South Korea’s Lotte incubates influencers’ ideas, targets launch of 20 new brands this year
A new breed of cosmetics companies is emerging in South Korea. They’re aiming to be top of the crop in the beauty industry and are coined as the “fourth generation”. They are cosmetics brands by influencers. A major player behind this movement is Lotte Shopping, and we investigated their strategy to become increasingly involved in the planning and development processes of these brands.
South Korean retail giant Lotte Shopping (from here on “Lotte”), which owns the Lotte Department Store chain, is currently focusing on fostering beauty brands by influencers, which have a strong appeal, particularly among Millennials. Specifically, Lotte has announced that they’ll be collaborating with “Your Brand” — a beauty platform that allows influencers to launch their own cosmetics brands — to acquire the exclusive selling rights of the influencer-created products.
Your Brand is a project co-launched by three companies: IMP Labs, which operates the content marketing platform MCN CELEB; cosmetics development and branding specialist company enhance B and major cosmetics manufacturer COSMAX. Lotte handles the platform’s distribution. Lotte’s plan is to first start with online sales and then later expand to offline stores.
Lotte public relations representative Choi Jisoo has revealed how the initiative came about: “We started by inviting influencers to a publicly-open seminar. After the seminar, we held a meeting with the influencers who showed interest in collaborating with Your Brand, signed individual contracts with them, and began developing products together.” In other words, rather than concentrating on just the sales side, Lotte has taken on a more active role, being involved in the brands’ launch and product planning details.
Your Brand’s most distinctive aspect is that it produces influencer brands based on influencers’ experience and reviews of existing products. They get the influencers to actually use products on the market, then extract what they feel are the faults or any requests they have — the areas where they mention “it’d be better if it did this”. With the support of experts, they adopt a development cycle that involves improvements and new features.
Some of the influencer brands jointly developed with Lotte include Kattisy by fashion model Soyou, which has an eyeliner for drawing cat-like eyes, and makeup brand hipazizi by beauty creator Linzy. Along with them, jewelry designer Yeoniaile has launched the high-performance skincare brand Aile de la peau , which has developed such products as a moisturizing cream with a sherbet-like consistency.
Lotte is currently not only working with influencers involved in beauty but also those who are baseball and golf players. Every month they select a new set of three influencers and the plan is to have around 20 brands by the end of the year.
Choi says that “the Your Brand experiment has only just begun” and, while avoiding mentioning any results so far, she has hinted that Lotte holds high expectations for these influencer businesses, saying that “we’ll continue to support them in order to strengthen the brands’ images and product categories”.
Influencer brands — K-Beauty’s fourth generation
Currently, South Korea’s cosmetics industry is feared to be spiraling towards a state of decreased competitiveness. The reasons for this include market saturation from the influx of latecomer brands and reliance on inbound demand, specifically from Chinese tourists. At the same time, marketing is increasingly becoming mostly online-based and making clever use of social media. Influencer brands with already strong fan bases are starting to be seen as the next generation of cosmetics companies. For this reason, industry insiders are calling these brands the “fourth generation”.
The first generation is the major long-established domestic companies such as Amorepacific, and the second generation is the low-to-middle price range cosmetics brands that became popular through selling in small direct-to-consumer stores that opened up in tourist hotspots and inner-city retailers known as “road shops”. Brands that were successful in this method and expanded in size include Missha, Tonymoly, Innisfree, Skinfood, and The Face Shop. Then the third generation is the group of startups that spread out onto the global stage, backed by the growth in ‘health & beauty’ stores and the popularity of K-beauty.
So far, Lotte has partnered with brands and manufacturers of the first, second, and third generations and has built up a firm position in the field of cosmetics retailers. It can be inferred however that Lotte’s exclusive selling deals through Your Brand show that they’ve caught wind of the changes within the industry and are rounding up companies of the fourth generation in order to embark on the building of a new ecosystem.
In the South Korean market where things change by the minute, how far are influencer brands likely to grow? Also, what moves will be made next by Lotte, which is pulling out all stops to put these brands in the spotlight? We’ll need to watch closely for developments, including whether this “fourth generation” will go on to change the face of the market.
Text: Ching Li Tor
Original text (Japanese): Jonggi HA
