Jung Woon Ho will never forget his 1999 trip
to New York,when his eye was caught by a
poster of supermodel Naomi Campbell promoting
The Gap. Why, he thought, could he not build a
brand as strong as Gap Inc (GPS ).'s,marrying a
cool, even classy, image with relatively low prices
in makeup in Korea? "The cosmetics business is all
about images," says Jung. Back at home,
he worked up a business plan, and in 2003
he launched TheFaceShop. Korea was ripe for the idea. The first FaceShop store,
in Seoul's bustling Myongdong district, opened in
December, 2003. The company now has 360 stores in Korea and 61 overseas.
This year, TheFaceShop expects profits to jump 219%, to $28.6 million,as sales climb 176%,
to $162 million.
To give the brand an aura of cool, Jung insisted that all his products be made from
botanical extracts. Then he slashed costs and offered lotions, creams, and lipstick at less
than half the price of local suppliers. "TheFaceShop brought about a revolution in
Korea's cosmetics industry," says Cho Yoon Jung, an analyst at Hyundai Securities in Seoul.
Jung also hit his competitors where they were vulnerable. Korean cosmetics had
previously been dominated by large retailers supplied by wholesalers. Jung cut out the
middlemen, directly supplying franchised FaceShop stores selling only his brand. He
outsourced production to a pair of Korean manufacturers that work for international brands
such as L'Oréal, Johnson & Johnson (JNJ ), and Boots. And to owners of existing cosmetics
shops willing to retool their stores and join his FaceShop chain, he offered higher
margins than established manufacturers did.
Jung didn't forget the power of that Naomi Campbell poster, either. But instead
of finding a supermodel to stump for TheFaceShop, he hired Kwon Sang Woo, a top
actor popular with young women. Jung blanketed the airwaves with ads featuring Kwon
admiring a young woman with beautiful skin as she plays the violin in a leafy garden,
followed by the tag line "Natural story. TheFaceShop." To hammer home the
company's green image, Jung also insists that each store have a live zelkova tree inside.
in Seoul's bustling Myongdong district, opened in
December, 2003. The company now has 360 stores in Korea and 61 overseas.
This year, TheFaceShop expects profits to jump 219%, to $28.6 million,as sales climb 176%,
to $162 million.
To give the brand an aura of cool, Jung insisted that all his products be made from
botanical extracts. Then he slashed costs and offered lotions, creams, and lipstick at less
than half the price of local suppliers. "TheFaceShop brought about a revolution in
Korea's cosmetics industry," says Cho Yoon Jung, an analyst at Hyundai Securities in Seoul.
Jung also hit his competitors where they were vulnerable. Korean cosmetics had
previously been dominated by large retailers supplied by wholesalers. Jung cut out the
middlemen, directly supplying franchised FaceShop stores selling only his brand. He
outsourced production to a pair of Korean manufacturers that work for international brands
such as L'Oréal, Johnson & Johnson (JNJ ), and Boots. And to owners of existing cosmetics
shops willing to retool their stores and join his FaceShop chain, he offered higher
margins than established manufacturers did.
Jung didn't forget the power of that Naomi Campbell poster, either. But instead
of finding a supermodel to stump for TheFaceShop, he hired Kwon Sang Woo, a top
actor popular with young women. Jung blanketed the airwaves with ads featuring Kwon
admiring a young woman with beautiful skin as she plays the violin in a leafy garden,
followed by the tag line "Natural story. TheFaceShop." To hammer home the
company's green image, Jung also insists that each store have a live zelkova tree inside.
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