Why No One Single Brand Is Winning K-Beauty

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Back in April, when CVS announced that it would be launching an assortment of Korean beauty brands in 2,000 of its stores and online, a bunch of stories came out proclaiming that yes, finally! K-beauty is not just a fad and it is definitely here to stay. While it’s true that awareness of and interest in K-beauty have reached a peak, the industry still faces an uphill battle in the US.

The New York Times credits Dr. Jart with bringing the first BB cream to the US in 2011, thus kicking off this country’s fascination with K-beauty. It’s been about five years since the K-beauty specialty retail pioneers Soko Glam and Peach & Lily launched, driving curiosity about the now-infamous 10-step face regimen. You can buy Korean beauty brands at Nordstrom; Target; Sephora; Ulta; Forever 21; QVC; Urban Outfitters; Macy’s; multiple indie e-commerce retailers that specialize in K-beauty, such Glow Recipe and Soko Glam; and all over Amazon. Soko Glam has a mini shop at Bloomingdale’s in the Soho neighborhood of New York City; Peach & Lily has shops-in-shop in two Macy’s stores, with more to open in the next several weeks; and Glow Recipe has a newly curated selection at Saks.

On the surface, this looks great for Korean beauty brands, but K-beauty has become a large, amorphous entity with tons of players. Korean beauty, the concept, has essentially become the brand. The market is dominated by individual products and categories rather than broader brand offerings. This is solidified in most stores, which merchandise a few products from various brands together under one K-beauty umbrella, further blurring the lines between individual brands.

Korean companies are feeling extra pressure because China has always been K-beauty’s biggest export market. But the country recently initiated a ban on K-beauty products, other imports, and travel to Korea as a protest against the THAAD missile system. Brands are hoping for a recovery, but it hasn’t happened yet, which is another reason they’re eager to diversify in the US.

“[Customers] will walk into CVS and be like, ‘Oh, there’s a K-beauty section. That’s kinda cool!’ and they pick it up. But there’s no emotive attachment to that brand and no brand loyalty,” says Ju Rhyu, the founder of Inside the Raum, a B2B consultancy focusing on Korean beauty. She’s worked with K-beauty brands, US retailers, and Fortune 500 companies. Brands are jockeying for shelf space and competing on pricing, she says, often undercutting other brands.

The onus for branding, marketing, educating consumers, and encouraging brands to clean up the Amazon gray market that negatively affects pricing largely falls on the indie retailers that introduce these brands to the US market. They’ve also ultimately become distributors to larger national retailers. Glow Recipe has placed Blithe and J.One in Sephora, Soko Glam has placed the uber-popular Son & Park Beauty Water and Neogen there, and Peach & Lily orchestrated the CVS curation, to name just a few. But these are generally individual products and not often full lines, with just a few exceptions.

“We distribute and incubate brands so they can be a success in various retailers,” Christine Chang, the co-founder of Glow Recipe, explains. “The reasoning for that is because K-beauty is in the early stages of really going anywhere in the US market, so we find thoughtful retail partners to expand that market. There needs to be that one runaway hit product in each brand that has to anchor the brand.”

Bradley Horowitz, the president of AmorePacific US, the largest cosmetics company in Korea, doesn’t see some of the indie K-beauty brands as having longevity. “[Some of] these are small, insignificant players. They don’t have the capacity or the organization or the infrastructure in the US to build brands. They are just looking to capitalize,” he says. “They’re taking a few innovations of the moment and selling them here. There’s absolutely nothing wrong with that, and there’s a place for that. I’m just making the point that that’s not what we’re doing.”

AmorePacific owns a stable of brands including namesake brand AmorePacific, Laneige, Sulwhasoo (a high-end brand carried at Nordstrom and Neiman Marcus), Aritaum, Etude House, and Innisfree, all of which are attempting to crack the US market in different ways, at both department stores and specialty stores. It wants to grow its brands completely, not just focus on niche products. Horowitz says AmorePacific (the brand) does about $15 million in sales at Sephora, where it sells dozens of products.

Laneige, a brand Horowitz categorizes as “entry-level prestige,” was originally introduced at Target as part of its prestige-skincare selection right alongside French brands like Vichy. It was never marketed there as K-beauty. It’s now available at Sephora online and will be found in more than 150 stores starting in September. Innisfree, which tells a botanical story and has what the company hopes is millennial appeal, is opening its first store in Union Square in NYC and debuting a US website in September. It will offer over 900 makeup and skincare products, including customizable cushion compacts that come in a variety of shades, finishes, and compact designs. Horowitz calls it AmorePacific’s fastest-growing brand.

The interesting thing is that AmorePacific is selectively downplaying the inherent K-beauty-ness of all of these brands rather than counting on the current buzz. Horowitz says he’s turned down requests from the indie K-beauty retailers to curate individual innovations, like Laneige’s best-selling Water Sleeping Mask, to avoid “cherry picking.” While you’ll find some of these products on the K-beauty wall in Sephora, he doesn’t want that to be the primary hook. (The exception is Etude House, AmorePacific’s charming and inexpensive makeup line, which the brand is testing in Western markets by selling exclusively at Soko Glam. It is now one of the site’s top 10 best-selling brands.)

“We try to feed the K-beauty wave, but it’s a fine balance. I’ve been in the industry 28 years. There was a time France was an epicenter of innovation, there was a time Japan was, even Brazil had its moment,” he says. “These [indie] retailers tell a K-beauty story and there’s a place for that for people who are really beauty junkies. But our goal was to do something different. We’re out to build big global brands... In our industry, brands rule the day. When brands try to be about one thing, they sometimes end up in trouble.”

Photo: Laneige

AmorePacific is hedging its bets on the K-beauty craze with Aritaum, however, which is sort of a mini-Sephora that only carries AmorePacific brands, including ones like Iope and Mamonde that aren’t currently trying to find other retail outlets here. Aritaum has expanded and updated its stores in the US, creating an unabashed one-stop shop that celebrates K-beauty. Most have so far been in neighborhoods with dense Asian populations, but that is slowly changing. Its latest shop is in the Sunset Park neighborhood of Brooklyn; 30 percent of customers there are non-Asian. Aritaum opened in a Bloomingdale’s in Hawaii in 2015 and the company is looking at other potential mall locations.

Some smaller K-beauty brands would definitely like to emerge from all the noise as standalone players. Sarah Chung started Landing International in 2014 to connect brands directly with store buyers in the US. She was instrumental in getting brands like CosRx (which also sells at Soko Glam) and Cle into Ulta, and has also worked with Forever 21. She says that for smaller brands, using the distributor model can be limiting. “They’re picking and choosing hero products. The brand itself doesn’t get to say, ‘This is our story. This is our philosophy,’” she says. “The brands we work with take a longer view and we’re not going to jump on every trend.”

The industry experts here said that the non-AmorePacific brands that have been most successful so far have established offices and networks in the US rather than keeping all their operations in Korea. They variously pointed to Neogen, Skinfood, Too Cool for School, Belif, TonyMoly, and Dr. Jart as brands with growing brand awareness outside of the K-beauty umbrella. TonyMoly, which has been everywhere from Sephora to dollar stores since it came to the US, just launched products in Macy’s. A company representative told WWD, “Our success there proves we are a true brand, not just part of a [South] Korean beauty trend.”

Too Cool for School opened a store in NYC’s Soho neighborhood, and while the brand had to pull its makeup line out of Sephora for underperforming, it’s adding more of its popular skincare products there this fall, according to brand educator Ashley Hasegawa. However, a representative for the brand confirms that the Soho store is closing and “considering re-opening elsewhere in the city. There is ongoing construction right next to the store and Too Cool For School wants to provide the best shopping experience for their customers.” It will still also be carried in Nordstrom.

Rhyu thinks that, like AmorePacific, Dr. Jart and Belif are downplaying the K-beauty angle. “They have a very clear brand identity and the K-beauty message is more secondary,” she says. Dr. Jart is proud of its Korean roots, but Susan Tsui, Dr. Jart’s vice president of marketing, says in an email, “Dr. Jart is fueled by our commitment to adhere to what we were founded on, art and skincare.” It has over 30 products in Sephora, and also just launched on QVC. It is probably AmorePacific’s biggest K-beauty competitor in the US.

Ultimately, education is still a huge issue. “I tell my brands who think K-beauty is so big because it’s in editorial a lot, ‘No, don’t get confused,’” says Chung. “Most Americans don’t know the difference between North and South Korea, so if you think being in a magazine means everyone knows your name, it’s just not the case.” This was a bit of a tongue-in-cheek assessment, but mainstream American shoppers really don’t understand all the categories and ingredients in K-beauty that well yet. “The way we’re telling the story of it makes it a barrier to entry for a lot of people because, ‘Oh my god, it’s so many steps! Oh my god, the ingredients are so out there!’” she says.

Memebox, which infamously set off waves in the K-beauty community in May when it announced it would no longer be selling products and would instead function as a sort of TripAdvisor for K-beauty, is betting on education. It offers information about products in the form of YouTube videos and ingredient lists, then provides links to buy at Amazon and other retailers. Dino Ha, Memebox’s founder, said the site lost 20 percent of its traffic when it switched formats, but has since gained 60 percent more traffic in the last two months. There are 2 million visitors per month and people stay on the site six times longer than they did when it was e-commerce.

Charlotte Cho, Soko Glam’s founder, also says that traffic and engagement are growing steadily on her content site, the Klog. And Korea-based e-commerce site W2Beauty is making a big play here both in education and retailing, establishing a US base and hiring editorial contributors.

Jude Chao, the blogger behind Fifty Shades of Snail and newly appointed editor at large for W2Beauty, says, “We have over 7,000 products in our inventory, but that won’t mean much to people if they don’t know what the products do.” She says that the new editorial section will feature “robust” trend reports and lifestyle features to put K-beauty in context. It will also soon unveil a community platform to host the large, passionate, and engaged core K-beauty audience that will hopefully also draw newbies. “We’re creating a dedicated space where anyone with a question about anything K-beauty can come and find real people to talk to about the answer,” she says.

One of the other challenges that K-beauty companies face is competition with Western brands that copy their innovations and potentially muddy the message for consumers who know and trust these familiar names more. Garnier has a Moisture Bomb product that some have pointed out copies Belif’s Moisturizing Bomb. Benefit has two-toned lipstick, which has been a Laneige signature product. This Murad two-step aqua peel mask looks a lot like this version by Primary Raw, both at Sephora. Clinique just launched a bubble mask, an innovation that’s everywhere in Korea. Sheet masks, often made in Korea for Western brands, are commonplace, as are BB creams, the OG K-beauty product. Rhyu calls the market “bastardized,” with stores like Sephora even featuring Japanese brands like Boscia and Tatcha in its K-beauty section.

Horowitz thinks that as long as Korean beauty companies and manufacturers lead in innovation, there’s nothing to worry about. “I’m of the belief that if [Western companies] have a bigger voice than ours, they’ll help make the market bigger. Ever since Lancôme launched their cushion compact... in units I’m selling more cushions today than I’ve ever sold. Big brands coming in maybe help make a market on a category bigger, and I gain a bigger piece of that category.”

One Western-meets-Korean hybrid that makes sense for this market: the K-beauty indie retailers who have started dabbling in making products and becoming de facto brands themselves. Glow Recipe sold out its Watermelon Mask at Sephora, and Soko Glam collaborated on a sold-out vitamin C serum with CosRx. Memebox is focusing on its private-label brands Nooni and I Dew Care, which are both at Ulta now; the Disco Kitten mask sold out right after its launch. These retailers are in the unique position of knowing all the labs and manufacturers in Korea, understanding what US customers want, and knowing how to sell those products here. Memebox uses data from its site to help inform its product-development choices, makes the products in Korea, and then has its team in California design and market all the products. It also shares this data with partners, including some Western brands in Asia.

Finally, there’s the question of whether or not it even matters if fully formed brands emerge from this. As Cult Beauty’s founder points out, shoppers “don’t give a shit about brands, they want the product.” And yes, the UK-based Cult Beauty, which bases its whole selling model on products over brands, carries a few K-beauty products. Peach & Lily’s Peach Slices Acne Spot Dots (which are like these) are doing so well at CVS that the drugstore is going to start stocking them in the general acne skincare section, and starting in October, the store is bringing more K-beauty products in for an expanded selection. And Ulta Beauty carries more than 100 sheet masks, proving that people want variety.

“There may never be a mainstream K-beauty brand. And it’s not really a bad thing, because the influence of K-beauty is much broader,” says Rhyu. “The brands themselves may not last long, but the impact of the innovation and fast beauty concept will definitely live on in the Western beauty world.”

Updated 8/3/17 at 11:40 with news that the Too Cool for School store would be closing.

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