The drug and cosmetics store landscape is expected to undergo major changes as some players are pulling out of the show and others eye the market.
Caffebene, which has made a name for itself as a homegrown caf chain, appears to be ready to call it quits in the drug and cosmetics industry, only five months since its entry with a store called December 24.
The first December 24 shop opened in Gangnam Station has already been shuttered, while its second shop, located at Sadang Station, is also to close soon.
Ultimately, deteriorating profit and a lack of expertise forced Caffebene to withdraw, those close to the company said.
“It’s back to the coffee business, and while we’re at it, we hope to expand our overseas reach,” said a spokesman for Caffebene.
The local drug and cosmetics industry has bulged to an estimated 1 trillion won ($920 billion) over the past couple of years, as conglomerates have been busy entering the markets to capitalize on the soaring demand from busy shoppers who want to buy all their essentials, from cosmetics to health food, at a single stop.
CJ Olive Young currently stands as the industry leader, with over 250 shops to its name, and is set to break into the Chinese market through Shanghai this year.
A number of others, including GS Watson’s, the result of a joint venture with Watson’s of Hong Kong, are not faring so well.
Challenging CJ is Lotte, one of the most dominant brands in the local distribution chain.
Lotte does retail, including department stores, as well as a home shopping outlet and a number of smaller supermarkets nestled in some of the best neighborhood locales.
CJ Olive Young executives said Lotte, due to such brand and distribution power, has the potential to become CJ’s top rival.
Lotte last year said it formed a task force team to review plans for starting its own drug and cosmetics store in the near future.
Trailing behind CJ is GS Watson’s, the No. 2 player in the industry in terms of profit. GS Watson has been making good progress ― it has managed to swing its profits into the black in just two years ― but its gap with CJ is still quite wide, as there are fewer than 100 Watson stores in the country.
Watson’s presence in Korea also draws a sharp contrast to its immense popularity in China and Hong Kong.
By Kim Ji-hyun (
jemmie@heraldcorp.com)
