The global cosmetics corporation L'Oréal Group is heavily weighing the option to erase the name of Gowoonsesang Cosmetics, which it acquired last year, and only incorporate the functional cosmetics brand Dr.G.
Gowoonsesang Cosmetics once presented a blueprint to create 10 brands, but L'Oréal has decided to operate only under Dr.G, effectively abolishing the plan for brand diversification.
According to a comprehensive report from ChosunBiz on the 14th, L'Oréal, which acquired Gowoonsesang Cosmetics from the Swiss distribution group Migros in December last year, is currently reviewing the incorporation of only the leading brand 'Dr.G' instead of the name Gowoonsesang Cosmetics. The structure from 'L'Oréal–Gowoonsesang Cosmetics–Dr.G' is being simplified to 'L'Oréal Korea–Dr.G'.
Recently, Gowoonsesang Cosmetics also informed clients that it would end operations for the vegan brand 'Vividraw' and the makeup brand 'Heals'. The company stated that it would support maximizing sales with clients through inventory management and promotions until the end of this year.
Changes have also occurred in Gowoonsesang Cosmetics' strategy for '10 brands in 10 years.' Following this plan, it launched the vegan brand 'Vividraw' in 2022, followed by the makeup brand 'Heals' and the dermaceutical brand 'Labit' last year. However, both Vividraw and Heals failed to significantly impact sales structures, leading to the decision to operate the brands only until this year.
A source in the cosmetics industry noted, "The business will move forward solely with existing Dr.G products," adding, "I understand that there are no plans for brand or new product launches next year."
Employees are also experiencing changes. Gowoonsesang Cosmetics has been evaluated as having good benefits in the cosmetics industry, including biweekly telecommuting, two-hour lunch breaks on Wednesdays, and overseas workshops for employees. It is reported that changes to the welfare system will occur once the current office remodeling is completed.
Recently, the company has started to tally target sales weekly, and if sales targets are not met, response staff are preparing measures. Some employees, like designers, are handling tasks related to L'Oréal instead of Dr.G, thus altering the work atmosphere.
The changes in operational methods led by L'Oréal are not unconnected to past experiences where acquisitions of domestic cosmetics companies did not yield the expected results. L'Oréal acquired the fashion and cosmetics company Style Nanda in 2018, which at that time accounted for 70% of sales for the color makeup brand '3CE.'
However, Style Nanda recorded sales of 269.5 billion won and an operating profit of 61.8 billion won in 2019, seeing a decrease to 256.3 billion won in sales and 44.3 billion won in operating profit in 2020. Since 2021, operating profit has remained in the 30 billion won range.
In 2020, the impact of COVID-19 caused the color cosmetics market to lose growth momentum, while competitive domestic cosmetics companies emerged, intensifying competition. Following the withdrawal from the clothing business last year, restructuring has also taken place this year.
With both 3CE and Dr.G in its portfolio, L'Oréal is expected to strengthen its presence in the Korean market by focusing on brands with high market share. Dr.G is a flagship brand that has contributed to achieving annual sales of 200 billion won for Gowoonsesang Cosmetics, with approximately 90% of its revenue generated domestically.
L'Oréal Korea stated, "There has been no decision on not using the Gowoonsesang name or on employee welfare matters," adding that it plans to focus on Dr.G, which has the greatest potential for growth, both domestically and internationally, to enhance the competitiveness of the Dr.G brand in the market.