South Korean cosmetics giant Amorepacific is planning to drastically reduce the number of its stores in China amid sluggish sales, while stepping up efforts to expand its luxury goods portfolio and online sales.
In 2019, Amorepacific operated 1,280 stores for five brands – Hera, IOPE, Mamonde, Etude and Laneige – in China. In 2020, that number fell to some 800 due to the coronavirus pandemic. The Innisfree brand alone has seen its number of Chinese stores increase from 610 to 280 in 2020 and could drop to 140 in 2022.
Innisfree saw more than a 50% drop in sales in China in the third quarter of 2021, as more affordable Chinese cosmetic brands emerge with products of equal or better quality.
“C-beauty shows strength in the color cosmetics sector. Chinese customers tend to buy cheap color cosmetics from local brands while preferring to buy more expensive luxury skin care products from foreign brands, ”Kyobo Securities analyst Jeong So-hyeon told The Korea Herald.
The downsizing of retail stores would be part of a strategic shift focused on the group’s premium product lines and online sales. To develop the e-commerce front in China, Amorepacific will increase the proportion of sales generated by digital platforms such as TikTok and the Kuaishou short video platform to 30%.