Domestic eyewear brand 'Blue Elephant' is experiencing explosive growth and is now expanding its territory. Despite the global economic downturn, affordable and trendy glasses and sunglasses have captivated Millennials & Gen Z around the world. Recently, Blue Elephant has been aggressively opening stores in major domestic commercial districts popular with foreign tourists, as well as in overseas markets, closely following the success formula of K-eyewear leader 'Gentle Monster'.
According to the industry on October 28, Blue Elephant plans to open a mega store called 'Blue Elephant Space Seongsu' with a floor area of 2,640 square meters in Yeonmujang-gil, Seongsu-dong, Seoul, around December. Blue Elephant is expanding its stores in major commercial areas with high Millennials & Gen Z foot traffic such as Seongsu, Ikseon, Hannam, Sinyongsan, Hongdae, and Myeongdong, and currently operates more than 20 stores nationwide.
Annual sales surged 30-fold in two years... Now dubbed the Cost-Effective Gentle Monster
Blue Elephant is a K-eyewear brand established in 2019. Its sales, which were around 900 million won in 2022, soared to 30 billion won last year, marking a 30-fold increase. During the same period, operating profit jumped from about 200 million won to 11.3 billion won, a 56-fold increase. Despite a reasonable price point in the 50,000-won range, the brand gained popularity among Millennials & Gen Z thanks to its trendy designs. Word spread on overseas social media and review platforms, earning it the nickname 'Cost-Effective Gentle Monster', which fueled the surge in performance.
In fact, the company increased its advertising and promotional expenses from about 100 million won in 2022 to 2.5 billion won last year, a 25-fold rise, targeting global consumers. As a result, it has become known among foreign tourists as a 'must-visit destination for sunglasses shopping in Korea'. Building on this popularity, Blue Elephant has continued to expand its offline stores.
This strategy closely mirrors the growth trajectory of 'Gentle Monster'. Launched in 2011, Gentle Monster broke away from the rigid image of traditional optical shops by creating showroom spaces in the form of unique exhibition halls and collaborating with global stars such as Blackpink's Jennie, gaining recognition mainly through social media. In particular, as the Korean Wave, led by K-pop, spread worldwide during the COVID-19 pandemic, Gentle Monster experienced rapid growth.
The operating company of Gentle Monster, IICOMBINED, posted sales of 789.1 billion won last year, nearly quadrupling in four years. During the same period, operating profit rose from 13.9 billion won to 233.8 billion won, an increase of almost 17 times. About 40% of total sales are generated overseas, and in countries such as Japan and the United States, year-on-year growth rates have reached nearly four to six times. Gentle Monster is now on the verge of joining the '1 trillion won sales club' this year.
Cost of goods sold ratio at 22.5%... High-Margin Business with Operating Margin Exceeding 40%
Eyewear is considered a 'high-margin product category'. Its cost ratio is lower than that of apparel or footwear, allowing for substantial profits. Blue Elephant's cost of goods sold ratio last year was 22.5%. This is about half the cost ratio of major fashion conglomerates handling premium apparel brands, which stands at around 40%. As a result, Blue Elephant's operating margin reached 42.7% last year.
The same is true for IICOMBINED (Gentle Monster). Last year, its cost of goods sold ratio was only 15.6%, and during this period, its operating margin was 29.6%. As performance soared, retained earnings also accumulated steadily. Blue Elephant's retained earnings increased about 8.5 times, from approximately 1.5 billion won in 2023 to 12.8 billion won last year.
Leveraging this investment capacity, Blue Elephant is targeting overseas markets. After opening a three-story flagship store in Harajuku, Japan, in July, the company plans to open its second Japanese store, the 'Shinjuku Flagship Store', this month. In the first half of next year, Blue Elephant will enter Los Angeles in the United States, and in the second half, it plans to expand into Europe, further growing its global footprint. The company aims to expand to 30 stores and reach annual sales of 100 billion won this year.
The leading player, Gentle Monster, is also making significant strides in overseas markets. IICOMBINED is currently present in 14 countries, including the United States, China, Japan, Hong Kong, the United Kingdom, Australia, and Southeast Asia. In Japan, sales grew from 9 billion won in the first year of entry (2023) to 55.6 billion won last year, a 6.17-fold increase in just one year. In the United States, sales jumped from 11.8 billion won in 2020 to 52.9 billion won last year, a 4.5-fold increase in four years.
As of last year, IICOMBINED's total tangible assets, including assets under construction, land, and buildings, reached 600 billion won, nearly doubling from 300 billion won a year earlier. This year, Gentle Monster completed its new headquarters in Seongsu-dong and acquired the Queen Mama Market building near Dosan Park, which is now operated as the Gentle Monster House.
An industry insider in the fashion sector commented, "Eyewear is a high-margin category that is strategically attracting attention in the fashion industry. As domestic brands open flagship stores in Japan, the United States, and other locations, strengthening branding in connection with K-culture, the growth momentum of K-eyewear is highly anticipated."
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Reporter Park Jaehyun now@asiae.co.kr
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Edit Kim Boram kbram6457@asiae.co.kr
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