Online malls for two major brands shut to help shops

LG Household & Health Care shut the online malls for The Face Shop and Nature Collection from June 7, the beauty and lifestyle brand said Friday.

The decision was made to protect the sales of offline stores, which have been hurt as customers rapidly change consumption habits and purchase more online. But whether the move will actually help the stores remains in doubt, as the products can still be purchased from third-party platforms, such as Coupang or Gmarket.

“We believe shutting our online malls will induce customers to visit the offline stores for purchases,” said a spokesperson for LG Household & Health Care. With regard to third-party sales channels, the spokesperson said, “We don’t have control of the items traded in the secondary market.”

According to the company, it has been striving to coexist with the offline stores in various ways, like giving offline stores a one-day extension for holding discount events. The last day of a sales event is usually the most popular for people making purchases.

The number of The Face Shop stores nationwide has plummeted from 1,204 in 2015 to 804 last year. Nature Collection opened in 2016 and had 369 stores as of last year.

Beauty product stores have been suffering from weak sales as an increasing number of consumers have started to see offline stores as where they can test products before making their final purchases online.

Some operators formed an association in March, arguing that the companies have been selling only popular items online. The association was created to fight unfair business practices. It claims that companies were selling products cheaper via online markets.

Shutting the online malls may be part of the company’s strategy to focus on premium brands like Whoo.

“Sales of road shop brands account for only a small part of the sales of LG Household & Health Care,” said analyst Choi Jae-ho from DS Investment & Securities. “The recent decision to shut online malls for The Face Shop and Nature Collection is seen as the company’s plan to reduce costs incurred from the operation of the road shops and to expand its luxury brands business. LG Household & Health Care is expected to eventually cut down the number of road shops.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]