As CJ Olive Young expands overseas, including to North America, the so‑called "Olse-gwon" retail catchment it built in Korea is stirring debate over its impact on neighborhood businesses. With the first fact-finding survey underway to analyze how life-needs chain retailers such as Olive Young and Asung Daiso Co. affect local commercial districts, some are calling for a review of the existing distribution regulations designed around big-box stores.
According to the industry on the 12th, the Korea Federation of Small and Medium Enterprises has recently commissioned a research project titled "The spread of life-needs chain retailers and plans for co-prosperity with local commercial districts," and begun the process of selecting a contractor. As chain specialty stores handling household goods and cosmetics spread rapidly in a small-footprint, multi-store format, the aim is to analyze their impact on local commercial districts and small business owners.
The life-needs chain retailers cited by KBIZ are in effect seen as targeting the recently fast-growing Olive Young and Asung Daiso Co. Both companies handle household goods, cosmetics, sundries, and hygiene products; Olive Young operates 1,300 stores nationwide, and Asung Daiso Co. runs more than 1,600 nationwide. They also share a chain structure in which headquarters controls product mix, prices, and sales strategy, making them similar to the business formats under study.
In particular, Olive Young has secured a dominant position in the domestic H&B (health and beauty) market based on a nationwide store-opening strategy and has steadily expanded its business. As it rapidly increased stores not only in key commercial districts but also near residential areas, its influence grew to the point that the real estate market coined the term Olse-gwon. A perception has taken hold that a district with an Olive Young is guaranteed foot traffic.
Inside and outside the retail industry, a regulatory gap is cited as one reason Olive Young has been able to aggressively expand its stores. Unlike hypermarkets and shopping malls, which face restrictions on openings and operating hours under the Distribution Industry Development Act, Olive Young, as an H&B specialty store, is part of the same large corporate group but falls outside the scope of those regulations.
Olive Young is a key affiliate of CJ Group, which belongs to a large group of corporations. CJ Corp., the holding company of CJ Group, owns more than 51% equity, and Lee Sun-ho, a management leader at CJ and the eldest son of CJ Group Chairman Lee Jay-hyun, holds about 11% equity, positioning Olive Young as a core affiliate expected to play a role in the group's future succession process.
Starting this year, Olive Young has broadened its business scope to wellness (health management) and is significantly expanding its product lineup, which is fueling the regulatory debate. Whereas Olive Young previously focused on beauty products such as cosmetics, the wellness-only store Olive Better centers on sundries such as health supplements, ready-to-eat meals or sleep products, and exercise gear.
In the mid to long term, Olive Young aims to enter overseas markets such as North America and establish itself as a global H&B platform. It will open its first local store in Pasadena, California, in May this year and plans sequential openings in major commercial districts such as Westfield in Los Angeles (LA). It is also accelerating the establishment of a local logistics center and entry into the European market.
However, some say it is difficult to view the regulatory debate around Olive Young simply as "big business versus small merchants." That is because most partner companies that supply to Olive Young are small and medium-sized enterprises. If regulations on Olive Young are introduced, there are concerns that small brands with high channel dependence could face unexpected harm.
Last year, small and midsize to mid-tier companies accounted for about 90% of brands stocked at Olive Young. Among them, 116 brands recorded more than 10 billion won in annual sales through Olive Young's online and offline channels, more than tripling in about five years compared with 2020 (36 brands). The number of brands exceeding 100 billion won in annual sales also doubled from the previous year to six.
Olive Young says its product lineup does not significantly overlap with that of neighborhood businesses and that it actually helps revitalize local commercial districts. An Olive Young official said, "In the case of old downtowns or aging districts, nearby merchants' reactions are often positive after a store opens," adding, "As more people in their teens and 20s and foreign tourists come in, it leads to increased sales in surrounding commercial districts."
KBIZ plans to use the findings of this study to review future policy. A KBIZ official said, "We will comprehensively review the relationship between life-needs chain retailers and local commercial districts by dividing it into factors for co-prosperity and conflict," adding, "Taking into account changes in the retail environment, we will present considerations and policy approaches when reviewing criteria for applying systems such as the Distribution Industry Development Act."