The End of Sephora's Presence in South Korea

The selective perfumery brand of the French group LVMH has announced its withdrawal from the South Korean market, dominated by powerful local players. What led Sephora to make this decision? Explore the reasons behind this departure and the brand's future in Asia.

The selective perfumery brand of the LVMH group, Sephora, is preparing to withdraw from South Korea, faced with intense local competition. In an Instagram post, Sephora Korea announced that it would begin closing its online store, mobile app, and physical stores starting May 6th.

One of the main reasons for this withdrawal is the competition posed by companies like CJ Olive Young Corporation. Owned by the South Korean conglomerate CJ Group, which operates in various sectors such as retail, pharmaceuticals, food, and media, Olive Young has established itself as the undisputed leader in the health and beauty market in South Korea. In 2021, Olive Young held about 90% of the market share with over 1,300 stores across the country. In 2023, Olive Young reported a revenue of 3.86 trillion won (2.88 billion dollars), up 39% from the previous year, with an estimated margin of 10.7%.

Sephora, which failed to establish a strong foothold in the South Korean market, nevertheless plans to continue its expansion in the rest of Asia. The brand already has nearly 400 points of sale across the continent, including a "store of the future" in Singapore.

South Korea became the fourth-largest global exporter of cosmetics in 2022, behind France and the United States, thanks to a booming industry largely driven by the worldwide craze for "K-Beauty". This success is part of the cultural wave known as "Hallyu," supported by a powerful industrial infrastructure. In 2022, South Korean cosmetics exports reached 7.5 billion dollars, compared to 4.2 billion dollars in 2016. Nearly half of these exports are destined for China, although the South Korean government is seeking to diversify its export markets as part of its "future cosmetic industry development plan" announced in 2019.

Sephora thus leaves a complex and competitive market but continues to see promising prospects in the rest of Asia, where it hopes to strengthen its presence and influence.