South Korean beauty and health retailer CJ Olive Young has been featured in a recent Harvard Business Review (HBR) case study, analyzing its strategic growth, market dominance, and innovative approach in the competitive beauty industry. The study, titled “Olive Young: Formulating Beauty Innovation,” was co-authored by Harvard Business School Assistant Professor Rebecca Karp and researcher Shu Lin, and was presented on Feb. 11 as part of Harvard’s MBA second-year Innovation at Scale course.
Examining Olive Young’s Market Success
Karp’s interest in Olive Young was sparked by the exit of US beauty giant Sephora from the South Korean market. “I became interested in Olive Young when I learned that Sephora had attempted to enter the Korean market and pulled out. I was curious as to why,” Karp said in an email interview. “They have figured out how to shift with the market, cultivating indie brands, developing private brands, and creating a dominant online capability in ways many other companies have failed to do.”
Founded in 1999 with a single store in Seoul, Olive Young has since expanded to over 1,350 locations across South Korea by 2024. While its physical expansion is notable, the company’s ability to adapt and innovate in the evolving beauty retail sector has been a focal point of the HBR study.
A “Beauty Playground” Experience
The research highlights Olive Young’s unique retail strategy, describing its stores as “beauty playgrounds” where customers can interact with products in an immersive shopping experience. With over 10,000 beauty and health products available, the flagship store in Myeong-dong, central Seoul, reportedly handles more than 5,000 purchases daily.
“What I love the most about Olive Young is the ability to try, discover, and search for products,” Karp noted. “Many products are organized by trend or category rather than by brand. If you want to explore ‘slow aging’ products, they are all grouped together, allowing customers to learn about and utilize the full ecosystem of products rather than just focusing on a single brand.”
Financial Growth and Market Dominance
Olive Young has demonstrated strong financial growth, reporting a 39 percent increase in sales in 2023, reaching 3.9 trillion won ($2.9 billion). Net profits surged by 72.7 percent to approximately 466 billion won, surpassing the revenues of major domestic cosmetics firms Amorepacific and LG Household & Health Care for the first time.
The study also underscores Olive Young’s merchandising strategy, where its merchandisers act as “trendsetters” rather than traditional buyers. These professionals closely monitor market trends, collaborate with brand partners, and curate product assortments to align with emerging beauty movements. “Being able to both identify trends and shift the market towards that trend is truly Olive Young’s special sauce,” Karp said.
Challenges and Future Expansion
As Olive Young considers global expansion, particularly into the US market, the research outlines both opportunities and challenges. The US currently accounts for around 70 percent of the company’s total cross-border sales. However, the study also references Olive Young’s past venture in China, which ended in 2020 due to financial losses, highlighting potential risks in overseas expansion.
While the company’s strengths lie in immersive retail experiences, technological integration, and trend forecasting, the study emphasizes that sustaining these advantages in new markets will be a critical challenge.
With its innovative strategies and growing global ambitions, Olive Young continues to redefine the beauty retail landscape, solidifying its position as a dominant player both domestically and internationally.
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