Asia Personal Care & Cosmetics Market Guide 2016

Since the demand for new retail channels has become bigger and consumer demands segmented,
various channels such as select shops and multi shops are entering the market. For example, LG
Healthcare and Household launched its select shops ‘Tomaru’ and ‘Nature Collection’ and expanded its
operations in duty free shops. Commercial Service Korea believes that select shops/multi shops will play
an increasingly important role in the distribution of cosmetic products in this market.
On-line shopping malls have been making rapid inroads as a key marketing channel with the increase of
smartphone and SNS users and its accessibility. South Korea stands out as the country with the highest
smartphone ownership rate/broadband penetration rate and fastest average internet speed. Sales via
mobile shopping have increased dramatically in recent years. Of the total online shopping, the
percentage of mobile shopping jumped from 17.0% in 2013 to 45.4% in 2015. This new trend reflects
the new shopping style called ‘morooming’, which refers to people who “window shop” offline and then
purchase online.
Korean consumers are increasingly purchasing product directly from overseas markets. Overseas direct
purchase represented more than USD 1,521 million in 2015 from USD 274 million in 2010. Healthcare
supplements (20%), cosmetics (14%), and food (13%) are very popular among overseas online Korean
buyers. In 2014, the Korean government simplified the customs procedures for almost all consumer
goods (with a few exceptions, including medicines) to improve the convenience of overseas direct online
shopping. Under the Korea-US FTA, the importation of goods valued at less than USD 200 (including
taxes, shipping & handling) from the U.S. are eligible for the simplified customs procedures called a ‘list
clearance’, which is a quick, one-day customs clearance procedures as long as the logistics/courier
company provides the full packing list to Korean Customs, and if the item qualifies for ‘personal use’.
Imported cosmetics accounted for approximately 40% market share in the Korean cosmetics market.
There is a large variety of products in the market; competitive imports differentiate themselves from
existing offerings through brand identity, packaging, unique formulations and ingredients.
Imported cosmetics are primarily sold through on-line sales (32.7%), specialty stores (16.0%), brand
shops (9.0%), hypermarkets (7.3%), department stores (6.6%), duty free shops (1.7%), multi-level
marketing (1.6%), home shopping channels (1.3%), and other (23.7%).
There are currently three major franchise drug stores competing in the local market: CJ Olive Young, GS
Watsons, and Lotte LOHBs. Shinsegae is planning to launch Boots in the first half of 2017. These
retailers target customers focusing on wellness products by offering organic/natural cosmetics,
nutritional supplements, and general consumer goods.
The mobile advertising paradigm is gaining popularity in the Korean market as a platform to customize
advertisements for each consumer. Cosmetics companies try to maximize the impact of advertising by
hiring celebrities and powerful beauty bloggers as brand models and focus advertising campaigns
through major portal sites such as Nate, Daum, and Naver and SNS (YouTube, Facebook, Pandora TV,
etc.). In addition, celebrity product placement (PPL) is considered one of the strongest marketing tools.
Product Trends
Korean beauty experts predict that skin care will remain the largest cosmetic category over the next few
years, adding that multi-purpose products are becoming increasingly popular with consumers who are