Peach & Lily, the hot online retailer of Korean skin-care brands, has transplanted itself into its first brick-and-mortar location, and founder Alicia Yoon is turning her new experience into a learning lab.
She has entered the Macy’s chain with a 140-square-foot shop-in-shop in the Flushing store, which is internationally known for its Asian clientele.
It is estimated that 85 to 90 percent of the store’s customers are of Chinese derivation, 7 percent Vietnamese and 5 percent Korean.
“It is such a unique world,” she said. “It is in a very different community. A lot of these consumers don’t speak English, but they are serious about their skin care. If we can succeed in this location, I am confident that we can learn what we have to learn and succeed in any other location. Here you have consumers who are super demanding.” Among the early sellouts are sheet masks, snail cream, oil cleansers and heavy-duty treatment products.
Macy’s certainly seemed pleased. Muriel Gonzalez, executive vice president and general merchandise manager at Macy’s for cosmetics, fragrances and shoes, stated, “the Peach & Lily shop-in-shop [in Flushing] is an exciting new pilot concept for us where an e-commerce site has moved into a customized in-store space. With the growing trend and consumer demand for Korean beauty and skin-care products, our partnership with an established online destination such as Peach & Lily enhances our store environment and experience with an expanded assortment of product offerings for customers. Peach & Lily’s new space allows us to build upon the brand’s existing online traffic and create a new hybrid experience in-store.”
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Yoon, who noted that most of her online customers — 80 percent — are not Asian, said her assortment of Korean skin-care brands has appeal beyond Asian-American consumers. She would like to set up shop in Macy’s Herald Square flagship in Manhattan and in other stores that are not as “heavily Asia-American population at all.”
Her customers so far tend to be in their 20s and 30s, but “we also seem to have a lot of women who in their 40s to 60s, who have very serious skin concerns. About 15 percent are men, which opens the door for a future male line. “We have a lot of teens because we have a sub Web site called Peach Slices. We call it Peach & Lily’s fun loving savvy little sister. We want to have a baby site, called Peach Fuzz.
What intrigues Yoon more is the psychographics of her audience. “When we speak to our consumers, they are more adventurous — they are willing to put snail cream on their face,” which is Peach & Lily’s bestseller, Yoon said. “Or they are into more naturally formulated skin-care products; things that work.”
Yoon would not talk about sales results or financial projections. But industry sources estimate that Peach & Lily’s Flushing shop could do at least $1 million in retail sales annually, based on the its first month of traffic. The Web site has been in business for nearly three years, and according to industry estimates has built up a sales base ranging form $5 million to $10 million a year.
Since the Peach & Lily shop quietly went into operation, there has been talk of expanding to other Macy’s locations, Yoon noted. Not only Herald Square but Union Square in San Francisco has been mentioned, and Yoon put in a bid for Los Angeles, Texas, Georgia and Chicago in the first round. “The reason I wanted to do that is to have different templates of different demographics to test and learn as much as possible,” Yoon said. “I asked them to find me a predominant Hispanic market as well.”
Her plan is to test all of the early markets “then take the best-in-class practices from each and then we would roll out pretty aggressively in phase two.” Her target for the first phase is in the top 10 doors, basically the flagships.
The Flushing shop includes more brands than Peach & Lily features on its Web site. The new store holds 12 to 15 brands. Of those, four to five have not been launched on the Peach & Lily Web site yet. There is no makeup in the assortment now, but Yoon says she expects to put in a color cosmetics line. “The concept of the store is like an Asian Space NK,” Yoon said. Price points range from a $3 sheet mask to a $350 Lady & Skin serum.
Among the brands debuting in the shop are Lady & Skin and Herbolle and Dr. Dream.
A standout item is a Lady & Skin Concentrated Caviar and Night Cream, plus its EGF Epidermal Growth Factor treatments. In the center of the shelving units is a small sign headlined “Alicia’s Picks.” This month she is promoting essence boosters, which contain rose stem cell extract and vitamin C. Another brand that is featured in the shop is Aromatica, which thanks to its government sanctioned epidermal growth factor rating can promise that all of its skin care ingredients are toxin free.
The trendiness of Korean beauty acts as a magnet and customers are curious about the latest products, Yoon said. “People will spend a long time in the store,” she said. “I have some customers in there for two hours.”
Yoon stressed how what she refers to as the off-line selling experience creates an interaction and feedback that is rich. She noted how Americans are well versed in taking care of their bodies, but sometimes view an obsession with skin care as a bit vain.
“For me, skin care is such a big part of self care,” she said, adding that she tells her sales team, “I am not interested in sales. That will come. What I am interested in is in anyone who walks out of our store should become that much more knowledgeable about skin care and know their skin is a little bit better. The goal isn’t just to sell products. It’s to make sure the right products are on the right faces,” she maintains.
The signs in the shop are printed in English and Mandarin. The Korean text is on the product packaging.
While most store counters are organized by brands, Peach & Lily goes by steps in the skin care ritual — double cleansing with water- and oil-based products, toning and hydrating. Koreans think skin should be plump like a wet sponge. “When your skin is more hydrated, collagen breaks down more slowly. It’s just a healthier skin environment . Hydration helps your skin improve itself better. In Korea, there is a big concept that your skin should stay hydrated 24/7,” Yoon stressed.
Then comes the essences and “there primary function is to hydrate,” Yoon noted, adding that the products also provide other benefits. She picked up one of her favorite brands, Rose by Dr. Dream, which includes a product that is an encapsulated powder that turns into a liquid. It contains vitamin C, and rose stem cell extracts. The name of the product is the Dream Age Radiance Powder Essence and the brand is named after a well-known plastic surgery clinic in Korea.
After the Essences, there is the treatment section, including serums, face oils and ampoules. Those are organized into subcategories under the treatment banner. “Treatment is where you are going to start targeting your skin concerns, whether its dullness, brightening, redness, acne, firming. Then eye creams, moisturizers as a sealer. In lieu of your night cream, “you can use an overnight sleeping mask,” Yoon said. The steps include exfoliation in addition to an array of masks.
Even though Yoon’s Web site appears to be doing well, the importance of brick-and-mortar is not lost on Yoon.
She quoted an old NPD report that said 94 percent of U.S. “will not make a purchase unless they can touch and smell the product offline first. Sampling could work,” she continued, “but there is still something very different about having somebody explain it to you in real time. Being multichannel is what everybody is going for to get that whole brand experience.”