Indifference as a tactic: How Olive Young draws shoppers by leaving them alone

Olive Young built its lead in Korea’s beauty retail by doing something rare in cosmetics stores: It stopped pitching products.

In stores, employees greet shoppers and then hang back. They let customers test products, compare brands and linger without pressure. Staff members do not approach unless a shopper asks for help. The company calls it “half-response” service.

At the Sangam MBC branch in western Seoul on Nov. 20, an employee sorted inventory and greeted customers without looking up. Over the next 15 minutes, shoppers tried hand creams and compared shampoos. No one interrupted them. The pattern, customers and employees say, holds across the chain.

Olive Young began using this “half-response” approach in the early 2000s, from its earliest days. The core rule is not to approach customers unless they seek assistance. Unlike department stores that emphasize attentive service, the company said it found that young women often viewed aggressive in-store engagement as a burden. While beauty chains once competed by handing out samples outside, Olive Young positioned itself as a low-pressure place to browse — what it calls “discovery shopping.”

Crisis and reinvention

Olive Young’s massive market presence is proven by the numbers: 15 million membership users and 4 million monthly active users. Over 90 percent of Korean women in their 20s and 30s are members, making it a solid K-beauty platform.

But it hasn’t always been like that. The retailer faced a crisis in 2010, when Amorepacific, Korea’s top cosmetics firm, announced that it would pull out of Olive Young stores. Its brands like IOPE and Laneige were customer favorites. LG Household & Health Care, the second-largest player, also reduced its offerings. Emergency meetings were held daily.

“There weren’t as many K-beauty brands back then, so we explored all kinds of ideas out of desperation,” an Olive Young representative said.

Their breakthrough was direct overseas sourcing — bypassing distributors to bring foreign brands straight to Korea. Starting in 2011, they introduced dermocosmetics and brought in difficult-to-acquire foreign brands like Burt’s Bees.

“If big-name brands pull out, we need to offer what others don’t,” said Lee Min-woo, head of Olive Young’s global retail division. “Korean consumers were increasingly curious about foreign products. So we decided to boost our overseas lineup. That was the start of Olive Young’s early competitiveness.”

They also revamped their display strategies, organizing products by trend and category — inner beauty, color makeup, skincare — rather than by brand, doing something commonplace today, but deviating from the typical drugstore displays at the time that sorted products by brand, with big names getting prime spots while smaller labels were pushed aside.

To fill empty shelves, Olive Young also turned inward, actively seeking out and nurturing domestic small beauty brands lacking distribution channels. A prime example: Mediheal.

With top display placement and aggressive marketing, Mediheal soared. Since debuting in Olive Young in 2009, the facial mask giant has been No. 1 in cumulative mask pack sales for 14 consecutive years, with total sales reaching 3.1 billion units.

Empowered merchandisers drive success

Merchandisers, who supply products to stores, are another pillar of Olive Young’s success. When major brands pulled out, the company dramatically expanded the merchandiser role, tasking them with finding indie brands and diversifying the product lineup.

The growth of cleansing brand Arencia was led by a fourth-year merchandiser who was struck by the unique texture of the “pack” cleanser. After top promotional placement and analyzing sales data and reviews, the merchandiser suggested launching tube packaging in addition to the original jar type.

This sparked a boom in pack foam cleansers, starting with Arencia’s “Rice Cake Cleanser.” Olive Young now sells around 80 kinds of such cleansers.

At Olive Young, brand discovery isn’t just for senior managers. Junior merchandisers can independently purchase over 1 billion won ($678,000) worth of products if they find trending brands via social media monitoring.

Today, about 200 merchandisers are split into six specialized teams managing 10 major categories and 326 subcategories. Their close monitoring and product curation not only elevate brands but sometimes create entirely new markets.

A great example is the color lip balm category, which boomed thanks to local beauty brand Rom&nd. In 2022, Rom&nd released the “Glasting Melting Balm” following suggestions from merchandisers.

Unlike previous lip balms with weak color payoff, this product became more vibrant with each application. In late 2022, there were about 300 color lip balms; by October this year, that number had grown to about 1,200.

Domestic footprint and tourist appeal

From the northernmost Cheorwon-dongsong branch in Gangwon to the southernmost Seogwipo branch in Jeju, Olive Young now has 1,374 stores nationwide. It surpassed 1,000 in 2017, up from 90 in 2010. Between 2015 and 2018 alone, the number of stores more than doubled from 552 to 1,198.

Founded in 1999, Olive Young opened stores in regional areas early on, starting with Busan in 2008. This national network became an advantage after the Covid-19 pandemic, as tourists returned to regional cities.

Visit the company’s Myeong-dong Town or Jeju Hamdeok branches around the New Year, and you’ll often hear Mandarin at the checkout counter. Olive Young has tailored service manuals for branches in tourist-heavy areas. Employees monitor popular foreign social media platforms like Xiaohongshu and TikTok and learn culturally appropriate greetings and responses.

The dual approach — sourcing from abroad while also promoting hometown brands — appeals to both locals and foreigners. Foreign tourists seek Korean exclusives, while locals want access to foreign products.

“I checked product recommendations on X before arriving,” said a tourist from Japan going by Hina. “It’s cheaper than duty-free shops and offers a wide variety, so I always stop by when in Korea.”

The Korea Tourism Organization reported that between January and May this year, 7.2 million foreigners visited Korea, and Olive Young recorded 5.96 million purchases from foreign shoppers.

Foreign product sales, meanwhile, are also soaring. In 2023, the share of foreign brand sales at offline stores was in the single digits. It jumped to 26.4 percent in the first half of last year and surpassed 30 percent in the second quarter.

Olive Young’s numbers speak volumes. From January to September this year, Olive Young reported 4.25 trillion won ($2.89 billion) in revenue and 421.9 billion won in net profit — increases of 20.8 percent and 22 percent, respectively.

It is expected to surpass 5 trillion won in annual sales for the first time this year.

In May of next year, Olive Young will open its first U.S. store in Pasadena, California — a direct challenge to beauty retail giant Sephora, which has about 2,700 stores in 35 countries, including 430 in the United States. The Pasadena store will target local Gen Z shoppers with discovery shopping-style layouts, highlighting K-beauty’s unique strengths.

The competition is familiar to Olive Young. After entering Korea in 2019, Sephora prioritized global brands over value or localization — only to ultimately fail after misreading the market, prioritizing global brands over value or localization, making Korea one of only two countries the company has exited, along with Japan.

In Korea, Olive Young’s dominance is undisputed — which also invites scrutiny. In December 2023, the Fair Trade Commission fined it 1.9 billion won for allegedly pressuring suppliers not to run promotions for competitors. However, the Supreme Court later reduced the fine to 1.4 billion won, citing insufficient evidence.

“As Olive Young expands, it will face increasing scrutiny for potential power abuse. It will need to manage its influence more carefully,” said one industry source.

The company’s brick-and-mortar-first strategy defies the e-commerce trend. While an online retail presence is essential, the 1,300 stores nationwide — like convenience stores — are still the core. Olive Young also wants to become a hybrid platform, recently partnering with Shinhan Bank to launch specialized financial products and services.

With 6.57 million domestic members and 3.36 million global mall subscribers, Olive Young’s next chapter is still being written.

BY NOH YU-RIM, KANG KI-HEON [lim.jeongwon@joongang.co.kr]