Home Shopping Caught Between Online and Offline... Escaping Crisis with PB Products

With With Corona, Performance Decline
Q3 Operating Profit Drops Over 20%
Expanding PB to Improve Profitability
Industry: "Cost Reduction Effect is Significant"

[Asia Economy Reporter Lim Chun-han] The home shopping industry, which enjoyed a windfall from the non-face-to-face trend following the COVID-19 pandemic, recorded sluggish performance in the third quarter as the phased return to normal life (With COVID-19) began. The related industry is seeking new opportunities by strengthening product competitiveness through private brands (PB). Each company is expanding its PB areas into fashion, beauty, and food, significantly increasing the number of products.

◆ Made in-house and sold exclusively on home shopping = On the 16th, Lotte Home Shopping operates about 50 products across three PB brands, including fashion, fresh, and health foods. The number of PB products this year increased by about 20% compared to the previous year. Lotte Home Shopping plans to launch its self-planned tableware brand ‘Casa Roha’ by the end of the year and will continue to develop PB products in food, beauty, and living categories.

CJ OnStyle operates more than 30 brands, including PB and exclusive license brands (LB), selling over 1,000 products. Recently, it has been expanding its PB areas mainly in the fashion sector with brands such as ‘Odense’ (kitchen), ‘Oblang’ (beauty), ‘Oharu Jayeon Gadeuk’ (health foods), and ‘Atssential’ (living). It has also launched online-exclusive PBs like the fragrance-specialized brand ‘Taylor Scents’ and the idea lifestyle goods brand ‘Idea Zip,’ expanding sales channels from TV to online. PB accounts for more than 10% of CJ OnStyle’s total handling volume.

Hyundai Home Shopping is also focusing on strengthening PB and exclusive brands. The number of brands increased from six last year to 11 this year. The number of products in major fashion brands such as ‘Lassiento’ and ‘Milano Story’ rose by 43.4%, and sales increased by 19.5% compared to the previous year. Last month, Hyundai Home Shopping exclusively launched the premium men’s fashion brand ‘Martin Bal.’ Martin Bal is a fashion designer who has worked at Maison Margiela and Burberry, and this is the first time the Martin Bal brand has been introduced in Korea.

◆ Expanding PB sales amid deteriorating performance = The home shopping industry is experiencing performance declines due to With COVID-19, broadcasting fee burdens, and live broadcast competition with e-commerce companies. Lotte Home Shopping’s operating profit in the third quarter this year was 24 billion KRW, down 20%. CJ OnStyle’s operating profit was 27 billion KRW, down 36.2% year-on-year, and Hyundai Home Shopping’s operating profit was 27.04 billion KRW, down 29.3%.

The reason the home shopping industry is focusing on PB products is to improve profitability. PB products are independently managed from planning to design and production. Therefore, there are no costs for brand usage fees or distribution fees, naturally resulting in higher profit margins. An industry insider said, "PB definitely strengthens profitability due to cost reduction effects," adding, "The margin rate for high-end premium products can rise up to 10%."

Performance is also on the rise. Lotte Home Shopping’s fashion PB ‘LBL’ has an average annual order amount of about 100 billion KRW, and the health food PB ‘Daily Balance’ has surpassed a cumulative order amount of 13 billion KRW since May last year. CJ OnStyle’s fashion PB ‘The Edge’ has ranked first in CJ OnStyle’s hit products for five consecutive years, with order amounts exceeding 200 billion KRW last year. Hyundai Home Shopping’s fashion PB ‘Lassiento’ sales grew 30% from January to October this year compared to the previous year.

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