inventory pressures from e-commerce channels and structural adjustments in offline stores.
In the face of this situation, AmorePacific is actively adjusting its business strategy in the Asian market, particularly in China, striving for a qualitative breakthrough by significantly optimizing business structure and enhancing competitiveness.
Core brands such as Sulwhasoo, Laneige, Innisfree, and Mamonde have also undergone varying degrees of brand updates and adjustments.
In April of this year, AmorePacific appointed Park Tae-ho as the president of its China region, succeeding former president Hwang Yonghmin, to fully lead the management and development of its business in China.
Soon after the new president took office, the group's high-tech skincare brand AP Serge Lutens officially entered the Chinese market.
This not only expanded the group's market share in the high-end beauty market but also represented an attempt to find new growth points in the Chinese market.
With the popularity of Korean wave culture such as K-POP and Korean dramas, Korean cosmetics are increasingly welcomed in the Western market.
Previously, Korean beauty brands established a foothold in the Chinese market by relying on high cost-effectiveness and unique makeup looks, and now this trend is spreading to the Western market.
However, the market is ever-changing, and global brands must establish closer ties with local consumers to succeed.
Although Korean beauty brands are currently facing the challenge of how to grasp and meet local market demands,
AmorePacific's various strategic decisions show that its investment intentions in both the Western and Chinese markets remain unchanged.
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