Datamonitor Comment

Can South Korea's Missha make a comeback with new markets?

By Michelle Yeomans contact

- Last updated on GMT

Can South Korea's Missha make a comeback with new markets?

Related tags: South korea

Although its' touted as South Korea’s 'first successful budget cosmetics brand', Missha has had a tough time maintaining its status of late, what with having to close its' Hong Kong and Macau outlets and analysts concluding that it can't live up to the fierce competition.

The bad news didn't end there though, two months later, the annual sales of Missha's owner 'Able C&C' reportedly fell 20% in Japan, while the brand reported a loss in operating profit, sales and net profit, resulting in it being overtaken by rivals The Face Shop and Innisfree.

According to Datamonitor Consumer researcher, Irene Bi, expansion in new markets could be the brand's saving grace.

"Fortunately, Missha seems to have foreseen its reduced prospects in its existing markets, and has shown a keen interest in exploring new ones. Since, July 2014 the brand has reportedly opened stores in Germany, Slovakia, Turkey, Kazakhstan, and Poland."

If Missha succeeds in the European arena, it would be a starting point for other Korean brands to follow, leading to a significant change in the competitive landscape within the European beauty sector.

Irene_Bi_red1-126x126

Europe 'remains an untapped resource for Korean brands'

Bi says Missha’s change of direction is a logical move as the European market remains an untapped resource for Korean brands despite the popularity and demand for alphabet creams.

Other concepts inspired by Korean products include snail slime in skin care and cushion foundation in make-up, which are now more common in products under Western brands.

Moreover, the Datamonitor analyst says with its emphasis on affordability (e.g. best-sellers like BB cream and sunscreen retailed at around €10 each), Missha stands a good chance of appealing to the cautious spenders in post-recession Europe.

"If Missha’s downsizing in local markets is a mechanism to stay away from competition, its expansion into the European market has actually taken the brand to another crowded market," ​says Bi.

"But this time the company is less knowledgeable about the buying behaviours, beauty needs/concerns, not to mention facing threats from well-established Western brands that have been closely following the 'Korean wave'," ​she warns.

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