Korean fashion giants turn their focus towards beauty

[Courtesy of LF]

South Korea’s major fashion companies are increasingly enhancing their beauty product offerings. Beauty products, which have close ties with fashion, provide significant synergies for fashion companies that are expanding into lifestyle markets. The higher profit margins and reduced seasonal impact also make beauty products an attractive proposition compared to fashion.

According to industry sources on Monday, major fashion companies such as LF, Handsome, and Shinsegae International, as well as big fashion platforms like Musinsa, ABLY, and Zigzag, are actively expanding into the beauty market. Large fashion companies are following the lead of luxury brands such as Chanel and Dior, which have expanded into perfumes, cosmetics, and skincare.

Lifestyle and culture company LF is targeting the beauty market by leveraging its vegan beauty brand, athé. Initially recognized for its value-conscious products, athé has recently emphasized trendiness to broaden its customer base. For example, the brand’s lip balm containers come with handles, allowing them to be adorned with ribbons like fashion accessories. The product has gained popularity among the millennial and Gen Z demographics to become the top item in the KakaoTalk gift list.

Aligning with this trend, athé has recorded an average annual sales growth rate of 200 percent over the two years since its launch in 2019, with annual sales doubling in 2023. Additionally, sales in the first four months of 2024 saw double-digit growth on year. The brand has further expanded its lineup to include high-functionality serums that contain vitamins.

Shinsegae International, the first in the fashion industry to venture into cosmetics, also views the cosmetics business as a major growth driver. While its overall sales fell by 0.9 percent to 309.4 billion won ($228 million) in the first quarter of 2024, the cosmetics division saw a 13.5 percent increase in sales to 104.3 billion won. Operating profit from the cosmetics division was 16.7 percent, higher than the overall figure (8.9 percent).

Shinsegae International operates around 30 import brands and six private brands (PB), with PBs showing significant growth in 2024 to date. Among its PB brands, sales of high-performance skincare brand Yunjac and luxury cosmetics brand POIRET increased 33 percent and 63 percent respectively on-year in the first quarter of 2024.

Skincare brand Swiss Perfection saw a 64 percent increase in sales and a 185 percent jump in operating profit for its Swiss branch after restructuring its global distribution network. The goal now is to expand business in North America and Europe and increase retail sales to 100 billion won within three years.

Handsome, a fashion company under Hyundai Department Store Group, aims to become a lifestyle company that offers more than just fashion items by introducing luxury beauty products that cater to customers’ overall lifestyles. Its luxury skincare brand Oera offers lotions and creams exclusively in Switzerland that are made using the pure water and premium ingredients available in the country.

Fashion platforms like Musinsa and ABLY are also focusing on beauty. ABLY, the first among women’s fashion platforms to introduce a beauty category, saw a 135 percent surge in beauty product transactions in the first quarter of 2024 compared to a year ago.