Road shop-based cosmetics brands such as MISSHA, TONYMOLY, and SKINFOOD, which once filled major commercial districts like Myeong-dong, Hongdae, and Gangnam in Seoul, are regaining their presence in overseas markets. These brands had to significantly scale back their domestic businesses in the past due to the THAAD (Terminal High Altitude Area Defense) dispute and the impact of COVID-19. However, they have rebuilt a new growth base by reorganizing their businesses around overseas drugstores, hypermarkets, and e-commerce platforms.
According to related industry sources on the 18th, MISSHA, a brand operated by ABLE C&C, recently began selling products at 97 stores and online channels of Boots, the largest drugstore chain in the United Kingdom. It also entered 14 key stores located in central London.
Boots is a leading British drugstore with about 175 years of history, operating roughly 1,800 stores across the U.K. Following its entry into TikTok Shop in the U.K. in Mar., ABLE C&C secured both online and offline distribution bases in the country with this Boots launch.
MISSHA is a symbolic brand that opened Korea's first road shop near Ewha Womans University in Seoul in 2002. At one point, the number of stores expanded to more than 800 nationwide, including busy areas such as Myeong-dong and Gangnam. However, as headwinds like COVID-19 piled up, offline domestic demand slumped, and performance deteriorated sharply, with losses of 68 billion won in 2020 and 22.4 billion won in 2021. In response, MISSHA decided at the end of last year to withdraw from domestic directly managed stores and duty-free operations, and it reorganized its business structure by focusing on overseas markets.
At the end of last year, during Black Friday and Cyber Monday in the United States, MISSHA achieved record sales on Amazon and TikTok. Its flagship products such as BB cream gained popularity through word of mouth among local consumers.
ABLE C&C's sales in the first quarter of this year were 61.4 billion won, up 10.2% from a year earlier, and operating profit rose 91.1% to 9.4 billion won. Overseas sales during the same period increased 47.2%, and the share of overseas in total sales rose from 52% in the first quarter of last year to 70% in the first quarter of this year. In particular, U.S. sales increased 230% year over year, and European sales rose 43%.
TONYMOLY is also widening its stride, centered on large overseas distribution networks. TONYMOLY entered 600 Walmart stores across the United States last month. It had already supplied products to Target, Ulta Beauty, and Amazon in the U.S., and with the addition of Walmart placement, consumer touchpoints within the North American mass distribution network have expanded further.
TONYMOLY is a representative brand that shared in the rise and fall of the domestic road shop market. Since its launch in 2006, it established itself in the road shop market by highlighting unique package designs and mid- to low-priced color and basic skincare products, and it increased stores in major commercial districts, including its Myeong-dong location in Seoul. However, sales, which were 205.7 billion won in 2017, dropped sharply to 113.5 billion won in 2020 and 114.6 billion won in 2021 during the height of the COVID-19 pandemic.
Since then, TONYMOLY has sought to improve fundamentals by reducing the share of its road shop-based business and diversifying channels to Olive Young, Asung Daiso Co., online, and overseas distribution networks. Last year, sales and operating profit increased 24.5% and 18.7% year over year to 220.3 billion won and 14.4 billion won, respectively. It is the first time in eight years that TONYMOLY has posted sales exceeding 200 billion won.
SKINFOOD, which once underwent rehabilitation proceedings, is also drawing renewed attention overseas, centered on Japan. It has entered major Japanese distribution channels such as Don Quijote and Loft, and the number of overseas stores is over 4,600, more than three times the approximately 1,400 domestic stores.
Launched in 2004, SKINFOOD once gained popularity with the ad copy "Don't eat it, give it to your skin" and its food-concept cosmetics. However, after experiencing a liquidity crisis in the mid-to-late 2010s, it entered corporate rehabilitation proceedings in 2018.
After being sold in 2019 to private equity firm Pine Tree Partners, SKINFOOD graduated from rehabilitation and succeeded in recovering performance by fronting its 2020 hit product, the "carrot pad." SKINFOOD's sales were only 17.5 billion won in 2021, but rose for five consecutive years to 80.9 billion won last year.
SKINFOOD was sold again to Goodai Global at the end of last year and is seen as having entered a new growth phase. Goodai Global is a corporations that has successively secured K-beauty brands with strong overseas growth potential, including Beauty of Joseon, SKIN1004, TirTir, and Round Lab.
A beauty industry official said, "In Korea, the road shop-centered growth model has lost momentum, but brand recognition and product competitiveness built over many years remain an asset," adding, "Road shop-based brands are creating room for growth again by readjusting products and marketing to fit overseas channels."