Shops without stock draw crowds in South Korea
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There’s a new trend capturing South Korean consumers’ attention: shops without stock, focusing on experience rather than instant retail sales.
With a growing number of consumers choosing and purchasing products online or on mobile devices, hands-on stores that target such customers are becoming a new marketing trend.
Amore Seongsu, which opened in early October as a customer experience-oriented store of AmorePacific, a South Korean cosmetics giant, had surpassed 24,000 cumulative visitors as of December 5, about two months after its opening.
At Amore Seongsu, customers can test and experience the brand’s cosmetics – but nothing is for sale in this shop without stock.
Visitors can apply and spray products tailored to them from the beauty library, which features more than 30 brands and 2300 products from AmorePacific.
Furthermore, Amore Seongsu offers various other services, including makeup classes, flower box- and perfume-making classes every month to encourage customers to participate.
“We only offer customers the opportunity to check out products suitable for them at our stores, and customers purchase the products online afterward,” said an official from AmorePacific.
Online shopping transactions of cosmetics reached 1.15 trillion won (US$966 million) as of October, up 28 percent year on year. Meanwhile, sales via mobile devices rose 32 percent to 648.8 billion won, according to Statistics Korea.
“We only offer customers the opportunity to check out products suitable for them at our stores, and customers purchase the products online afterward,”
In fact, data shows that 20 percent of customers who visit Amore Seongsu purchase products from the brand online within a week of their visit.
In addition, AHC, a cosmetics brand operating under Carver Korea, opened its flagship store “Future Salon” in Myeong-dong, Seoul, in late October.
Moreover, Aekyung Industrial Co, a South Korean household-goods and cosmetics maker, also launched Luna Signature, a hands-on cosmetics store near Hongdae in Seoul, in June. The two stores also place more weight on experience rather than sales.
“We don’t put much importance on sales performance at experience stores,” a source from Aekyung said. “If we increase brand awareness by communicating with more consumers, it will lead to an increase in sales online.”
The furniture industry, which already operated showrooms and flagship stores, has also recently attracted visitors by decorating exhibition and sales halls as cultural spaces.
American mattress maker Simmons opened a cultural complex, Simmons Terrace in Icheon, Gyeonggi Province, last year. It has welcomed more than 100,000 visitors in just one year since its opening.
In addition to the showroom-like shops, museums and exhibitions featuring gardens, lounges and brand stories have been set up at Simmons Terrace.
“Customers do not purchase products immediately on site, but visitors become strong potential customers,” a furniture industry source said.
Questions & Answers
Q.What is the primary goal of these stockless shops for the companies that open them?
What is the primary goal of these stockless shops for the companies that open them?
The main goal is to offer customers the opportunity to experience products and increase brand awareness. Companies believe this will encourage customers to purchase products online afterwards, rather than generating immediate in-store sales.
Q.What evidence is there that this new retail approach is effective in leading to online sales?
What evidence is there that this new retail approach is effective in leading to online sales?
Data shows that 20 percent of customers who visit Amore Seongsu purchase products from the brand online within a week of their visit. A furniture industry source also noted that visitors become strong potential customers.
Q.How significant is online and mobile purchasing in the South Korean cosmetics market currently?
How significant is online and mobile purchasing in the South Korean cosmetics market currently?
Online cosmetics transactions reached 1.15 trillion won (US$966 million) as of October, a 28 percent increase year on year. Sales via mobile devices specifically rose by 32 percent to 648.8 billion won.