GS Retail exits health and beauty, closing every lalavla store after 17 years

GS Retail, the operator of GS25 convenience stores, said on August 11, 2022 it would withdraw from health and beauty retail entirely: lalavla's online shops stop in September and every offline store closes by the end of November, 17 years after the group entered the market.

GS Retail entered the business in 2005, opening Korea's first Watsons store in Seoul's Hongdae district in a joint venture with Hong Kong's A.S. Watson Group. In 2017 it fully acquired the joint venture, Watsons Korea, and rebranded it lalavla a year later. The chain once swelled to nearly 200 stores, then shrank to around 30 by 2022 as pandemic conditions and competition with the sector's No. 1 player, CJ Olive Young, took their toll.

'GS Retail decided to end our health and beauty store business to focus resources and efforts on our convenience stores and quick commerce services, the company's future growth engines,' a company official said. With GS Retail out, CJ Olive Young is likely to consolidate its leading position - Shinsegae had already closed all of its Boots stores and Lotte downsized its LOHB's business.

Closes all lalavla stores by end-November 2022, ending a 17-year business that shrank from nearly 200 stores to about 30; resources refocus on GS25.

Sales slumped through the pandemic while CJ Olive Young, the sector's No. 1, kept pulling further ahead.

A chain built for nearly 200 stores was running on about 30, losing the scale the format needs to pay.

Convenience stores and quick commerce were growing and needed the resources health and beauty was absorbing.

Rivals had already reached the same verdict - Shinsegae shut its Boots stores and Lotte shrank LOHB's.

When a category leader runs away with the market, the second player's cheapest move is often a clean exit - redeploying people and capital where it still has scale.

The exit completes a season of retreats in Korean health and beauty retail: Shinsegae closed all of its Boots stores and Lotte downsized LOHB's to cut expenses, leaving CJ Olive Young positioned to consolidate the market-leader role as smaller players scale down. GS Retail said it would concentrate resources and effort on GS25 convenience stores and quick commerce, which it called its future growth engines. The company did not disclose closure costs or other financial details of the wind-down.