Stand-alone cosmetics stores sales plunge, while online flourish

A customer walks into Innisfree shop in Seoul in this 2018 file photo. Korea times file

By Kim Jae-heun

Stand-alone cosmetics shops near universities in the capital area or on main streets in downtown once thrived, with the market growing to be worth 2.81 trillion won ($2.58 billion) in 2016. However, the figure has fallen since then, plummeting to 1.7 trillion in 2018.

One of the most popular skincare franchises, Missha, now has only 400 stores nationwide, closing down 164 last year alone and 30 more this year as of last month. At its peak, Missha operated 800 stores.

Sluggish consumption and intensifying competition have been behind the dramatic decline, alongside the rise of online malls and flourishing Health & Beauty stores such as Olive Young.

But the outbreak of COVID-19 pandemic has also played a decisive role.

People spending more time at home saw less reason to wear makeup, as well as shifting their daily purchases online to avoid spreading the coronavirus.

Cosmetics brands operated by major companies were not an exception.

AmorePacific's Innisfree and LG Household & Health Care's The Face Shop have shut down 135 and 264 stores, respectively.

Etude House, another popular skincare brand operated by AmorePacific, closed 229 stores from 2018 and now has just 164 left.

“Many brands have carried out a large-scale restructuring and they are almost finished. Also, the COVID-19 pandemic does not look like it will end anytime soon so it will be unavoidable for cosmetics firms to close more stores,” an industry source said.

Some cosmetics firms have sought to diversify their business portfolios.

Tony Moly has entered the pet food market by acquiring single ingredient pet food manufacturer Ocean, and seeks to use its outlets as a new profit generator.

“We want to adopt the infrastructure we created overseas with cosmetic products to newly launched pet food items,” a Tony Moly official said.

LG Household & Health Care has reformed its online shopping mall to seek mutual growth with its stores.

It has opened an online platform for franchises, mostly run by individuals.

“Small dealers will be able to sell their products on our platform to improve their sales and profits,” an LG Household & Health Care official said.