Health & Beauty

The impact of the epidemic on the Korean makeup "shopping paradise" Seoul Myeongdong business district continues. According to CCTV Finance, nearly 80% of cosmetics stores in the Myeongdong business district (Myeongdong) have closed since the new crown epidemic swept through in 2020.

The report cited data from the Korea Fair Trade Commission that the closure rate of Korean beauty stores in 2020 is as high as 28.8%. Many beauty shops use promotional measures to help themselves, but the effect is not ideal.

The Myeongdong business district is a well-known shopping district in the center of Seoul, the capital of South Korea, and is especially popular with foreign tourists. Before the epidemic, the Myeongdong business district not only gathered major international clothing brands, but also famous local Korean beauty brands such as Laneige and Etude House.

Chinese tourists used to be the main consumers of clothing and beauty shops in the Myeongdong business district, but after the outbreak of the new crown epidemic in 2020, the cliff-jumping decline of Chinese tourists to South Korea caused a huge blow to the retail industry in the business district.

In November 2020, Jiemian Fashion reported that in the lanes on both sides of Myeongdong Avenue, the main street of the business district, many mid-range cosmetics stores, clothing stores, and food and beverage outlets from various countries are in It has gradually closed down last year. In the third quarter of 2020, the vacancy rate in the Myeongdong shopping area was as high as 28.5%, five times the overall market average.

But this situation is still getting worse. In July 2021, the Korea Times reported that major Korean beauty giants that could have supported in 2020, such as Amorepacific and LG Home Health Care, have also closed their brands in Several shops along the street in the Myeongdong area.

According to a market research report released by the Korea Real Estate Board, a South Korean real estate market consulting agency, the vacancy rate of small shops in the Myeongdong business district in the second quarter of 2021 has reached 43.3%, which is a further increase from the 38.3% in the first quarter of 2021. This is the highest store vacancy rate in the Myeongdong business district since 2017.

Although the tourism retail channel in the domestic market has been hit, exports of Korean cosmetics to overseas markets have further increased. According to the data of the Korean Customs Service, the Korean customs agency, the export volume of Korean cosmetics in 2020 was US$6.122 billion, a year-on-year increase of 14.8%.

While the physical retail industry around the world has been impacted to varying degrees, the e-commerce market is experiencing vigorous development. In 2020, the sales of Korean cosmetics exported through e-commerce platforms more than tripled, from 47 million U.S. dollars in 2019 to 145 million U.S. dollars in 2020.

Among them, the Chinese mainland market has further consolidated its position as the largest export market for Korean cosmetics, recording a total of US$3.046 billion in Korean cosmetics exports in 2020, accounting for nearly half of its global market. At the same time, Japan and the United States are also the main export markets for Korean cosmetics in 2020.

It is worth noting that with the help of overseas cross-border e-commerce and wholesale channel partners, the Korean cosmetics industry is also expanding into emerging markets. The Nikkei Asian Review reported that Turkey and the Middle East market are becoming emerging overseas markets for Korean beauty. Trendyol, Turkey's largest e-commerce platform, told the media that the sales of Korean beauty on the platform has been five times that of a year ago. Alibaba Group is the holding company of Trendyol.

According to data from the Korean Trade Department, South Korean cosmetics exported to Turkey in June 2021 recorded US$7.8 million, an increase of more than 81% over the same period in 2019. Although Turkey and the Middle East account for a small share of Korean cosmetics' global exports, their growth is significant. Practitioners believe that this is mainly due to the vigorous development of the e-commerce industry, the influence of social media KOLs, and the promotion of local distributors.

In addition to e-commerce channels, Hong Kong cosmetics retailer Watsons and beauty retailer Sephora are also promoting Korean makeup brands in their Turkish stores. In addition, Watsons opened its first store in the Middle East in October 2020, and plans to open more than 100 stores in the Middle East by 2025.