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Olive Young defies tariff headwinds in U.S. as Daiso, Coupang tighten grip at home

Published: 06 May. 2025, 16:00 Updated: 06 May. 2025, 17:43

CHO YONG-JUN
[email protected]

Customers pose for a photo outside the Olive Young Myeong-dong Town store in central Seoul. [CJ OLIVE YOUNG]

Olive Young, Korea's largest beauty chain, says the United States remains one of the retailer's top target markets, despite uncertainties surrounding U.S. President Donald Trump's tariff hikes.

Expansion into the U.S. market is essential for Olive Young's future growth, as it has been squeezed by price-cutting competitors like Daiso in offline outlets and Coupang in e-commerce in the domestic market.

"The United States is a key country in Olive Young's plan of global expansion" due to the "sheer size of the market and the influence it has on other countries," Olive Young told the Korea JoongAng Daily on April 30.

The United States is an increasingly important market for the Korean beauty and cosmetics industry, as the country imported approximately $1.7 billion worth of Korean cosmetics last year, surpassing French cosmetics. There are also many smaller skincare firms, such as Anua, that sell directly on Amazon, on top of retailers like YesStar and senti senti that specialize in Korean and other Asian beauty products.

Olive Young established a U.S. subsidiary in Los Angeles in February to officially enter the market, including importing Korean beauty products into the country and opening an offline store.

The chain has been a must-visit tourist destination for many foreigners visiting Korea, offering one-stop shopping for all things K-beauty related. U.S.-based shoppers, however, may soon find Olive Young’s offline stores right outside their backyard, as the retailer is gearing up to officially enter the American market, pushed by growing challenges within the country.

Brand drop in Japan, store splash in U.S.

The details of Olive Young’s U.S. expansion — including potential store locations and the number of offline stores it plans to open — remain under wraps, but the retailer’s plan in the United States already differs very much from its Japanese expansion in 2024, based on what is already known.

In Japan, Olive Young decided to supply its makeup private brands (PBs) to Japan’s existing retailers, instead of opening an offline store directly in the country. Seven out of 10 private label brands, including Bioheal Boh, Bring Green, Wakemake and Colorgram, entered Japanese online retailers Rakuten, Qoo10, offline stores such as Loft and Plaza, and drugstores in the country.

"As Olive Young is expanding overseas, the brand is opting for a two-track strategy where it is exporting private brands abroad on one hand and engaging in a platform business on the other, such as operating Olive Young Global Mall and offline stores in the United States," Olive Young said.

The company said it chose to indirectly enter Japan, citing the country's "complex local distribution channels," and that it plans to first positively increase Korean beauty products' brand awareness in the country.

"The Japanese market gives weight to their previous experience with the brand and the brand's reputation," the firm said. "Which is why we first want ocal customers to have a positive experience with our private brand products."

In contrast, Olive Young said they opted for a more full-blown approach in the United States as younger Americans are "more open to accepting new trends."

"The rise of Korean beauty products was helped by the rise in Hallyu, but fundamentally, Korean beauty products were recognized for their technology and price competitiveness," Kim Joo-deok, a professor of the beauty industry at Sungshin Women’s University, told the Korea JoongAng Daily.

A rendered image of Boots' flagship store in Myeong-dong in central Seoul. The Boots flagship store closed down in less than two years after it opened in 2017. [EMART]

Undercut at home

Olive Young’s recent expansion to Japan and consequently to the United States, however, may be out of necessity. Despite Olive Young establishing its global online store, Olive Young Global, back in 2019, the company's overseas revenue only accounted for 4 percent of the firm's total revenue in 2024.

Meanwhile, the retailer mainly focused on achieving and retaining a dominant market status within Korea: most of the smaller "road shop" stores, referring to smaller and more budget-friendly cosmetic brands' offline stores, closed in the face of steep price competition from Olive Young, and even competing all-in-one beauty store brands run by major retailers, like Emart's Boots and Lotte's Lohb's, pulled back as they were unable to compete in terms of customer loyalty.

But Olive Young began facing challenges from unexpected contenders.

Coupang, using its next-day delivery service Rocket Delivery, sells a wide range of products from different brands and launched R.Lux, a brand-new platform dedicated to more luxury cosmetics brands, last July. Similarly, Kurly, best known for next-day delivery of produce and foods, also began its Kurly Beauty back in August 2022. Naver, too, attracted official stores of various beauty brands into its Naver Shopping platform, offering two-day or next-day delivery services.

But perhaps Olive Young’s most fearsome — and unexpected — competitor is from the Korean equivalent of Dollar Tree, Daiso. The budget-oriented store known for its vast number of offline stores and cheap household items began selling skincare and cosmetic products that come in smaller-sized portions, attracting consumers who wanted to try out a new product before committing to a full-sized bottle.

Beauty products sold at a Daiso store in Jung District, central Seoul, in November 2024 [YONHAP]

“The Korean beauty market has been very saturated for a while,” Prof. Kim Joo-deok said.

“Olive Young had a dominant position in Korea in terms of its offline market presence, but Daiso’s emergence as a competitor by selling budget-oriented cosmetic products put Olive Young in a tough position,” the professor said, adding that this would have pushed Olive Young towards the export market.

Olive Young, in response, said they have been preparing for the expansion, not necessarily because of local competition, but to spearhead the K-beauty trend overseas.

"We have seen the rising demand in Korean beauty products, alongside the rise of K-culture and K-content, following the end of the Covid pandemic," Olive Young said. "We have 26 years of experience in the industry, so we are trying to continue the K-beauty trend with our overseas expansion."

Olive Young said there are no official changes with its U.S. expansion plan, and since the firm has focused on opening the Olive Young platform and its offline stores in the United States itself, it is not directly affected by U.S. President Donald Trump's tariffs.

"A 10 percent increase in price due to Trump's base tariff is bearable for K-beauty firms," the professor said. "But a 20 or 25 percent tariff would result in a price hike and make Korean cosmetic products not price competitive anymore."

BY CHO YONG-JUN [[email protected]]