Cosmetics stores line the streets of Myeong-dong, Seoul. Park Hyun-koo / The Korea Herald / Asia News Network

SEOUL – Street beauty stores were once the symbol of the country’s K beauty boom. Lining the streets of Myeong-dong, South Korea’s most expensive shopping district, franchise beauty stores were once bustling with tourists from Japan and China as well as those back home.

But as tourism has plunged and shopping changed online during the pandemic, it is declining at an alarming level.

“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 stores, except the global branch in Myeong-dong, have since been temporarily closed,” the official said, referring to his flagship branch occupying the most expensive retail space in the country. at the entrance to the main street of Myeong-dong.

The brand is closing several of its physical stores in an effort to cut losses and focus on several key locations, the official said.

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 on the number of the 521 stores that survived 2020 was not yet available.

Revenue also followed suit thereafter. Nature Republic posted 109 billion won in global sales in the first three quarters of last year, down nearly 24% from a year ago.

Other road-shop brands like Skin Food and Tony Moly suffered the same fate.

Large cosmetics companies with more diverse sales channels were also 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 their product lines as well. than attending makeup classes, the official said. .

The cosmetics industry as a whole has suffered as the wearing of masks has hurt demand for makeup products, 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, such as Clio Cosmetics and AK Industries, which depend on duty-free stores 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 nunc – an online shopping app – at the start of 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 still some good news from the industry, 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 South Korean retail giant Shinsegae.

LG Household & Health Care defied pessimism in the third quarter of last year. When Amorepacific and Able C&C suffered a 22.4% and 29% drop in sales, respectively, they saw a 5% increase in sales.

“Although consumer spending continues to contract, spending on luxury goods remains strong as shoppers are willing to pay for satisfaction,” said an LG Household & Health Care official.

The company’s premium brands, like 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.

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