Shinsegae has embarked on a renewed challenge in the beauty market through the reorganization of its beauty edit shop "Sikora." It has shifted its strategy away from focusing on high-end overseas brands to concentrating on K-beauty. Evaluations suggest that Chairman Jeong Yu-kyung is once again dedicating efforts to the beauty business for performance during the affiliate separation process.
According to industry sources on the 12th, Shinsegae is reorganizing 22 Sikora stores nationwide this year. The flagship store at Gangnam Station is set to open at the end of this month with a larger space and an enhanced brand lineup, while the main Shinsegae store will also be expanded and relocated to an independent space.
The core of the renewal is the expanded proportion of K-beauty brands. Essentially, the previous concept, which aimed to differentiate itself through "overseas department store cosmetics," has been withdrawn. Some stores, including the AK Plaza Hongdae store in Seoul, have already raised the share of K-beauty brands from about 40% to 55%, with sales nearly doubling compared to the previous year. Popular K-beauty brands such as Tamburins, Nonfiction, and Melixir have made significant entries.
Sikora is an edit shop brand launched by Shinsegae in 2016, marketed as the "Korean version of Sephora." In its early days, it gained attention for featuring luxury overseas brands that were not available in Korea, expanding the number of stores to 30 by 2019. However, due to the impact of COVID-19 and intensified competition with Olive Young, the business was reduced. Currently, there are 19 Sikora stores with annual sales around 100 billion won. CJ Olive Young has about 1,370 stores nationwide, recording nearly 5 trillion won in annual sales. There have been speculations that Sikora might follow in the footsteps of LalaBlah and Ross in withdrawing, but it is making a challenge again through the reorganization in response to the popularity of K-beauty.
As domestic and international demand for K-beauty surges, the cosmetics business expansion is gaining momentum across the retail sector. Various distribution channels, such as Daiso and convenience stores, are expanding beauty categories, intensifying market competition. According to market research firm Euromonitor, the domestic cosmetics market has grown from 14.5 trillion won in 2023 to 17.5 trillion won last year, and is expected to expand further to about 19.2 trillion won this year.
Shinsegae is also reorganizing the team responsible for Sikora, setting up a dedicated task force (TF) for the beauty business, thereby concentrating business capabilities on beauty. This move is seen as part of a business reorganization following Chairman Jeong Yu-kyung's promotion, expressing the intention to actively respond to the global growth trend of K-beauty. The key brand VIDIVICI of its affiliate Shinsegae International has also initiated its entry into global markets, including Japan and the United States, through rebranding.
Some are paying attention to the competitive landscape with CJ Olive Young in the "Samsung Group" rivalry. Analysts suggest that Sikora's similar approach in store concepts and location strategies to Olive Young makes a direct competition inevitable. Sikora is securing similar consumer touchpoints to CJ Olive Young with an experiential layout and a strategy focused on foreign pedestrian-rich areas.
A beauty industry official said, "The renewal of Sikora by Shinsegae is not just a simple store reorganization, but a signal for the group's beauty business to make a leap forward," adding, "Since the response from consumers has been good after the store reorganization, if Sikora expands its business in earnest, there could be shifts in the domestic health and beauty market."