Why and how the Korean beauty market outdistances the global cosmetic market’s current trends
The South Korean cosmetic market currently represents almost 2.8% of the global beauty market. In less than ten years, the market rose to the top 10 beauty markets in the world. Its size was indeed estimated around $10.2 billion in 2019, with an average annual growth of 4.3% between 2015 and 2019 and is anticipated to reach $13.9 billion in 2027.
But what needs to be more closely considered is the significant percentage of cosmetic exports in the size value of the market. Indeed, in 2014, the cosmetic exports of the K-beauty market amounted to $1.6 billion in 2014 against $6.5 billion in 2019, meaning exports constituted more than 50% of the size value of the South Korean cosmetic market in that year.
Such significance can be understood under the prism of Hallyu (the Korean Wave), a cultural phenomenon that first arose in the 2000’s and further expanded in the 2010’s. Hallyu consists in promoting South Korean culture and entertainment worldwide. Along with K-pop, television, cinema or food, K-beauty takes part in such cultural expansion. Indeed, Korean beauty standards greatly affect its entertainment industry, and thus carries a great weight in the Korean culture. Thanks to the constantly growing global popularity of K-beauty, both the production and exports of South Korean cosmetics have grown and steadily keep developing. Such phenomenon can also be inscribed in McCracken’s broader concept of ‘Beauty Trade’, which includes beauty in the greater context of global political economy by asserting that “the global economy of beauty is a space where production, marketing, distribution, and consumption of beauty are intertwined with the production of gendered bodies, youth cultures, the blurring of distinction between public and private spheres, and beauty entrepreneurialism”. The Korean cosmetic market thus relies on rooted social and cultural codes of outer appearance and beauty, as well as popular culture in order to export a concept and an ideal rather than simply a cosmetic product. Such process is enabled by the globalized beauty market, that enables a greater circulation of information around K-beauty, and this promote Korean cosmetics worldwide more easily.
Such international success also relies on how Korean cosmetics managed to demark themselves with specific attributes that other global markets lack.
Indeed, South Korean cosmetics demonstrate unrivaled functionality, innovative attributes as well as exclusive components and fabrication.
Due to the beauty standards in the South Korean society, that attach great importance to appearance and looks, the standards regarding beauty products are extremely high. In response to such standards and an extremely high demand, the South Korean cosmetic market proves to be highly competitive which enables to combine excellent components with affordability, something that is yet to be developed on other global leader cosmetic markets.
Furthermore, the functionality of Korean cosmetics is the most advanced within the global beauty market. Functional cosmetics are products that advertise benefits such as sun protection, anti-acne or anti-wrinkle active principles and so on. They are also at the forefront of the development of cosmeceuticals, which are products that advertise benefits from natural agents such as herbs, plants or raw materials. They increasingly insist on the organic label of such products with the aim to direct the business and marketing strategy towards wellness and health and thus build trust between the brands and their consumers. Kuoca for example, is a brand launched in 2014 that creates made-to-order products and emphasize on the freshness of its formulations by arguing that freshness leads to effectiveness.
Finally, the beauty industry in South Korea is the most developed in the world, which distinguishes them from other cosmetic markets. They thus target a consumer range that has yet – or has only begun – to be explored on the global scale.
Despite its innovative and leading strategy of growth, such attributes have not preserved the South Korean market from the COVID-19 pandemic. In 2020, the market encountered a downfall of 8%. However, it is still a major industry on the global market that is expected to take the lead in the upcoming years. Such expectations can be enlightened by the unique digital strategy to develop e-commerce and live commerce, as well as innovative marketing strategies that aims to improve the consumer experience.
In March 2020, South Korea introduced the world’s first customized cosmetics system which aims to tailor a specific cosmetic product according to the preferences and skin condition of the customers. Such system relies on high technology such as smartphone apps, 3D printers and so on to personalize as much as possible the customer experience.
Furthermore, with the fastest average internet speed in the world, South Korea rapidly adapted to the current transformation of distribution channels triggered by the COVID-19 crisis, such as the boom of e-commerce transactions. The development of advanced marketing strategies aiming to generalize e-commerce, such as the ‘live commerce’, which consists in combining video streaming with commerce in order to bring the consumer closer to the product they’re buying and increase the in-person experience online, or the heavy reliance on SNS to increase brand loyalty among consumers demonstrate the rapid adapting of the K-beauty market to the current changes.