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Burberry Beauty expected to pull out from Korea

Slow sales, declining brand power spark withdrawal just two years after launch

The cosmetic division of the British luxury brand Burberry is likely to pull out of Korea after suffering anemic sales for more than two years as Hicos, its Korean importer, appears to be ready to shutter the brand, industry sources told The Korea Herald.

Only a single domestic outlet still operates at Lotte Department store in downtown Seoul after the shop in Lotte’s Daejeon branch was closed last month.

Once notorious for refusing discounts, Burberry Beauty has recently been offering various promotions including buy-one-get-one-free campaigns -- sales tactics that it had snubbed in the past on the grounds that they were beneath its brand.

At a recent Hicos Family Sale event for the friends and families of Burberry Beauty employees, products were sold at 20 percent of the original price.

All this appeared to be in stark contrast in November 2011 when the brand first opened shop at Lotte Department Store‘s Jamsil branch to much fanfare.

Success had seemed to be inevitable, as Koreans had in the past been obsessed with the signature tartan pattern that defined Burberry. This same pattern was used for Burberry Beauty’s products.

But since then, the brand has managed to add only two additional stores, in Daejeon and in Sogong-dong, Seoul.

Those in the cosmetics and designer industries say that the pullout, if materialized, may go on to signal that the Burberry brand itself is losing steam in Korea.

“Burberry has been going stale for quite some time here,” said one industry source.

As such, the brand power of its sister company Burberry fashion department has been less than helpful, as the fashion label’s operating profit has tumbled by nearly 40 percent between April 2012 and March 2013, compared to the year before.

“Nothing has been decided about our future and we can confirm nothing,” said a Hicos spokesperson, insisting that closing the Daejeon store does not imply business failure.

But she also admitted that it has yet to map out any new business plans for reinvigorating the brand.

Burberry Beauty‘s imminent departure signals that Korea is no longer easy game for foreign designer brands.

“The odds are stacked against them, ranging from the media criticism over overpricing, direct online purchases that are eating into their profit, market saturation and last but not least, a bad economy,” said Yoon Soo-man, a freelance cosmetic product marketer.

Lee Mi-yeon, a thirty-something shopper who frequently browses the cosmetics section of department stores, advised for brands to work harder to gain recognition in Korea where trends come and go at breakneck speed.

“Burberry has failed to make the effort to stay ahead, such as by regularly releasing new items or repackaging its products,” she added.

Burberry won’t be the only overseas designer brand forced out of the Korean market.

U.S. beauty care giant AVON withdrew in early 2013, while Helena Rubinstein and Givenchy have reduced distribution to duty-free shops. For French luxury brand Yves Saint Laurent, it took nearly 10 years to rethink its strategy in Korea and make a recent comeback in Korea.

By Bae Ji-sook
(baejisook@heraldcorp.com)