The store closure rate is as high as 28.8%! What happened to Korean cosmetics?

On August 23, the Korea Fair Trade Commission released data showing that the closure rate of physical cosmetics stores in Korea reached 28.8% last year , ranking first in the retail industry . Among them, Missha, Nature Park, Magic Forest and other brands all reduced their franchise stores by more than 100.

Magic Forest's operating losses in the second quarter of this year reached 3.1 billion won, or about 17.15 million yuan. The operating losses of many companies have also increased further. In fact, from the perspective of current Chinese cosmetics stores, there is also an obvious phenomenon that the sales performance of well-known Korean brands such as Nature Paradise and The Face Shop in China has also declined significantly.

What exactly is the reason that has caused Korean cosmetics sales to suffer losses and close down? First of all, due to the global epidemic, the number of Korean tourists has decreased, and cosmetics sales have also decreased. However, according to the editor, this is not the main reason for the decrease in Korean cosmetics sales and the high store closure rate.

The market is not static, and consumer demand will change with the times. In recent years, the advancement of mobile clients such as Internet phones and the launch of more and more beauty apps will enable more consumers to master sufficient and effective professional information. Then, those cosmetics that only rely on brand fame but do not have actual effects will of course be eliminated by the market.

Moreover, a considerable part of the market share of Korean cosmetics relies on overseas markets. According to the Korean News Agency, more than 50% of Magic Forest's sales currently come from online and overseas markets. As far as the Chinese market is concerned, five years ago, affordable Korean cosmetics were sold in large and small physical stores, but in the past two years, these affordable Korean cosmetics products have been almost ignored.

With the rise of emerging cosmetics stores in China, such as Colorist and WOW COLOUR, and the development of offline stores, domestic products that are easy to use and affordable are generally more popular among young people .

Coupled with Internet marketing, affordable pricing, and rave reviews, domestic products such as Perfect Diary, Collage, and Juduo have risen rapidly, occupying the market for affordable beauty products and becoming a strong rival to Korean cosmetics .

Moreover, e-commerce marketing has almost become the preferred shopping method for young people today. Compared with physical stores, online sales require less capital investment in store rent, staff salaries, etc., and advertising marketing can bring more profits, with low investment and high output. Therefore, physical stores are also being eliminated by the e-commerce model.

Therefore, from now on, accelerating product transformation, ensuring product usability, opening up online channels, and increasing e-commerce marketing may become ways for Korean cosmetics stores to save themselves.

Korean Market

Cosmetics store closure