K-Beauty Targets U.S. Offline Retail Stores

Korean Cosmetics Make Inroads Into U.S. Offline Retail
APR and Others Enter Major Stores in Q2
Rapid Sales Growth in the European Market, Where Market Share Remains Low

Riding the global wave of K-pop and K-drama, K-beauty is also expanding into the world market. Growth in the United States and Japan is particularly strong. However, share prices have risen even more steeply than sales growth. Now, attention is shifting to the sales trends of cosmetics companies leading K-beauty. On August 29, Mirae Asset Securities published a report titled "Cosmetics: The U.S. Offline Market Opens Up," analyzing that in the United States, channel diversification is taking place through offline stores, and that special attention should be paid to the relatively low market share and growth potential in Europe.

Korean Cosmetics Begin to Appear on U.S. Store Shelves

Until last year, Korean cosmetics grew mainly through competition on online channels such as Amazon. Offline penetration was limited to countries like Japan. However, in most regions, including the United States, the offline market is overwhelmingly larger than the online market. Fortunately, in the second quarter of this year, initial sales were recorded at major retailers such as Ulta Beauty. APR posted 2.5 billion won, VT 4 billion won, and iFamilySC 1 billion won in sales, though the scale remains small.

However, depending on future trends, sales could increase rapidly. Bae Songyi, an analyst at Mirae Asset Securities, stated, "Top brands at beauty specialty retailers like Ulta Beauty and Sephora are estimated to post over 100 billion won in sales through these channels alone," adding, "In the United States, which is considered a mature market after more than three years of offline entry, this could become a new growth engine."

Market Share in Europe Also Rises

According to market research agencies, the cosmetics markets in the United States and Europe are similar in size. However, while 150 million dollars worth of Korean cosmetics are exported to the United States each month, only 90 million dollars are exported to Europe. Market entry in Europe is still in its early stages. Korean products account for about 5% of all imported cosmetics in Europe. This is significantly lower compared to Japan at 40%, the United States at 20%, and China at 15%.

Nevertheless, Korean cosmetics are making rapid inroads into the European market. Last year, the share of cosmetics exports by country was 31% to Greater China, 18% to the United States, 14% to Southeast Asia, 10% to Japan, and 7% to Europe. This year, the figures were 25% to Greater China, 18% to the United States, 13% to Southeast Asia, 10% to Japan, and 10% to Europe. The European market grew by 68% compared to the same period last year.

Bae Songyi, the analyst, commented, "We are focusing on APR, VT, and iFamilySC, which are actively entering new channels and regions, including the U.S. offline market." She also analyzed, "Cosmecca Korea and Genic, which have secured brands in the expansion phase as their main clients, are also in a favorable position for investment."