Korean Cosmetics Giant Amorepacific Partners With Reliance's Tira For Expansion
The company currently has 80 multibrand outlets in India, and it plans to take this count to 240 in the next 3-4 years.
South Korean beauty and cosmetics conglomerate Amorepacific Corp. has set an ambitious goal of quadrupling its physical stores in the country, of which a hundred will be opened in partnership with Reliance Retail Ventures Ltd.
The owner of brands like Innisfree and Etude House has signed agreements with Reliance Retail to sell through its beauty store—Tira.
"We have signed for 100 store-in-store outlets inside the Tira stores that will be opened over the next three years," Paul Lee, managing director and country head, Amorepacific, told BQ Prime. Lee's India visit coincides with the group's flagship brand, Innisfree, completing 10 years of operations in the world's most populous market.
It also sells three other brands—Laneige, Sulwhasoo, and Etude House.
The 78-year-old group rode the K-beauty wave to become one of Asia’s most powerful cosmetics empires, surpassing the beauty sales of Chanel and LVMH. But recently, it has been grappling with slowing business in China.
To make up for the sluggish sales in China, the company is accelerating its push into other markets, including India. Over the last decade, the company has made inroads into the country mainly through partnerships with domestic retailer Nykaa. However, Amorepacific now plans to leverage the distribution network of the Tata Group and Reliance to expand its reach.
"We have high expectations from the Indian market," said Lee. "While we have a very strong partnership with Nykaa, we are now also building profound partnerships with Tata, Reliance, and other multibrand retailers like Lifestyle and Sephora." The cosmetics and beauty giant is also in the final stages of signing distribution contracts for its Laneige products in Sephora stores.
The company currently has 80 multibrand outlets in India and plans to take this count to 240 in the next 3–4 years, according to Lee.
The plan to expand its footprint through multibrand outlets is in contrast to the company's earlier strategy to open exclusive stores. It has shut down about 20 exclusive outlets and currently has just two in the Delhi-NCR region.
Lee also said that plans to roll out more exclusive stores are on hold. "That is because we believe the trend of offline as a channel of beauty has shifted to multibrand concepts, similar to what we see in the West."
"In India, we are also seeing a shift from what used to be a Nykaa-dominated market, both online and offline. Today, the likes of Tata CLiQ Palette, Reliance's Tira, and big retailers Shoppers Stop and Lifestyle are expanding rapidly," he said.
India contributes less than 5% of Amorepacific's group sales. But Lee said that its business is growing nearly 25% every year. Lee expects this growth to slow down to 15% due to intense competition from both local and international brands, but that is still higher than the industry's growth.
About $15.8 billion worth of cosmetics were sold in India in 2020, the seventh largest market in the world, according to Euromonitor.
The market researcher expects the country to be among the top five, with volume pegged to grow 8.3% to touch $21.6 billion by 2024.
Other than tapping the stores of local retailers, Amorepacific has also unveiled a new look for Innisfree to mark its 10th anniversary. "The rebrand also includes a refreshed website and much-awaited new product updates," said Lee. It has introduced a new tagline that embodies the brand's commitment to embracing nature and pioneering healthy beauty.
"Indian consumers are exposed to a lot of international brands. As for just the Korean brands, the count today stands at about 30–40," said Lee, referring to the heightened competition in the beauty and cosmetics market.
Yet, the budget skincare brand, Innisfree, has managed to retain its number one position among the Korean brands in the Indian skincare market since 2015, Lee said, adding that the brand enjoys a 15% share in the K-beauty market.
"We want to invest more in India to remain ahead of the competition," said Lee. Amorepacific is also scouting for an Indian face to promote its brand. "In India, Bollywood has a big demand. So, we are in the process of tying up with a celebrity. We are already doing lots of promotions with the help of Indian models ... So, more local collaborations would be the way forward."