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AmorePacific Earmarks Aritaum Stores for U.S. Expansion

Eyes are on expanding to 100 Aritaum stores domestically over the next three years.

AmorePacific, the largest beauty brand in South Korea with a 40 percent share, wants a bigger slice of the burgeoning U.S. K-beauty business.

According to Kline, sales of South Korean beauty products in the U.S. are estimated at $225 million, up nearly 30 percent from 2015 levels.

That’s why AmorePacific, which with sales of $5 billion is ranked in WWD’s Top 100 as the 12th largest global beauty company, is kicking into high gear the remodeling and expansion of its specialty retail concept.

“If you are to believe there is a K-beauty wave, then we own it,” said Bradley Horowitz, president of AmorePacific North America, during a tour of a gleaming new Aritaum store in Brooklyn, N.Y.

Aritaum, which means “place for beauty” in Korean, is the vehicle Horowitz hopes will expose more Western shoppers to AmorePacific’s portfolio. There are 1,350 stores in South Korea. Fifteen years ago, the company started opening U.S. sites in mostly Asian communities using the Amore name.

But with booming interest in products created in South Korea, AmorePacific dusted off the concept, upgraded fixtures and decor and is in the process of re-branding the stores under the Aritaum name.

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“Bringing the concept to the U.S has a lot to do with this renewed interest in K-beauty,” Horowitz said. “We are seeding the market and building awareness [of AmorePacific champion brands]. We want to show those who are interested in K-beauty or are a beauty junkie looking for discovery that our stores are fun and have many first-to-market products and innovations.”

There are 75 stores in North America, 65 in the U.S and 10 in Canada. About half have been converted to the latest look on display in Brooklyn where Horowitz provided WWD a tour. Just days later another store opened at 173 Hester Street in Chinatown.

The rest of the country is undergoing the transformation with a time frame to complete renovations within two years. Eyes are on expanding to 100 Aritaum stores domestically over the next three years. Sizes range from 400 square feet up to 1,700 square feet. Those familiar with the stores said they are productive, generating in excess of $1,000 a square foot.

Beyond the obvious brand building, Horowitz said the freestanding stores provide a test market for products to determine broader distribution potential. Some of AmorePacific’s brands are sold in stores including Neiman Marcus, Nordstrom, Bloomingdale’s, Bergdorf Goodman and Sephora.

New store sites will be in multiethnic communities to garner more crossover customers. And while most existing doors are in downtown or strip centers, sometimes anchored by a H-mart grocery superstore, Horowitz isn’t ruling out shopping mall growth. Malls have become the darling of vertical brands with rapid expansion of NYX, E.l.f. and Kneipp and the recent announcement of Clarins’ first U.S. freestanding stores.

Horowitz feels the time is right to strike, especially as specialty retailers, such as Sephora, carve out space to highlight Korean beauty. “There’s so much noise about Korean beauty and we are the embodiment of it. We have 75 stores ready to expand our audience,” he said. “Western consumers will absolutely be our future.”

As AmorePacific seeks an audience in addition to its Asian fan base, the company will tout its high-levels of service provided by its consultants, called Ariels. “There’s no reason we can’t out service specialty stores,” he said.

Because many of the brands are unknown to Western shoppers, Horowitz said customers spend a lot of time discussing the lines with the beauty consultants. They explain many of the technologies formulated at AmorePacific’s’s research and development facility, the largest in South Korea. The company is credited with being among the first to use cushion compacts, BB cream formulas and boosters.

One of the biggest upgrades as AmorePacific converts the stores is decor. New fixtures spotlight AmorePacific’s portfolio of brands. Each area tells the story of the collection.

The hallmark brand is Sulwhasoo, the number-one skin-care line in South Korea and the company’s largest brand with annual sales topping $1 billion.

What’s eye opening about Sulwhasoo is that despite the sheer size, it is a brand name still primarily undiscovered by North American consumers. “We need to expand our awareness. The products themselves are phenomenal. They are based on South Korean herbal medicine — skin-care solutions that are hundreds of years old that we infused with the best and latest R&D,” Horowitz explained. “This should be the leader of the K-beauty wave.”

One of the items in the Sulwhasoo lineup, the First Care Activating Serum, is the largest selling product in units in all of Korean beauty care. Retailing for $84, it is also the best moving stockkeeping unit in Aritaum. The brand is sold outside of Aritaum doors in Bergdorf Goodman, select Neiman Marcus, some Nordstrom doors and at a new 220-square-foot customized installation at Bloomingdale’s in Century City, Calif.

The merchandise mix is rounded out by other AmorePacific brands including Mamonde, IOPE, Laneige and Hanyul. There’s also a large array of masks and an edited display of personal care.

Mamonde, based on the power of flowers, is sold only in Aritaum, but has great rollout potential, Horowitz said. Laneige, which debuted in Target in 2014, is the discount merchant’s largest premium skin care brand. Recently footage was expanded to a full liner foot spanning from the top to bottom shelves in Target’s premium skin care department. It is expected Laneige will be the next AmorePacific billion dollar brand.

IOPE was the brand used to introduce the cushion compact in 2008 and is being adapted by many U.S. brands. In South Korea, one out of every 2.2 women have an IOPE cushion foundation compact.

The most Korean of the brands under Aritaum’s roof is Hanyul, which features ingredients indigenous to South Korea such as red pine, red grass and black beans.

Near the checkout is a traffic-stopping display of masks, another South Korean export shaking up the beauty market. “Sheet masks continue to explode because they offer accessible price points,” Horowitz said.

He enthusiastically points to an area in the store where he sees tremendous potential — color cosmetics. “We think it could become 10 percent to 14 percent of sales and it is just a fraction of that now,” he said. Already the Laneige Two Tone Lipstick  has garnered shopper attention and Horowitz thinks that is just the beginning. To sell more color, the company will have to make a cultural shift, especially with its Ariels, to add color cosmetics knowledge to their skin care repertoire.

At checkouts, shoppers are presented with samples to encourage return trips and there is a generous loyalty program. “We have a good CRM program which keeps good records and notifies customers by mail of news and we have great social media programs,” he added. With aggressive product and store expansion plans, Aritaum won’t be a secret much longer, Horowitz concluded.