CJ Olive Young, Musinsa rivalry heats up in Brooklyn of Seoul

South Korea’s top beauty chain CJ Olive Young Corp. is turning up the heat against Musinsa to contain the rise of the country’s No. 1 online fashion platform in the beauty market, with the cosmetics giant being called out for alleged fair trade violations.

Their rivalry surfaced after Musinsa was tipped that CJ Olive Young had pressured beauty brands to boycott the Musinsa Beauty Festa In Seongsu to be held Sept. 6-8 in Seongsu-dong, a hot shopping district for Gen Zers and foreign tourists.

A cosmetics brand is known to have reported to the Korea Fair Trade Commission (KFTC) that CJ Olive Young told it to cancel its participation in the Musisa event or the beauty store operator would remove its products from the shelves of its outlets.

KKR-backed Musinsa is considering filing a complaint against CJ Olive Young to the KFTC on alleged obstruction of business.

It is understood to have seen a double-digit drop in the number of participants in the largest offline pop-up store event in the Seongsu neighborhood, compared with the original tally.

In response to the allegations, CJ Olive Young said it was looking closely into them and would take measures if necessary.

During the Musinsa Beauty Festa, 41 beauty brands will open pop-up stores on the street connecting Seongsu Station to Seoul Forest.

AmorePacific Corp., South Korea’s largest cosmetics company, will also participate in the festival by offering products at a discount, joined by 22 popular food shops.

The alleged abuse of power by CJ Olive Young against Musinsa highlights the beauty chain’s endeavors to hinder the fashion platform’s ascent in the cosmetics retail market. In 2021, the street fashion platform launched the Musinsa Beauty platform, where products from about 1,700 cosmetics brands are traded.

Transactions via Musinsa Beauty have surged 90% on-year in the January-July period of this year in terms of value, according to the company.

Seongsu-dong, called the Brooklyn of Seoul, has a trendy neighborhood vibe and hip independent shops. Musinsa moved its headquarters to the area in 2022 and operates offline stores there.

(Unit: billion won)	CJ Olive Young	Musinsa
Sales*	3,868.2	993.1
Operating profit/loss*	460.7	-8.6
Number of employees	4,000	1,500
Number of stores	1,354	30
*In 2023
(Sources: CJ Olive Young and Musinsa)

CJ Olive Young runs five outlets in the district. In November, it is slated to open a new five-floor outlet near the Seongsu Station. It will be twice the size of its flagship store in Myeong-dong, its largest outlet.

The retailer is pushing its expansion in the area. Last month, it purchased a 1-billion-won ($750,000) license from Seoul Metro for Seongsu Station to be named Seongsu and CJ Olive Young for three years from next month.

Musinsa had also vied for the license but failed after it offered less money than the beauty giant.

Write to Hyung-Joo Oh and Sul-Gi Lee at ohj@hankyung.com
 

Yeonhee Kim edited this article.