Sephora withdraws from South Korea in defeat to K-beauty supremacy

It's official: Sephora Korea announces its gradual closure, overwhelmed by strong local competition and the years of pandemic that have significantly impacted the market. The brand arrived in South Korea in 2019 with the opening of a flagship store in Seoul, in the Parnas Mall shopping center, at the heart of the Gangnam district. Sephora had raised high expectations with the opening of five stores and a promising online sales service. However, like Watsons and Boots before it, Sephora faced increasing difficulties, and losses accumulated. Starting from May 6th, the LVMH Group's brand will end all its activities in the country, except for customer service, which will continue to handle returns and refunds until August.

The main factor that precipitated Sephora's downfall in South Korea was the intense competition from the local brand, CJ Olive Young, an emblem of K-beauty since its creation in 1999. The latter is an integral part of the "Hallyu," or Korean Wave, a cultural phenomenon born and developed in recent years through Korean dramas and pop songs that have become cult favorites in China and Southeast Asia. The term "K-beauty" was coined in reference to the products used by Korean star-system protagonists, true beauty icons for Asians.

South Korea, the world's fourth-largest cosmetics exporter, sees its K-beauty market valued at $7.5 billion in 2022, with an estimated value of $21.8 billion by 2026, thanks to the global increase in demand for innovative or organic products. In this frenetic race, a few major players in Korea are vying for local demand. Not long ago, LG Household & Healthcare, part of the LG Group, and Amore Pacific dominated with 35% of the market share. Then CJ Olive Young Corp disrupted the market, quickly emerging as the country's leading beauty store chain. The company is now the industry leader.

In 2023, CJ Olive Young saw its sales soar by 39%, reaching 3.9 trillion won (approximately $2.9 billion), while its net profit increased by 72.7% to 355.1 billion won. Now, the company seeks to diversify its offerings, focusing on consumption trends such as "Healthy Pleasure," catering to the demand of younger generations for healthy and enjoyable products. After conquering the beauty market, CJ Olive Young has recently ventured into the market for so-called light alcoholic beverages.