[THE INVESTOR] South Korea’s health and beauty chains are moving to expand their businesses, as the market continues to grow despite overall weak consumer sentiment that has hurt the rest of the distribution sectors, industry data showed Aug. 15.
Health and beauty stores are the Korean version of drug stores. They sell cosmetics, beauty products, medicines, dietary supplements, snacks and goods of diverse global brands that are difficult to purchase in traditional retail stores.
Customers check out products at an Olive Young store in Seoul. (Park Ga-young/The Investor)
In 2016, Korea’s top health and beauty store operator Olive Young reported annual sales of 1.12 trillion won ($986.9 million), up 47.1 percent on-year, compared with 300 billion won in 2012. Olive Young’s annual growth also reached almost 40 percent over the past five years.
Backed by its health and beauty sector’s performance, the brand operator CJ Olive Networks posted 1.4 trillion won of sales and 80 billion won of operating profit in the first quarter of this year.
CJ Olive Networks operates around 850 stores across the nation, as of 2016, a threefold increase from 270 branches in 2012. At the current speed, the number of Olive Young stores in the country will surpass 1,000 by the end of the year, market insiders forecasted.
CJ Olive Networks is also considering opening stores in China and Southeast Asian countries, according to the company’s spokesperson.
GS Retail’s GS Watsons, the second-largest health and beauty player here, has 151 stores nationwide, as of the first half, with sales reaching 146 billion won last year compared to 104 stores that generated 100 billion won in 2014.
GS Retail plans to open 30 to 40 more branches this year, as the health and beauty market here is expected to grow further down the road, though its operating profit may remain negative for the rest of the year.
During the first half, GS Watsons reported a 2 billion won loss in operating profit.
Lotte Group’s LOHBs said it posted triple-digit sales growth in 2015 and 2016, and expects to achieve 80 percent on-year growth this year.
By Shim Woo-hyun/The Korea Herald (firstname.lastname@example.org)