Health and Beauty Specialist Retailers in South Korea

2021 DEVELOPMENTS

Beauty specialist retailers lose significant share within the channel

Amongst the five different channels that comprise health and beauty specialist retailers in South Korea, beauty specialist retailers lost the most significant share in retail value sales at the end of the review period due to intense competition from drugstores and e-commerce players. The performance of beauty specialist retailers has plunged since 2017 as the popularity of standalone cosmetics stores that tend to focus on a single brand has gradually declined.

Olive Young consolidates its dominance of drugstores/parapharmacies

Unlike beauty specialist retailers, drugstores/parapharmacies had enjoyed double-digit growth for in-store sales for 10 consecutive years before experiencing slowing demand from 2018, and the sales declines of 2020/2021. The pandemic negatively affected consumer demand for colour cosmetics, one of the major categories in most drugstores’ portfolios, while the loss of sales was partially compensated by the stable demand for skin care, especially dermocosmetics.

Optical goods stores partially recover as consumers prepare for a post-pandemic world

In 2020, optical goods stores witnessed a temporary increase in sales due to the first COVID-19 emergency fund distributed to the general public, followed by a notable downturn throughout the second half of the year, due to the diminishing demand for contact lenses and sunglasses. As the country slowly returned to normal operations towards the end of 2021, local consumers started to prepare for post-pandemic activities, stocking up on contact lenses and purchasing sunglasses in advance to benefit from the steep discounts offered by retailers.

PROSPECTS AND OPPORTUNITIES

Experiential stores to help beauty specialist retailers engage with younger consumers

Beauty specialist retailers, which tend to mainly target female consumers aged 10-20 years, are looking to establish a platform on which to engage with customers by launching experiential stores. For instance, Etude House opened a flagship store in Shinchon, a popular campus town in Seoul.

Regulation on vision correction eyewear may impact optical goods stores

In South Korea, physical stores have been the major distribution channel for eyewear because of a local regulation that prohibits sales of vision correction products via e-commerce. Online shopping marketplaces have become increasingly popular for spectacle frames, which are not included in restricted products for online sales.

Onnuri H&C focuses on private label as a growth driver

Onnuri H&C Co Ltd, the leading player in health and beauty specialist retailers, sustained sales growth during the pandemic as the COVID-19 emergency fund provided by the government, which was prohibited to be used via online shopping platforms, fuelled sales of dietary supplements such as multivitamins and probiotic supplements. The company has identified its private label lines, ranging from OTC to dietary supplements, as a growth driver since the low prices of such products can potentially drive greater footfall to its physical stores.