15.05 Million Visitors: K-Beauty's Shelf Is Moving to Pharmacies and the Regions

What is the signal?

Reports published in late September consistently noted that both the number of inbound visitors and their spending are at record levels. From January to August, 15.05 million foreign tourists visited Korea, up 21.6% from 12.38 million in the same period last year, and the point at which arrivals passed 15 million came earlier than mid-October last year. Over the same period foreign card spending in the tourism category reached 14.018 trillion won, up 48.5% from 9.4396 trillion won a year earlier. Visitors rose 21.6% while spending rose 48.5%, which means spending per person grew.

Interest on the beauty side shows up too. According to an analysis by the global travel platform Klook, traffic to domestic beauty categories from foreign users rose 46% year on year between 1 January and 15 August. Coverage described a spending pattern once centred on duty-free stores, department stores and hypermarkets shifting toward medical and beauty treatments, pharmacy cosmetics and drugstore shopping.

The number that shows the channel shift most sharply is pharmacies. In BC Card's analysis of first-half foreign card spending, pharmacy spending rose 1,176.9% year on year and the pharmacy share of medical tourism spending widened to 2.0%. In the same analysis foreign spending on medical services rose 98%, and the medical share of total spending grew from 12.6% in the first half of last year to 16.3% this year. Cosmetic surgery rose 35.5% while skin beauty services rose 109.8%, which was read as the weight of medical tourism being reorganised from surgery toward skin and beauty.

The regional axis splits as well. Medical spending is heavily concentrated in the capital region, with Seoul accounting for 92.8%, while consumer-goods shopping is widening toward major destinations such as Busan, Gyeongju and Jeju. On the pharmacy side, regional growth rates were reported at 591% in Busan and 359% in Jeju, and on-the-ground coverage described pharmacies aimed at foreign visitors spreading from Myeongdong to Haeundae and Nampo-dong in Busan.

The nature of these figures is worth separating, though. The card spending totals are payment data compiled by one card company, and Klook's 46% is traffic on one platform, not sales. A large increase like 1,176.9% is the kind of number that appears when the starting point is small, and the pharmacy share of medical tourism spending is in fact 2.0%. The regional growth rates are growth inside the pharmacy channel, not total cosmetic sales in those regions. What can be read here is that the touchpoints for tourist beauty spending are increasing outside duty-free retail, not that pharmacies have become a main shelf.

1. Tourists no longer go only to duty-free stores

For brands watching exports or reverse direct purchase, inbound tourists were long a duty-free story. Get into the duty-free channel and you captured tourist demand; fail to get in and tourists were demand that had nothing to do with you. In that structure, brand scale was effectively the access right.

Spending spreading into pharmacies, drugstores and post-treatment purchases means the form of that access right changes. These channels differ from duty-free retail in their entry terms, how products are displayed and how consultation happens. Places open up that do not require large scale, but the conditions those places ask for are also different.

The first thing to settle in practice is which touchpoint your product can sit in. The same product sells differently on a duty-free display, at a pharmacy counter and on a drugstore endcap. Without making that judgement, looking only at the fact that tourist demand has grown leaves you with no actual point of connection between that demand and your product.

• Which of duty-free, drugstore or pharmacy your product can be placed in
• Whether you have confirmed that channel's entry terms and minimum quantity
• Who explains the product in that channel (staff consultation or display alone)
• Whether prices clash when the same product sits in several touchpoints at once

2. Treat the purchase that follows a treatment separately

In the first-half analysis cosmetic surgery rose 35.5% while skin beauty services rose 109.8%. Skin beauty grew more than twice as fast. As the number of treatments rises, demand for products needed right after a treatment rises with it.

The order of pharmacy purchase items in the coverage overlaps with that flow. The most frequently mentioned items were skin-care creams such as recovery creams, followed by acne and blemish care products, supplements and health functional foods, skincare cosmetics, and artificial tears and eye supplements. It is worth noting that what came first was not colour or fragrance but products on the soothing and recovery side.

There is a line here that must be kept clear. Planning with post-treatment use in mind and advertising a treatment effect are entirely different problems. Cosmetics cannot use expressions that may be mistaken for pharmaceuticals, and cases of advertising crossing that boundary continue to be caught in Korea. Assuming a use occasion and designing the formula and sensory profile around it is planning; writing that occasion as a sentence on the label or the product page is a separate matter requiring review.

So what a brand looking at this demand should settle is not the wording but the specification: whether the formula is low-irritation, how far to take fragrance and colour, whether the container is easy to use hygienically. The wording is safer built afterwards, inside the rules.

3. Separate what is concentrated in the capital from what has spread to the regions

Two directions appear at once inside the same data. Medical spending is overwhelmingly concentrated in Seoul at 92.8%, while consumer-goods shopping is widening toward Busan, Gyeongju and Jeju. Pharmacy spending growth was also larger on the regional side, at 591% in Busan and 359% in Jeju.

These two directions are different signals for a brand. Products tied to treatments, products sold through consultation, still have their larger opportunity in Seoul. Products noticed and picked up on the spot during a trip are finding opportunity in destination areas. Aiming one product at both situations usually fits neither.

Products that sell in destination areas carry a few extra conditions: a size that fits a suitcase, a volume that raises no cabin-baggage issue, a container that does not break, a price point that makes it easy to pick up several at once. These are questions of container and volume rather than formula, and they are items that are hard to change late in development.

Coverage describing the Myeongdong-style pharmacy format aimed at foreign visitors spreading to Haeundae and Nampo-dong in Busan points closer to this being a store format taking root than a temporary inflow. Still, that too is on-the-ground observation of a few commercial districts, so it is early to read it as a nationwide channel structure.

• Whether your product is a consultation product or an impulse product
• Whether the volume satisfies conditions for carrying and cabin baggage
• Whether the container withstands damage and leakage in transit
• Whether the price point is one where people buy several or only one

4. A product a foreign visitor picks up carries one more condition

When a tourist picks up a product built for domestic consumers as it is, a labelling problem follows. In the store a staff member explains it, but once that product is in a suitcase heading home, all that remains is the information printed on the container. Whether the ingredient names, directions and expiry can be read becomes the condition for a repeat purchase.

Labelling requirements differ between products sold domestically and products for export. A tourist purchase sits at an intermediate point: formally a domestic sale, but actually used overseas. The problem that commonly arises here is not the product itself but the situation where a consumer back home cannot find the same product again or cannot search its name.

So if you are aiming at this demand, it is better to make at least the product name and key information readable in English as well. What can be shown and how must be decided within the scope of labelling and advertising rules, so confirming it before the design is finalised is the right order. A label is the item that costs the most to change once printing is done.

• Whether the product name is written in a form searchable from the home market
• Whether directions and expiry are readable beyond Korean
• Whether the labelling items are organised within domestic rules
• By when a label change would have to be confirmed if one is needed

5. Tourist demand becomes revenue only when it turns into repurchase

One tourist buying a product in Korea is one sale. That person buying again back home is where it becomes a business. Reports of rising inbound spending appearing alongside reports of rising reverse direct purchase point toward that connection actually happening.

The point where the connection breaks is usually simple: there is no route to buy at home, or there is one but they cannot find it, or the price differs so much that they do not buy. None of the three has anything to do with product quality; they arise from not having settled the sales structure in advance.

So at the point you decide to enter the inbound tourist channel, settle the route that follows it as well: which countries most of that channel's customers come from, what route exists for buying your product in those countries, and how far that route's price diverges from the domestic price. Without those three settled, tourist revenue ends with that season.

One more thing: tourist demand moves together with external variables such as exchange rates, flight routes and visa policy. Taking this year's growth rate as next year's baseline for production quantity sits on the risky side. Before scaling up an opening order to match increased demand, it is safer to write one line about where the remaining stock goes when that demand recedes.

The first question for the brief

Rather than beginning with 'tourists have increased, so we will look at tourist districts', try one sentence: is our product sold through consultation, or picked up in passing? Choose one and the shelf, the volume, the container and the price point are settled with it. Then add one more line beneath it. When someone who bought this product in Korea wants to buy it again at home, where and at what price can they?