Cosmetic Stores Are Disappearing

Four Small Brands Closed Last Year
Etude and Skin Food Also Closed Stores
Tonymoly Enters Pet Food Business

Cosmetic street shops are disappearing across the country. Myeongdong Street, once known for having a cosmetic store every other house, has lost the vibrancy of foreign tourists due to the prolonged COVID-19 pandemic, leaving only rental notices in place. Photo by Moon Honam munonam@

[Asia Economy Reporter Lim Hye-seon] The saying "a cosmetics store every other house" has become a thing of the past. Due to consumption polarization and the COVID-19 pandemic, cosmetics brand stores are disappearing from major commercial districts.

According to the Fair Trade Commission's franchise business transactions and the cosmetics industry as of the end of last year, four cosmetics brands disappeared. No new brands were launched. The new franchise store opening rate was 1.4%, while the closure rate reached 22.3%. Last year, offline retail sales in the cosmetics sector amounted to 28.4946 trillion KRW, an 18% decrease compared to the previous year.

The number of nationwide stores of major cosmetics brand shops was 2,696, nearly 40% less than two years ago (4,292 stores). This includes LG Household & Health Care's The Face Shop, Amorepacific Group's Innisfree and Etude, Nature Republic, and Able C&C's Missha, Skin Food, and TonyMoly. The sizes of The Face Shop and Innisfree, operated by major domestic cosmetics companies, have significantly shrunk. The number of The Face Shop stores decreased from 804 to 481, and Innisfree stores dropped from 1,047 to 657. The average sales of The Face Shop fell sharply by 46%, from 311.47 million KRW last year to 167.54 million KRW.

The decline of cosmetics brand shops is due to reduced demand for low-priced cosmetics. The prolonged COVID-19 pandemic halted visits from Chinese tourists and decreased foot traffic, leading to fewer customers visiting stores. Another reason is the surge in demand for high-end products due to revenge consumption. Companies are attracting customers by selling high-end cosmetics on online platforms with increased discount rates. As businesses selling only two to three items online have proliferated, price competition in the mid- to low-priced market has also intensified.

Cosmetics brands are turning to other industries to survive. TonyMoly acquired Ocean, a feed manufacturer, in March and entered the pet food business. Ocean's pet food products are stocked in nationwide pet specialty road shops, animal hospitals, large discount marts, and about 80 pet specialty online shopping malls. Able C&C added logistics agency services and rest food services to its business objectives at the shareholders' meeting held on March 31.

An industry insider said, "Even if Chinese tourists return, we do not expect performance to improve," adding, "There are limits to insisting on offline stores, so we will focus on diversifying our business."

This content was produced with the assistance of AI translation services.