Salvation in Global Expansion
Facing the saturation of the domestic market and rising opportunities abroad, The Face Shop, a subsidiary of LG Household & Health Care, is increasingly turning its eyes toward overseas markets. The Face Shop is a mid-to-low-end skincare and cosmetics brand based in Korea, focusing on products ranging from makeup to skin care, body and hair products.
Starting with the launch of the Singapore branch in 2004, The Face Shop is currently operating 1,785 stores in 33 overseas markets.
The Face Shop achieved 123.4 billion won (US$106.2 million) in sales in overseas markets in 2013, 125 billion won in 2014 and 175 billion won in 2015. The size of the overseas sales contribution to total annual sales reached more than 27 percent, which makes the top brand performance-wise. The Face Shop’s successful global launch is a positive reference case for other local followers.
Currently, the main targets are China and East Asian markets. But recently the Middle East, U.S. and the Maldives are added.
China
The Face Shop has maintained its presence in China since 2007. Sales have steadily grown from 32.6 billion won in 2012 to 44.1 billion won in 2013, 70 billion won in 2014 and 80 billion won in 2015. In the process of setting up a joint venture, the Face Shop reduced the number of stores in operation to 200. But recently, on the back of rising sales, the number reverted to 280 by 2015.
As part of its online strategy, The Face Shop joined hands with Alibaba and Tmall to pursue O2O co-marketing and Customer Relationship Management (CRM).
East Asia
The East Asian markets also witness the growing popularity of The Face Shop products. Especially, products that have brightening effects such as BB and CC creams and cushion compacts have received positive responses, as local customers like to mimic Korean women’s fair skin color featured in Korean popular dramas and TV shows.
The sales in Singapore, Vietnam, Malaysia and Indonesia have grown steadily and recorded 70 billion won in 2014 and 70 billion won in 2015.
Singapore was the country where The Face Shop set up the brand’s first overseas store, as it planned to make the country a springboard for further expansion into other Asian markets. In Singapore alone, The Face Shop is operating 23 stores in the vicinity of Orchard Road and the major shopping centers. The company raised 9 billion won in the first half of 2013, representing the most lucrative market among East Asian countries.
In December 2005, The Face Shop entered Vietnam and set up 54 stores in major cities such as Hanoi and Ho Chi Minh.
U.S.
Beginning with the SOHO branch, which was opened in 2005, The Face Shop has set up 39 stores both in the east and west coast regions of the U.S. Sales in 2014 and 2015 were recorded at 12 billion won and 17 billion won, respectively.
Up until 2015, the marketing strategy in the U.S. has been centered on the Korean and Chinese communities in the country, but from 2016, the strategy will also target the Vietnam community given the community’s strong buying power. In a bid to expand to the Latin American market, The Face Shop plans to open its first store in Miami within a year.
Middle East
In the Middle East countries, The Face Shop products are particularly popular among consumers in their teens and 20s. For religious reasons, women in the region have to cover most of their body parts with burka in Saudi Arabia or hijab in the UAE, except for their eyes, hands and feet. The products for these limited areas such as brow products and mascara such as Face It collagen volume mascara strongly appeal to the main target consumers.
As for the BB cream, either darker (No. 03) or brighter (No. 00) shades sell well in this region.
“Smile Foot Peeling,” a foot mask that helps maintain the softness and cleanness of the foot, has been also received well.
The cute packaging with a character theme appeals strongly to young customers.
After entering Jordan in 2006 and the UAE in 2007, The Face Shop is currently operating 55 stores in 5 middle eastern countries: Jordan, Saudi Arabia, the UAE, Oman and Armenia. As of 2015, The Face Shop has achieved about US$13 million in sales in the region.
The UAE and Saudi Arabia are the two top Middle East markets where The Face Shop has achieved the highest sales. The Face Shop maintains 20 operations in the major shopping districts in the UAE, including Dubai. In 2016, The Face Shop plans to expand to neighboring countries like Qatar, Kuwait, Bahrain, North African countries and Turkey.
Maldives
The Face Shop opened a store in Male, the capital city of the Maldives, in December last year, and it plans to launch the second store this year. The launch was initially prompted by a suggestion by a local logistics company. Marketing here focuses on eco beauty products like Mango Seed and Chia Seed, along with approximately 600 other products including CC cream.