[The Decline of Road Shops] Disappeared Signature Cosmetics... Where Have Missha, The Face Shop, and Others Gone?

Most Brands' Nationwide Stores Halved in the Last 4 Years
Boomed from 2000s Hallyu but Hit Hard by THAAD and COVID-19

[Asia Economy Reporter Moon Hyewon] First-generation cosmetic road shops such as The Face Shop, Innisfree, and Missha, which led the ‘K-Beauty’ myth in the 2010s, are disappearing.

According to the Fair Trade Commission’s franchise information system on the 11th, the number of nationwide stores of Innisfree, the representative of first-generation road shop cosmetics, decreased by more than half in four years, from 1,047 in 2018 to 470 as of the end of the third quarter this year. During the same period, The Face Shop shrank from 804 to 388 stores, Missha from 698 to 307, and Skin Food from 91 to 26.

In the mid-2000s, as the mid-priced cosmetics boom swept through, first-generation cosmetic road shops rapidly expanded their stores in major commercial districts nationwide, leading the domestic cosmetics market for over a decade. They gained great popularity especially among Chinese tourists, who increased rapidly due to the Korean Wave. On Myeongdong Street, where foreign tourists flock, cosmetic road shops were continuously lined up, and tourists’ hands were full of shopping bags from various beauty brands. It was truly the heyday of K-Beauty, which even gave rise to so-called ‘bottari-sang’ (informal resellers).

However, competition in the domestic cosmetics market quickly overheated, and the retaliation from China over the THAAD (Terminal High Altitude Area Defense) deployment led to a decrease in Chinese tourists, causing a significant blow. On top of that, offline sales became difficult due to the COVID-19 pandemic, and road shops gradually lost their footing. The main domestic customer base, women in their teens to 30s, flocked to health and beauty (H&B) stores such as CJ Olive Young and Lotte Lotte, rather than road shops, and as the popularity of luxury cosmetics increased, the customer base began to disperse. The number of franchise stores of major domestic cosmetic road shops has been decreasing every year, from 3,394 in 2018 to 2,899 in 2019, and 2,298 in 2020.

Cosmetics distribution has now shifted from offline to online. In the past, there was a perception that cosmetics had to be tried on and purchased at offline stores, but recently, the trend has changed to purchasing more cheaply online by referring to influencers’ content posted on YouTube or social networking services (SNS). Last year, the online transaction amount of cosmetics was 12.207 trillion won, a 23% increase compared to 9.8521 trillion won in 2018. First-generation cosmetic road shop brands facing crisis are now seeking survival strategies by pioneering overseas markets and strengthening online malls.

An industry insider said, "Road shop brands are gradually losing their place," and added, "As a survival strategy, they will pioneer overseas markets and actively carry out marketing through online channels."