Business Category Podcasts Reports
Contact My Account About
Click to Share

Amorepacific to Close 80% of Innisfree Stores in China

January 10, 2022 Kelly Kovack
January 10, 2022
Shutterstock

South Korean cosmetic brands used to be all the rage in China. In 2014, South Korea exported $600 million of cosmetic products to China, representing 31% of its total cosmetic exports, according to the South Korean government. Riding the K-beauty wave, Amorepacific launched its Innisfree business in the Chinese market in 2012, opening over 800 stores.

Fast-forward, K-beauty is struggling to maintain its relevance, and Amorepacific is revisiting its China strategy. According to data released by the Foundation of Korea Cosmetic Industry Institute, cosmetics exports to mainland China increased only 14% in 2019 to just over $3 billion, compared to the average annual increase of 41% between 2013 and 2018.

Political tensions in 2017 over the US THAAD missile system on the Korean peninsula started the decline. However, the Guochao trend has given rise to homegrown C-beauty brands built on fast trends, accessible pricing, and savvy marketing, creating stiff competition for mid- to low-market international brands.

By May of 2021, the brand had closed 140 stores in China and announced plans to shutter 170 more by the end of the year. Last week multiple Korean news outlets reported Innisfree was closing 80 percent of its stores on the mainland, going from 800 stores at its peak to just 140.

According to Chinese-language media, Amorepacific plans to make "a new round of strategic adjustments" for the China market in 2022, including a stronger focus on e-commerce and its mid- to high-end portfolio brands like Sulwhasoo. The Korea Herald reported a spokesperson denied the downsizing is due to sluggish sales in China; rather, the measures are being taken as a strategic shift to focus on high-end products and e-commerce sales.

Last spring, Amorepacific made the decision to shutter all Innisfree stores in North America, which included 10 US and Canadian locations, making Sephora's online store the destination for consumers to purchase the brand.

In a New Year’s opening ceremony for 2022, speaking about building a winning brand, Chairman of Amorepacific Suh Kyung-Bae said, "We need to clarify our brand value and focus on building engine products that will drive a growth and fully understand and nimbly respond to what customers want based on data."

×

2 Article(s) Remaining

Subscribe today for full access