AmorePacific held a ceremony to celebrate its 72nd anniversary at the AmorePacific Manpower Development Institute in Giheung, Yongin City, Gyeonggi-do, on Sept. 5. AmorePacific Chairman Suh Kyung-bae, stepping onto the podium, appeared to be resolute.
The cosmetics company has been experiencing hard times due to China’s retaliatory steps against the installation of the U.S. Terminal High Altitude Area Defense (THAAD) self-defense missile system in Korea. In reality, AmorePacific’s business performance in the first half of the year has worsened. Amid China’s retaliatory steps, AmorePacific, which once considered China as a foundation for growth, is in a situation in which the company no longer relies on the market.
Chairman Suh urged his executives and staff members to produce innovative products like the world has never seen. “Producing innovative products the world has never seen, offering experiences exciting customers, and communicating via digital are all customer-oriented. If we stick to a broad principle of customer orientation, (we) can rise to a genuinely great corporate leader despite an uncertain business environment,” he said. To this end, he called for his executives and staff members to take an attitude to “test & run” designed to make an in-depth study into customer demands. His remarks may be construed as an emphasis on stepping up efforts to preserve brand values amidst a crisis.
His remarks at a series of strategic meetings are in the context of no compromise in protecting brand values.” Inevitable diplomatic risks are things we have to deal with, and we have to wait and see,” he said.
Chairman Suh called the company to step on the gas to enhance AmorePacific’s brand values and expand its presence abroad. He told them not to overreact to declining sales in the duty-free business, which is not a conventional mainstay business portfolio.
AmorePacific posted revenue of 2.893 trillion won in the cosmetics business in the first half of this year, a 12.6 percent plunge over the same period of last year. In particular, the portion of duty-free sales out of total sales dropped 2.2 percentage points to 24 percent from 26.2 percent.
AmorePacific has strengthened online sales while halving conventional items and including new brand models with no restrictions. Suh has stressed digital innovation amidst a market paradigm shift focusing on digital and mobile modes.
AmorePacific Has Card Up Sleeve to Cope with Underperformance in China
AmorePacific Chairman Suh convened a meeting of executives to discuss the sagging business performance in the 2nd quarter of the year and suggested three options to cope with the underperformance. The keywords were “trends,” “online and off-line connections,” and “big data.”
Chairman Suh selected “innovative products” as AmorePacific’s core strategy. He stressed the need for innovative products to be trend-setters. He emphasized that the company’s role and functions are to provide products and services that customers want. He was apparently referring to such trends as youth customers’ consumption behaviors like the posting of photos on social network services, quality products with reasonable prices, and the favoring of simple skin care.
Chairman Suh’s next keywords were on- and offline commerce, or O2O. He has called for the understanding and utilization of the concept. He noted AmorePacific achieved innovative changes in door-to-door sales in the 1990s. “Of late, we have to ponder what kinds of experiences we offer as customers’ expectations have changed frequently of late,” he said. Suh, stressing the connection of online and offline customer experiences, called for new marketing strategies to synergize its online and offline operations.
Chairman Suh’s third focus is on big data. “Companies which cannot secure customer data will be the poorest one down the road,” he said. Chairman Suh stressed the significance of data in marketing.
Chairman Suh also stressed the need for more investments in manpower to put these strategies into practice. He stressed the need for nurturing leaders and experts to tide over a crisis. AmorePacific plans to diversify markets to recoup a slump in the Chinese market in a short-term perspective.
In September, AmorePacific will set up an exclusive Sulhwasoo outlet at the Galeries Lafayette in Paris. In the second half, the company plans to open an “Etude” outlet in Dubai and an “innisfree” outlet in New York.