2019.05.15
May. CEO Message
Last week, I visited our stores in large retail outlets across Korea and met many of the beauty partners that were working hard there. Daily beauty business deals with personal care goods and, at Amorepacific, we have been at the top of this market for decades. It sounds like we've been on a roll but in the beginning even we had our struggles. In the 1980s when we started our daily beauty business, things were difficult. Agencies made up the main channel of our business at first. However, with the rise of retail outlets in the early 1990s, we made our breakthrough when we signed a partnership contract with some large retail chains and, as a result, were able to take the top spot in the market. The market now is experiencing a downturn with fewer and fewer customers doing their shopping in the offline world leading some large retailers to shut their stores. Mobile (online) shopping is indeed making life difficult for brick-and-mortar stores. Even fresh foods are selling increasingly well online; packaged foods even more so. Also, mobile shopping accounts for nearly 40% of cosmetic sales and it is expected that its share will grow up to over 50%. It means we must innovate ourselves again as the world is changing.
With the rise of smartphones, humanity has evolved into a new species of what is now being termed as Phono Sapiens. Think of how we consume media these days. Instead of sitting right in front of a TV, we use a smartphone or other smart devices to watch drama series and entertainment shows. There is no need to wait to watch your favorite show. The same goes for movies. We can simply turn to our smartphone and watch movies without having to go to the movie theater. Not to mention shopping, news and banking services. We have a bank in our hands, and can access and use a banking service whenever and wherever we want. The world is now populated by Phono Sapiens, the kind of people who match the expression "I Phone therefore I am." In this evolving world, we have to stay up to date and be able to lead the change.
Dear Asian Beauty Creators,
We are going through difficult times. Over the past 70 years, we have had our ups and definitely many downs in between. However, we have always been able to overcome our struggles and bounce back, all thanks to our customers and their love. They fell in love with our exceptional products, innovative products offered via our door-to-door sales representatives, ARITAUM, department stores and other points of contact. It really has been word-of-mouth that has built the connection between our products and customers through touchpoints. The value of these three things - high quality products, interaction with customers (touchpoints) and word-of-mouth - remains unchanged over time. A different approach may be needed for new digital Phono Sapiens, but their value and attributes never change.
To keep customers in love with us, we must provide them with new high quality products. In other words, innovation is essential. We must also build up a fan base. Brand fandom is a group of customers committed to a brand and I am talking about fandom instead of word-of-mouth marketing because they may be the same in essence, but require a different approach. That means we must create a fandom differently from the way in which we are used to get customers talking about a brand. Product review posting, recommendations, comments, collaboration with influencers and all the other activities using social media including Ziahongshu, YouTube and Instagram are all elements of fandom; these are ways of building up a fandom base, which our unique culture, identity and story must meld seamlessly into. Recently, Hanyul Artemisia Miracle Relief Essence video has gone viral on YouTube. We have studied mugwort over the past 40 years. It is such a strong and miraculous plant that sprang first in Hiroshima, Japan after the atomic bombings during the World War II. This video not only grabbed and held the attention of our target audience, but also showed all the effort we put into the study of cosmetic ingredients and our professionalism. In this digital age, social media is the new word-of-mouth marketing tool.
My dearest Asian Beauty Creators,
Here are three things that we must do to keep customers engaged in this ever-changing world. First, create a millennial fandom and, to bring in more young millennials, we must undergo a digital transformation. As many of you who participated in the recent digital conference saw, we have identified 10 tasks. They are not a one-time thing but a journey that we all must take together. Let us keep pushing forward with these tasks to accept and absorb them, so that they become an integral part of who we are.
Second, achieve intergenerational harmony. Over 70% of our members are millennials and 70% of leaders are Gen Xers. It is important that we create a more millennial-friendly environment in which millennials can enjoy their work and fulfill their potential and for that, Gen X leaders have a big part to play. Pass down practical knowledge, our corporate DNA and strengths that helped us overcome difficulties in the past to millennials. Tell them what they have to hear, encourage them and guide them toward the right path like a big brother or sister. Gen X leaders are often referred to as undervalued blue-chips. Nestled between baby boomers and millennials, Gen Xers are more of an unknown than the generations before and after but still have leadership potential. I'd like to ask Gen X leaders to lead the change within our organization and help millennials grow with the company.
Third, truly understand customers. In this mobile-first world, big data is the way to understand how customers think and what they need. Customers today have evolved into Phono Sapiens that spend almost all day online as they interact with others using their smartphones. That means we can track their ongoing thoughts and feelings using data. The key is how we collect and analyze each piece of data. As I mentioned earlier, it is important that we understand the value of data to keep pushing our digital tasks in order to build a millennial fandom in the world of social media. Our journey of digital transformation begins with a single step. An immediate outcome may not be satisfactory, but we can take it as an opportunity for introspection and change our future in the long run. Despite all the changes we have made already, there is still much to be done. We are merely a small player in the global market but we do have many opportunities ahead of us, opportunities to engage potential millennial customers around the world. Recently, BTS has taken over the world and their global success has given me much to think about. K-pop stars in the international highlights, such as BTS, are millennials and some are members of Gen Z, although those who raised them behind the curtain are mostly Gen Xers. This shows how different generations can work together and achieve greater things. The message of love and peace that BTS shares is exactly what we share. Amore means love and Pacific represents peace; these two concepts form the story of AP and our brands and by creating value from our culture through digital technology, we can bind fans in Korea, China and around the world together and create a fandom.
In this age of Phono Sapiens, we all must take ownership of our lives. Taking ownership means that you are taking action by your own choice. There is a saying that life is an endless string of desire. I hope that you keep trying to get your heart's desire and take control of your actions and your life. Let's keep moving, be excited about the changes and enjoy our journey of beauty in this digital age. Lastly, I'd like to thank everyone who participated in preparing the Beautiful April event.
Array ( )