Today, we are living in the new normal after an unprecedented shift due to COVID-19. We believed that we could return to the same way of life we had before the pandemic, but now, we have no choice but to accept the new standards and the fact that we must adjust to this new environment. K-beauty, on its part, entered a period of stagnation in 2017 after the THAAD standoff, leaving behind the golden age of the Korean wave. That is not all. Setbacks continued, stemming from the unprecedented epidemic, the war in Ukraine, and the hike in consumer goods prices. What's more, stagflation is expected to pose a risk in 2023 even more devastating to our path forward.
No one can predict what’s in store for us. There is no point in living with a single identity any further. Instead of defining yourself with just one color, it’s now important to react nimbly to the given situation. So, I chose the chameleon as the animal of the year for the beauty industry. The more chaotic the world becomes, the more opportunities it presents to us. To seize the opportunity, you must be a chameleon that changes its color to match those around it. Who will be the ultimate winner this year in the beauty market?
Of course, Olive Young leads the beauty trend in Korea. The curtain has been drawn on the war in health and beauty (H&B), and Olive Young snatched the victory. However, today’s consumers have now become used to the non-face-to-face system, and the center of our life has shifted from the real world to the virtual world after COVID-19, so there is no guarantee that Olive Young’s triumph will continue.
As an increased number of vertical platforms like Kurly, Musinsa, and ZigZag are entering the online beauty market, we are at a time in which companies need to compete in a new market instead of the H&B market.
I can’t affirm this, but I’d like to offer my outlook for this year as a person who has mounted the most beauty marketing campaigns in the beauty industry.
Korean Wave 2.0 is coming
First, Korean Wave 2.0 is coming. Do you know what made K-beauty grow? Content has always been at the heart of K-beauty. Recently, Korean cosmetics reportedly became the top-selling beauty products in Japan, outpacing French cosmetics. Clio and rom&nd, color makeup brands, accomplished a remarkable feat on the back of the Korean wave sweeping across the island country. The number of fans of Korean pop culture will continue to increase as Korean TV series also continue to grow in popularity on OTT platforms. Brands that are prepared will drive up the sales.
You must, however, consider this. K-beauty has a strikingly different history compared to other multinational brands. Top brands like Chanel, L’Occitane, and Diptyque all had their beginning in the cottage industry. Hence, the homes of these celebrated companies became landmarks that attract tourists, becoming items of content themselves. In other words, a lack of such places can be seen as a weakness of K-beauty. However, “Seoul, the Hub of the Global Beauty Industry,” one of the major projects led by Seoul, will help the sector overcome these shortcomings. Seoul plans to invest KRW 200 billion to transform the capital into the most attractive city by 2026.
As Beaus company and the SBA teamed up in this bold project of marrying Seoul and beauty, I also feel a great sense of duty. On December 20, 2022, I joined the Night of the CreativeForce and listened to the talk delivered by Oh Se-hoon, Mayor of Seoul. It was an event where I was able to imagine the future of beauty blended with the K-culture, going beyond a single realm of cosmetics.
Of course, we need to provide a place of beginning for these cosmetics companies. To that end, Beaus company is engaging in various activities with the Outstanding CreativeForce for Beauty, doing things like making a cover of Hype Boy by NewJeans in popular places including Dongdaemun, Jongro, and Seongsu.
This is where tourism kicks in. There once was a boom in travel to Korea, riding the Korean wave. People from China, Japan, and many other countries flocked to Korea. The desire to look like Korean celebrities led to plastic surgery tourism, making the country an international powerhouse in cosmetic surgery. The beauty industry needs to follow suit. If you cast NewJeans, the hottest girl band nowadays, as a model for beauty tourism packages or associate the beauty products with their favorite places to hang out, the sector may thrive once again.
Going green is not a choice, but a necessity
Secondly, clean beauty will emerge with eco-friendly and ethical consumption becoming the new trend. That is, companies must brace themselves for the ESG framework. Until recently, the concept of clean beauty was presented by brands. Now, however, a company-wide approach to environmental issues is required.
The Environment Ministry is playing an increasingly stronger role and companies that did not make environment reports last year were fined for negligence. The government has also prepared for the big data business in relation to the carbon emissions trading, despite the project having not yet been commercialized. Although the environment status of companies may not affect sales numbers just yet due to the current lack of standards, businesses must still prepare for the change. So, going green is not a choice, but a necessity
The burgeoning market for men’s cosmetics
Third, the advancement of the men’s beauty market. Just a while ago, men’s cosmetics consisted of few men who liked to groom themselves. This led cosmetics companies to focus their attention on making men’s makeup products like the blemish balms. Starting this year, however, they will expand their focus to include skin care products. In fact, Olive Young played a big role in this. They are working on attracting male customers to increase their customer base.
While in the past they mounted campaigns targeting women with a concept that men’s cosmetics make a great gift for their significant other, today, they are giving away benefits and coupons generously to first draw male customers into the stores. This is certainly limited to Olive Young, but from looking at such precedents, other platforms have often imitated the marketing campaigns of Olive Young, so the collective move is expected to sufficiently boost the market size.
The high-end matters
Fourth, high-end products gain more importance. Gone are the days when mass production and mass sales promised success. Now, it is time to think about not just the value of the product itself, but also the value of the experience of buying the product.
Platforms have already been dominated by large conglomerates and lucrative startups, and the key here is to target the niche market of premium products. In Korea, the line between premium and luxury brands is blurred. This is attributable to the history having not been long enough for the market to mature independently, but the industry still eventually grew at a phenomenal speed. We must now apply the equation of the Korean wave that if you succeed in Korea, you’ll succeed everywhere else.
Gentle Monster, a Korean eyewear brand, has made an exceptional example of attracting KRW 60 billion in investment from LVMH and thus transformed itself into a global brand. We now have an OTT system that will deliver our trendy skills to the world. Beauty Kurly opened recently and luxury products that have recorded humble sales figures in Olive Young began selling like hotcakes. This is proof that the eye of the public has shifted to higher end products.
Broadening the business within a brand
Fifth, the business will expand within a brand. When you think of a brand, you are likely to picture design elements and brand stories. Platforms that have, however, accumulated power and loyalty to platforms have become an important factor. For instance, when you buy something from Olive Young, you are buying based on your loyalty to Olive Young, not based on your loyalty to products.
What then is branding? It is the power to persuade others using your unique value. Categories have been blurred. I recently met Lee Jun-beom, the CEO of GFFG, for an interview for a column, “Mr. Park Jin-ho Meets Trend Leading Companies.” We talked about many things that day and the most memorable part of the interview was that Knotted will launch a brand related to detergents and fragrances. Should we then look at Knotted as a beauty brand? No. This shows that we are living in an era where the boundary between categories has disappeared, and you can expand into lifestyle products within a single brand.
This year will go by faster than the previous. As much as the industry experienced a slump last year, I have no doubt that our hard work will pay off, bringing back the boom in K-beauty.