"Why should I go to a store that's also in Seoul when I came all the way to Jeju?"
Lately, CJ Olive Young's store strategy has been shifting to answer that question. It is drawing consumers by stocking products that are available only at stores in that region. It is weaving local specialties and local stories into products in various ways. This aligns with a strategy Starbucks previously rolled out. Olive Young is effectively following the path Starbucks took.
According to the retail industry on the 23rd, Olive Young is focusing on creating region-specific souvenirs through the lifestyle brand Round A'Round. In February, it plans to launch hand cream, bath bombs, and cypress spray with scents that evoke the seas of Haeundae and Gwangalli in Busan. Olive Young has recently been concentrating on developing products that reinterpret local native resources from a brand perspective, and this time it chose Busan as the star.
Earlier, in June last year, the Olive Young Jeju branch showcased various products inspired by tangerines, green tangerines, and camellias. Representative items included lip balm, shower puffs, bath bombs, hand cream, and umbrellas. At the Olive Young Gangneung branch, it collaborated with the coffee shop Terarosa to develop and sell items such as body scrub (exfoliant) and scented sachets. A hallmark of these region-specific souvenirs is that you must visit the store in that region to buy them.
In the retail industry, this is seen as a strategy that emerges when growth from simply expanding branches reaches its peak. According to Olive Young, since 2010 the average five-year branch growth rate has been on a downward trend, from 45% to the 2.1% range. In other words, Olive Young has already planted its flag in many places. Once expansion has gone as far as it can, the strategy typically shifts to securing more loyal customers. That is why the focus is on offering limited experiences to attract customers who come of their own accord.
This aligns with Starbucks emphasizing local stores and rolling out region-specific menus starting in 2015. Starbucks' average five-year branch growth rate since 2010 also fell, from 21.6% to 6.6%. A retail industry official said, "There inevitably comes a point when you can no longer grow just by increasing the number of stores," and added, "Recognizing this, Starbucks moved preemptively, launching local store visit events in 2015 and further strengthening merchandise that depicted Korean cities—previously placed in each store—by revamping it in 2024."
Olive Young is also giving food items a local flavor. In Jeju, it introduced Udo peanut bagel chips and Jeju tangerine palmi carré (layered pastry), and in Busan, it sold seed hotteok dalgona. An Olive Young official said, "Bagel chips, one element of the Delight Project, have become a must-buy for foreign tourists shopping at Olive Young, ranking within the top 10 popular brands among foreign buyers. By giving this product a local twist, we turned it into a travel souvenir, and the response was strong."
Previously, starting in 2016 with Jeju, Starbucks also rolled out region-specific menus. At the De Chuncheon Ui-am Lake R store, Starbucks sells specialized items such as the "Chuncheon-style dakgalbi & potato ciabatta sandwich," which reinterprets Gangwon's signature potato as a sandwich, the "potato-filled mascarpone cake," and the purple-hued lavender tea latte. At the The Jeju Songdang Park R store, it offered "Jeju Bijarim Reserve Cold Brew," and at the The Yeosu Dolsan DT store, it showcased "Yeosu sea grapefruit Fizzio." According to Starbucks, these beverages each sell more than 100 cups a day on average.
Ultimately, what the Olive Young and Starbucks cases make clear is this: Simply increasing the number of stores hits a growth ceiling, but a strategy of drawing customers with region-specific products and experiences can lift long-term results. In other words, designing for customers to "seek out the experience" and boosting loyalty is likely to become a growth engine for the retail and food service industries.