Daiso, Musinsa, Shinsegae, and Hyundai Join the Fray: "Second Olive Young" Ambitions Spark Round 2 of the Beauty Territory War [Why&Next]

After the Exit of LOHBs and Lalavla, Olive Young Secures Market Dominance
Daiso, Musinsa, and Department Stores Rapidly Expand Their Territory
Competing Through Differentiation in Price, Market Area, and Target Demographics

The health and beauty (H&B) market, once termed the “graveyard” for major distribution conglomerates, is making a comeback. As Lotte Shopping’s LOHB’s, GS Retail’s Lalavla, and Emart’s Boots and Boots all shuttered one after another, leaving CJ Olive Young as the sole player, a new wave of entrants are now moving back into the market.

These new contenders, rather than directly vying to become the “second Olive Young,” are segmenting by price point, commercial districts, product range, and customer base, digging into areas where they hold unique strengths. Their strategy is to target the niches that Olive Young cannot fully satisfy.

A customer demonstrating makeup at the Chicor store. Shinsegae Department Store

From 5,000 won Daiso to pharmacies: The beauty turf war reignites

As of September 15, according to industry sources, companies from Daiso and Musinsa to department stores, home shopping, and cosmetics discount specialists are either opening new stores or expanding their operations in the offline beauty market.

The fastest mover is Asung Daiso. With its clear-cut “under 5,000 won” price strategy, it is attracting people in their teens and twenties. Following the sellout craze of VT Cosmetics’ “Needle Shot,” leading cosmetics companies like Amorepacific and LG Household & Health Care have also launched Daiso-exclusive products. Daiso’s beauty sales rose by 85% in 2023, 144% in 2024, and over 70% last year. From January to July this year, sales increased by about 30% year-on-year. Recently, Daiso even opened a beauty-focused store in the Konkuk University commercial district of Gwangjin-gu, Seoul. It’s the first time in 29 years, since opening its first outlet in 1997, that Daiso has established a specialty store dedicated to a single product line. Cosmetics, once just a category in a home goods store, have now become a core driver of growth.

Daiso store interior. Photo by Yonhap News Agency

Online fashion platform Musinsa is also expanding into the offline beauty market. It opened its first stand-alone beauty store, “Musinsa Beauty Hongdae,” featuring one basement and three above-ground floors, with a total floor area of about 1,262 square meters. Combined with the basement pharmacy, the store offers around 870 brands and more than 12,000 products. The presence of offline stores also boosts online sales. After the opening of the Musinsa Megastore Seongsu beauty section in April, the daily average online sales of the brands available there increased by about 35% in the three weeks following the store’s launch. Musinsa plans to open its second stand-alone beauty store in Seongsu in November.

Department stores are emphasizing expertise and experiential offerings. At Shinsegae Department Store’s beauty select shop “Chicor,” K-beauty, global brands, and beauty devices are all offered under one roof, with a particular focus on attracting foreign tourists at its Myeongdong and Hongdae locations. On September 18, Hyundai Department Store will open the first store of its dedicated derma beauty specialty shop “COOD (pronounced Kh?de)” at its Pangyo branch. With a floor area of about 165 square meters, the store is curated with high-performance products based on dermatological science, prioritizing targeted solutions for skin concerns rather than a generic H&B approach. A second store will open early next year at The Hyundai Seoul, with plans to further expand to additional department stores and outlets. Hyundai Home Shopping is also extending its product sourcing capabilities from TV home shopping to offline through its own beauty select shop “COASIS.”

New business models like Offbeauty, positioning themselves as "beauty outlets," have also emerged. These companies directly purchase products arising from packaging changes or excess inventory and sell them at prices lower than regular retail. After opening its first store in May last year, Offbeauty has expanded to 40 stores in about one year, and is now opening large stores near Olive Young locations in districts like Myeongdong and Seongsu.

Musinsa Beauty Hongdae Exterior Rendering Image. Musinsa

Why LOHB’s and Lalavla couldn’t surpass Olive Young

This is not the first time distribution companies have attempted to crack the H&B market. In the 2010s, Lotte Shopping launched LOHB’s, GS Retail switched from Watsons to Lalavla, and Emart introduced Boots, the UK drugstore brand, following its own Boots stores. All but a few withdrew. Boots and Boots exited the business and LOHB’s closed its high street stores. Lalavla also withdrew from offline business in 2022.

What determined success or failure was store network size and merchandising prowess. For H&B retail, a larger store network increases bargaining power with suppliers, improves logistics efficiency, and accumulates valuable consumer data, creating a powerful “economies of scale.” Olive Young established a nationwide store presence early on within this structure. It leveraged accumulated sales data to source products, and by discovering and cultivating promising small and indie brands, it increased its product competitiveness.

In contrast, latecomers couldn’t narrow the gap with Olive Young in terms of store count or sales—and their product portfolios were similar. Consumers had little incentive to visit another H&B store rather than Olive Young. As of the first half of 2022, Olive Young had 1,275 stores, while even at its peak, LOHB’s and Lalavla did not exceed 200 stores each.

COVID-19 widened this gap. While competitors restructured their store footprints, Olive Young strengthened its omnichannel strategy by combining its online mall with its nationwide network. A representative example is its “Today Dream” service, which quickly delivers online orders from nearby stores.

Lalavla image. GS Retail

A market cultivated by Olive Young: Niche strategies over head-to-head battles

The reason latecomers are now paying attention to the H&B market is, paradoxically, Olive Young’s success. As Olive Young secured market leadership, the size of the beauty pie expanded to a level incomparable to the past. CJ Olive Young’s revenue rose to 5.8333 trillion won last year, an increase of more than 20% from 4.79 trillion won in 2024. Compared to 3.8611 trillion won in 2023, sales jumped by about 2 trillion won in just two years. In the first quarter of this year, sales stood at 1.5372 trillion won, a 24.6% year-on-year increase.

The market characteristics have also changed. Whereas domestic consumers were the main drivers in the first round of H&B competition, now the K-beauty boom has brought foreigners into the customer base as well. In prime commercial districts like Myeongdong, Seongsu, and Hongdae, cosmetics stores have become tourism infrastructure, giving foreign tourists opportunities to experience and purchase K-beauty. The rapid growth of indie brands creates more opportunities for retailers. While major cosmetics companies and road shop brands once dominated the market, it’s increasingly common for startups that gain traction through social media to rise rapidly to become flagship products.

“Simply displaying already popular products isn’t enough to secure competitiveness,” said one industry insider. “The focus is now on quickly identifying the next hit products. Providing in-store experiences where customers can try out products and discover new brands—experiences that are difficult to obtain online—has become increasingly important.”

Hyundai Department Store Launches 'COOD', the Industry's First Derma Beauty Specialty Shop. Hyundai Department Store

For this reason, industry observers expect the current competition may not necessarily lead to the birth of a “second Olive Young.” As the market expands and consumer tastes fragment, newcomers have more opportunities to carve out independent demand in specific price bands, product categories, or customer segments. Even if they don’t directly take away Olive Young’s customers, creating new consumption patterns could be enough to secure their position in the market.

Nevertheless, an increasing number of competitors pose a new variable for Olive Young. If distribution channels with competitive pricing or specialization gain footholds in particular segments, consumers will have more choices, and cosmetics brands will be able to diversify their sales channels as well.

“There is no immediate risk of Olive Young’s position being shaken,” said another industry source, “but attention is on how well latecomers can establish their own turf in a market long centered around Olive Young. If channels segment by price, specialization, experience, and commercial district, cosmetics companies are likely to develop increasingly tailored distribution strategies—differentiating products to fit each channel right from the planning stage.”

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