Myeong-dong, one of the most popular shopping districts in the city center, has taken the shopping crisis hard. Its stores, which were teeming with tourists from China, Japan and various Southeast Asian states, are now struggling to survive in the high-rent neighborhood amid declining visitor numbers, according to industry sources.
“With the absence of foreign tourists since March of last year, almost all other stores appear to be closed in Myeong-dong,” a Nature Republic official said. The company, one of Korea’s once successful “roadside boutique” beauty brands, sells its products through its own franchise network.
“Some of our own stores, with the exception of the Myeong-dong global branch, have since been temporarily closed,” the manager said, referring to the flagship branch, which occupies the most retail space. expensive of the country at the entrance to the main store in Myeong-dong. Street.
The brand is closing several of its physical stores in an effort to cut losses and focus on several key locations, the official revealed.
The number of Nature Republic stores has been declining for some time, from 701 in 2017 to 521 in 2019, according to data from the Fair Trade Commission. The latest data, showing how many of the 521 stores survived 2020, was not yet available. The company posted 109 billion won ($ 98.57 million) in overall sales in the first three quarters of last year, down nearly 24 percent from a year earlier.
Other roadside store brands like Skin Food and Tony Moly have seen similar fates.
Large cosmetics companies with more diverse sales channels were no exception to the fallout from the pandemic.
Amorepacific, a K-beauty powerhouse with more than 30 brands such as Sulwhasoo and Laneige, saw the number of its physical stores drop by 661 between late 2018 and August of last year, according to Fair Trade Commission data obtained. by lawmaker Yu Eui-dong.
Broken down by brand, Aritaum saw 306 store closings while Innisfree and Etude had to close 204 and 151 stores, respectively.
“The number of our stores is down due to an industry-wide struggle as well as the challenges our business faces,” said an Amorepacific official. “But the coronavirus pandemic has made matters considerably worse. “
Despite the headwinds, the cosmetics conglomerate has sought to forge ahead by opening “experience-based” branches such as Amore Seongsu, a three-story space that allows customers to try its products and participate. to makeup classes, the official said.
The cosmetics industry as a whole has suffered as mask wear has hurt demand for makeup, said Park Jong-dae, analyst at Hana Financial Investment.
“As the wearing of masks has become more common, the demand for makeup products has also plunged, hurting companies like Clio Cosmetics and AK Industries, which depend on duty-free and physical stores,” he said. he said in a report last month.
To offset the sharp decline in in-person sales, most businesses have turned to e-commerce channels.
Able C&C, the company behind cosmetics brand Missha, launched the nunc online shopping app early last year to boost its online presence.
The app has racked up over a million downloads, according to the company, and its Missha-branded products are also sold on other e-commerce platforms such as Auction and Coupang.
Almost 32% of sales of Aritaum, Amorepacific’s multi-brand store franchise, were generated through online channels such as Coupang, while 63% of sales came from its physical stores. Another 5 percent came from the Olive Young drugstore chain during the month of August.
But there was some good news from the industry nonetheless, with high-end makeup brands seeing gains last year.
Sales of luxury brands such as MAC Cosmetics and NARS Cosmetics were up 48.4 year-on-year, according to data from SSG.com, an e-commerce platform operated by Korean retail giant Shinsegae.
LG Household & Health Care defied pessimism in the third quarter of last year. When Amorepacific and Able C&C suffered sales declines of 22.4 and 29%, respectively, they recorded a 5% increase in sales.
“Although consumer spending continues to contract, spending on luxury goods remains strong as buyers are willing to pay for satisfaction,” said an LG Household & Health Care official.
The company’s premium brands, such as Whoo, have contributed to strong business performance both at home and abroad, the official added.
LG H&H’s Whoo and Amorepacific’s Sulwhasoo were among the best-selling Chinese Tmall, operated by the Alibaba Group, during the Singles Day shopping spree in November.
By Yim Hyun-su ([email protected])
