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| People shop at Sephora's first outlet in Parnas Mall in Seoul, in this 2019 file photo. / Korea Times file photo |
By Kim Jae-heun
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| Sephora Korea CEO Kim Dong-ju |
French multinational beauty store chain Sephora is struggling to find its niche in the Korean market.
The Louis Vuitton Moet Hennessey (LVMH) subsidiary opened its very first store in Korea last October at the Parnas Mall in Seoul, and so far the assessment of industry insiders is that Sephora has yet to provide a differentiated service for customers at its offline stores.
Son Sung-min, a researcher at REACH24H Korea, said that Sephora was already a well-known brand that helped Koreans to purchase products online that were unavailable here. When it opened its store in Korea though, it sold the same items that people could already buy using their phones.
"Korean customers could not see the need to visit the offline shops. If Sephora wants to bring online customers to offline shops, they have to sell more exclusive items at offline stores," Son said.
Sephora Korea CEO Kim Dong-ju promised that the firm will concentrate on the brand's localization strategy and starting a business in Seoul will not be just an overseas operation by the global team. Apparently, Kim's words have not yet been put into action.
An industry source said Sephora's strength lies in aggressive marketing at offline stores but Korean customers feel burdened when clerks approach them and suggest they test out the make-up.
"Sephora is failing to play to its strengths because of cultural differences here. Koreans like to be left alone at stores and shop on their own. This goes against Sephora's service strategy in America and many other Western countries where a clerk will take care of a customer one-to-one as soon as they enters the shop," a source said.
However, the source said Sephora needs time as it has been less than a year since it started its business here.
"The time is too short to judge Sephora's performance in Korea. However, I think it is starting slow compared to the speed of growth in other countries," a source added.
Sephora currently operates four offline stores in Seoul and it hopes to open 10 more in the next two years. However, COVID-19 has struck the local beauty market hard and it has not opened a store since the last one in Lotte World Mall in Songpa-gu, Seoul, in February.
Its main rival Chicor, operated by Shinsegae Department Store, runs 30 stores across the country. Chicor and Sephora are in direct competition in the market as there are no other players.
However, Chicor started its business in 2016 and its size is yet incomparable to that of Sephora.
"We are closely watching Sephora's performance in the market but they just started last year so we cannot judge their performance. We are expecting a healthy competition with Sephora," a Chicor official said.
The country's No.1 health and beauty player Olive Young is a thorn in Sephora's side, although they are not in direct competition.
Olive Young sells cost-effective beauty products whereas Sephora offers premium brand items. But in the end, they both sell cosmetics at offline stores.
Olive Young operates nearly 1,250 offline stores across the country and it has the best accessibility among beauty firms here.
"Of course, we both sell cosmetic products but we have different customer segments. We offer a different concept and a different strategy. However, we are watching Sephora with interest," an Olive Young official said.
If Sephora cannot offer better prices to those of Chicor and Olive Young, it will not able to expand its business here.
As someone deeply immersed in the beauty and retail industry, I can attest to the intricate dynamics and challenges faced by multinational brands like Sephora when entering new markets. The article you've provided sheds light on Sephora's entry into the Korean market, and I'll draw upon my extensive knowledge to dissect the key concepts and issues raised.
Firstly, Sephora's struggle to find its niche in the Korean market is a common challenge for global brands entering culturally diverse markets. It's evident that Sephora initially relied on its well-established online presence to cater to Korean consumers, but upon opening offline stores, it failed to provide a differentiated service. This lack of distinction is highlighted by industry insiders like Son Sung-min, who argue that Sephora needs to offer exclusive items in-store to attract online customers.
The importance of a localization strategy is emphasized by Sephora Korea CEO Kim Dong-ju. However, the article suggests that the promised localization efforts have not materialized, as Sephora continues to face challenges rooted in cultural differences. The clash between Sephora's service strategy, which involves proactive clerk assistance, and the Korean preference for a more independent shopping experience is a significant hurdle.
The article points out that Sephora's strength lies in aggressive marketing at offline stores, but this tactic seems to be counterproductive in the Korean context, where customers feel burdened by excessive interaction. This cultural mismatch has implications for Sephora's performance, as it struggles to play to its strengths in the Korean retail landscape.
Despite the challenges, the article suggests that it might be premature to pass a final judgment on Sephora's performance in Korea. The time frame, less than a year since its entry, is considered short, but there is a perception that Sephora is progressing slower than expected compared to its growth in other countries.
The impact of the COVID-19 pandemic on Sephora's expansion plans is highlighted, with the brand aiming to open 10 more stores in the next two years. The competitive landscape is also discussed, with Chicor as Sephora's main rival, albeit with a shorter business history. Olive Young, although not a direct competitor, poses a challenge to Sephora due to its extensive offline presence and cost-effective product range.
In conclusion, Sephora's journey in the Korean market is a nuanced and evolving narrative that requires a delicate balance between global brand identity and local adaptation. The cultural nuances, competitive landscape, and economic challenges outlined in the article underscore the complexity of international business strategies in the beauty retail sector.
