Buoyed by the fast-growing K-beauty market, Musinsa, Hyundai Home Shopping and Dae Myung Chemical are expanding their offline stores one after another, widening the entry points for beauty brands. But brands' calculations are getting more complicated. The opportunity to broaden consumer touchpoints through new channels has grown, but they cannot ignore existing relationships, as CJ Olive Young still wields strong influence in Korea's offline beauty market.
Accordingly, brands are carefully weighing whether to enter latecomer channels, as well as product assortment, pricing policies and the scope of promotions. The emerging beauty channels, too, are seeking differentiation not by taking on Olive Young head-on with the past health and beauty (H&B) store format, but by fronting different concepts and targets such as indie brands, women in their 40s and 50s, beauty outlets and ultra-low-priced products.
According to industry sources on the 11th, Musinsa Beauty (MUSINSA BEAUTY) plans to open beauty-specialized offline stores in Hongdae and Seongsu-dong, Seoul, in September and Nov., respectively. Before that, Musinsa began to ramp up its offline beauty business by unveiling a beauty select shop in a shop-in-shop format inside the large Seongsu-dong complex store, Musinsa Megastore Seongsu.
Hyundai Home Shopping has also moved to expand offline stores with its beauty select shop Coasis. After opening its first store in Dec. last year at Hyundai Premium Outlet Space 1 in Namyangju, Gyeonggi, Coasis has been expanding to Hyundai Department Store Cheonho and Hyundai Outlet Garden Five, among others.
OFF BEAUTY, operated by Q&B International, an affiliate of Dae Myung Chemical, is increasing stores with a beauty outlet concept. Asung Daiso Co. is also boosting its presence by fronting ultra-low-priced beauty products in the 1,000–5,000 won range.
Despite the growing number of offline platforms, beauty brands' concerns are reportedly mounting. Given that Olive Young still holds significant clout in Korea's beauty distribution market, brands cannot help but consider their relationship with Olive Young even when they receive entry proposals from new platforms.
Some brands, even when considering entry into latecomer platforms, are said to exclude popular products or to run channel-exclusive items by channel to keep balance. A beauty industry official said, "Because there is a channel with strong market influence, it is true that brands find it hard to move freely," adding, "Even when considering collaboration with latecomer platforms, there are cases where some popular products are excluded from entry in consideration of existing transaction relationships."
In fact, the Olive Young-centric market structure has previously been subject to review by competition authorities. The Korea Fair Trade Commission in 2023 issued a corrective order and imposed a penalty surcharge of about 1.9 billion won on CJ Olive Young, taking issue with actions such as asking suppliers not to run the same category promotions at competing health and beauty (H&B) stores before and after its in-house promotional events, Power Pack and Ol Young Pick. In lawsuits that continued through last year, the penalty surcharge was partially reduced, but the finding that Olive Young holds a superior bargaining position in transactions with suppliers was upheld.
◇ Diversifying strategies for new platform openings
This market environment is also affecting the recent store-opening strategies of new platforms. As GS Retail's Lalavla and Lotte Shopping's LOHBs, which once pushed H&B store formats similar to Olive Young, fell behind in the competition and exited the offline road shop business, latecomers are putting more weight on segmentation than head-to-head battles. Rather than positioning themselves as direct substitutes for Olive Young, they are narrowing their focus to customer segments and product categories where they have strengths.
Musinsa Beauty initially considered bringing in about 700 brands to Musinsa Megastore Seongsu, but ultimately adjusted the scale to around 500. Rather than simply increasing the number of brands, the decision was to strengthen curation around indie brands that lacked offline touchpoints to secure differentiated competitiveness.
Hyundai Home Shopping's Coasis is targeting women in their 40s and 50s and demand for functional skincare. OFF BEAUTY is seeking differentiation with an outlet model that sells brands' past-season and inventory items at reasonable prices, and Asung Daiso Co. is broadening its mass reach with ultra-low-priced beauty products and a nationwide store network.
An industry official said, "Because brands are weighed down by the dominance of top players, it will not be easy to change the market structure in a short time," adding, "Latecomer platforms are also likely to focus more on securing differentiated customer experiences and brand-building capabilities than on competing with existing distribution channels."