The Decline of Road Shops in Korea's Cosmetic Industry

The once-flourishing cosmetic road shops in Korea are witnessing an unexpected downturn. Renowned brands like Missha, owned by ABLE C&C, and Clio, famous for color makeup, are closing down their road shops. This decline has been gradual, influenced by market competition, political issues, and the global pandemic.

A Deep Dive into the Crisis

ABLE C&C plans to sell Missha in the last quarter of this year. Despite its efforts to boost sales through its multi-brand shop, NUNC, and brand-oriented ABLE Shops, the results have been disappointing. Another casualty of this decline, Clio, reduced its number of shops from 133 in 2018 to just 10 in 2021, largely due to the THAAD issue and the impact of COVID-19.

The Unfolding Crisis

The decline in road shops was somewhat expected. In 2019, the market size of road shops fell to 1.7 trillion Won from a peak of 2.81 trillion Won in 2016. Brands started shifting their focus to online platforms. However, the transition wasn't smooth for all brands, signaling a deeper crisis.

Multi-Shop: A Solution or Another Problem?

Transitioning to multi-shops was not a guarantee of success. Shops like Lotte's LOHB and Shinsegae's Chicor are also facing a slump. Amidst this chaos, CJ Olive Young is dominating the market with a 59.1% market share.

Conclusion

The Korean cosmetic market is experiencing intense competition due to the low barriers to entry. The key to survival seems to be a clear, differentiated concept that helps brands stand out in the market.

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