Beauty Retail Landscape Shifts as Single-Brand Stores Decline

The number of cosmetics retail stores in South Korea has decreased for 32 consecutive months, with the influence of companies like CJ Olive Young, Daiso, Musinsa, and Kurly growing. As consumers increasingly compare prices, ingredients, and reviews, single-brand road shops are being rapidly replaced by multi-brand stores and online platforms.
 
According to data from the National Tax Service on August 4, the number of cosmetics retail stores nationwide fell to 34,232 in June, a decrease of 2,176 stores (6.0%) compared to the same month last year. This marks a continuous decline since October 2023, when the count was 39,158, totaling a loss of 4,926 stores (12.6%) during this period. The reduction in road shop brands is also notable, with the number of franchise stores for Amorepacific's beauty shop Aritaum dropping from 522 in 2022 to 372 in 2024, a decline of 28.7%. Similarly, the number of Innisfree franchise stores fell from 324 to 190, a decrease of 41.4%.
 
In contrast, the online cosmetics market continues to grow. The National Data Agency reported that the online cosmetics transaction volume reached 4.1577 trillion won in the second quarter of this year, a 20.4% increase from the same period last year. In June, mobile transactions accounted for 1.0036 trillion won, representing 79.4% of total online cosmetics sales.
 
Offline, Olive Young and Daiso are absorbing the demand for road shops. The number of Olive Young stores increased from 1,265 in 2021 to 1,381 last year. Although it slightly decreased to 1,367 by the end of June this year, this figure is still 8.1% higher than in 2021. The company is enhancing its influence as a cosmetics distribution platform by linking its nationwide stores and online mall, providing product rankings, reviews, same-day delivery, and in-store pickup services.
 
Daiso is tapping into the demand for low-cost cosmetics with over 140 brands and more than 2,000 products priced under 5,000 won. The number of Daiso stores has grown from 1,390 in 2021 to 1,442 in 2022, 1,519 in 2023, and is projected to reach 1,576 in 2024, with estimates suggesting it will exceed 1,600 by 2025. Major cosmetics companies and indie brands are launching Daiso-exclusive small-sized products, establishing the store as a channel for consumers to test products without significant financial commitment.
 
Musinsa and Kurly are also expanding their beauty businesses. The Musinsa Mega Store in Seongsu features over 500 brands, with the average daily transaction volume for these brands increasing by approximately 35%. Beauty Kurly's transaction volume in the first quarter of this year also rose by 20.2% compared to the same period last year.
 
An industry insider noted, "The decline of road shops signifies not just a reduction in offline stores but a fundamental shift in how cosmetics are purchased. Sales are moving to multi-brand channels and online platforms, while standalone stores are evolving into spaces for brand experiences."