Shinsegae Department Store boosts presence in China

11-Jul-2017 - Last updated on 12-Jul-2017 at 11:01 GMT

South Korean leading retailer, Shinsegae Group, enters China’s e-commerce market amid selecting digital expansion as its strategic marketing priority.

Shinsegae Department Store will launch beauty and fashion stores on Alibaba Group’s largest online shopping platform, Tmall Global.

The e-commerce giant maintains around 80% of China’s online retail space, with Tmall generating almost 800 million visitors to its business-to-consumer (B2C) site in 2016.

In a South Korean e-commerce first, Shinsegae announced that it is the only department store to create a Tmall shop.

Making it simple

Shinsegae Department Store will implement Alibaba’s mobile payment service, Alipay, and will also utilise the Chinese e-commerce company’s logistic business, Cainiao, to transport items. This aims to enable consumers to purchase beauty and personal care products conveniently and securely.

Previously, Shinsegae Group turned its attention to appealing to overseas consumers through online retail platform, SSG.com, to diversify from the traditional brick-and-mortar purchasing model.

The company invested in enabling Korean, Chinese, Japanese and English consumers to access the site. Through providing these multiple language facilities, Shinsegae Group bolstered awareness and understanding amongst consumers to affirm the department store’s positioning, reputation and aims.

Difficult growth period?

This decision was a successful strategy, as online sales figures increased considerably to almost double in the period of January to June 2017. Despite growing tensions between China and Korea resulting from disputes over the latter’s decision to deploy a Terminal High Altitude Area Defense (THAAD) system, Shinsegae Group ploughed ahead with plans to raise its profile in China.

Data from Statistics Korea revealed that the number of Chinese consumers purchasing Korean-produced items digitally rose by 5.84% in the first quarter of this year.

The department store hopes that it can expand upon this new digital focus and enter the global e-commerce market through adding targeted and specific platforms in Japan and the US.

China’s projections

Chinese purchasing habits display a growing trend towards online platforms, as domestic and global names focus their brand innovation plans towards establishing online flagship outlets, Euromonitor International found.

In 2016, Shiseido-owned Cle de Peau, French cosmetics chain Sephora, and fragrance, cosmetics and skin care label, Guerlain, launched official online stores on Tmall.com.

Over the forecast period, hybrid items, particularly in the skin care, sun care, oral care, colour cosmetics and baby and child product sectors are expected to prove popular. As a result, China is predicted to witness a 5% compound annual growth rate (CAGR).