Here's how Olive Young has managed to maintain its growth and post its biggest year ever, despite the rise of constant rivals and the impact of COVID-19.
1. quickly caught the change in consumption trends contained in the expansion of Quick Commerce and invested in the e-commerce market faster than others, introducing Olive Young 3 hour delivery, the industry's first quick delivery service.
2. internalized key IT personnel and provided ultra-personalized curation services to secure online competitiveness to the point where the online channel alone could be profitable.
3. to provide customers with a seamless experience online and offline, the company erased the distinction between offline and online in the way it works and strengthened data-driven decision-making.
4. Empowered each MD to be entrepreneurs and strategists, strategically collaborating with small and medium-sized brands to pioneer new trends.
5. Expanded O2O platform services to global markets by renovating stores and localizing global malls to cater to foreign customers.
"Why do we need quick delivery for cosmetics, which is different from fresh food?"
When Olive Young launched ‘Olive Young 3 hour delivery’ service in Seoul in December 2018, people in the industry didn't seem to care much. As customers typically purchase cosmetics when the product is about to run out, Quick delivery seemed not to make much sense. Especially since Olive Young has more than 300 stores in Seoul alone, there was no need for fast delivery, because there was already enough accessibility. At that time, as cosmetics were perceived as something to buy after trying once, online purchases were not as active as in other product categories. Even though everyone was suspicious, Olive Young 3 hour delivery gave Olive Young's performance a boost. Olive Young 3 hour delivery's true potential was realized in 2020 when the Coronavirus disease 2019 (COVID-19) pandemic hit and completely paralyzed the offline market. Olive Young 3 hour delivery demand exploded as online malls became the only way to buy. The proportion of online sales rose to 20% of the sales, it defended against the drop in store sales. At that time, its competitors were unable to withstand the shock and decided to downsize or even go out of business11GS retail opened GS Watsons in 2005 in a joint venture with A.S. Watson in Hong Kong, and renamed the store Lalavla in 2018 after acquiring the remaining shares of Watson Korea in 2017, but exited the business in 2022 due to continued losses. Lotte Shopping launched 'LOHB's' in 2013, but withdrew the store altogether in 2022 due to poor performance and has been operating it as a shop in shop under the LOHB's division of Lotte Mart. Shinsegae Department Store opened CHICOR, a beauty editorial shop, in 2016, but has been reducing the number of stores due to poor performance. Even Sephora, a global beauty store operated by Louis Vuitton Moet & Hennessy Group (LVMH), entered Korea in 2019, but has been reducing the number of stores due to poor performance.닫기. However, Olive Young was the only one to grow, adding more stores. From 2020 to 2022, Olive Young's three-year compound annual revenue growth rate and operating income growth rate were 13% and 50%, respectively.
Having thus widened the gap with other cosmetics retailers, Olive Young posted its biggest performance ever in 2023. Cumulative sales for the third quarter of 2023 totaled KRW 2.7971 trillion, already surpassing the full-year results of 2022(KRW 2.775 trillion). Operating profit for the same period was KRW 274.3 billion, up 44% year-on-year. In 2023, annual sales were expected to exceed KRW 3 trillion for the first time.
So, what is the secret of Olive Young's success and how has it managed to solidify its position as a first mover by widening the gap with its competitors in the same crisis? In 1999, Olive Young introduced the concept of a "drug store" that sold cosmetics and health foods together, and it pioneered the health and beauty (H&B) store market. Although many latecomers entered the market and challenged Olive Young's dominance, Olive Young maintained NO.1 position in the industry with the largest store network and differentiated merchandise development (MD) capabilities.
This content was translated into English by AI (using DeepL) from an article that was originally written in Korean in the DBR (Donga Business Review). Therefore, please understand that there may be some awkward expressions.
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