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Is L’Oréal Withdrawing from Duty-Free Business? All Brands to Exit Lotte Duty Free Busan

[비즈한국] The L'Oréal TR (Travel Retail) division has decided to withdraw all its brands from the Lotte Duty Free Busan store effective June 30. There is also a prevailing trend of closing some brand outlets in duty-free stores across the Seoul metropolitan area and Jeju. As more brands leave duty-free shops due to the long-term industry slump, the mood in the sector, which had hoped for a performance rebound this year, is darkening.

L’Oréal Decides to Withdraw 6 Brands

According to BizHankook's coverage, global beauty brand L’Oréal will pull all brand outlets from Lotte Duty Free Busan as of June 30. A Lotte Duty Free official stated, "Six L'Oréal-affiliated brands, including YSL and Lancôme, are scheduled to exit upon the brands' request."

With the closure of Shinsegae004170 Duty Free Busan earlier this year, Lotte Duty Free is now the only remaining downtown duty-free operator in Busan. By withdrawing all brands from this store, L’Oréal has effectively begun the process of exiting the duty-free business in the Busan region.

Some brands are also being withdrawn from the Seoul metropolitan and Jeju regions. A visit to a duty-free store in Seoul on the 19th revealed that outlets for several L’Oréal-owned brands were already vacant. A duty-free shop official said, "In-store purchases are not possible due to the closures. You can only purchase them online."

According to industry sources, L’Oréal plans to withdraw brand outlets such as Biotherm, Urban Decay, L’Oréal Paris, and Atelier Cologne from duty-free shops. Notably, the niche perfume brand Atelier Cologne, which had been sold exclusively through duty-free channels since withdrawing from the domestic market in 2023, will now also end its duty-free sales.

L’Oréal, considered a world-leading beauty group, has struggled to gain traction in the domestic market. As they fail to win over trend-sensitive Korean consumers, famous brands are withdrawing from the domestic market one after another.

In the first half of this year, L’Oréal Korea decided to withdraw its makeup brand, "Maybelline New York." Although Maybelline New York gained high popularity among consumers after launching in Korea in 1998, customer demand declined with the emergence of various K-beauty brands. Despite a recent attempt at rebranding, it ultimately followed the path to withdrawal.

Previously, in 2021, the company shut down operations for the French cosmetics brand Vichy and the Japanese brand Shu Uemura. L’Oréal Korea explained regarding these withdrawals that it was "part of a strategy to focus on brands with high growth potential."

Lotte Duty Free Busan Faces Inevitable Revenue Hit

As L’Oréal, which holds many prominent brands in the cosmetics category, scales back its duty-free business, a blow to the revenue of the domestic duty-free industry is inevitable. Shinsegae Duty Free Busan, which closed earlier this year, suffered significant operational difficulties as numerous brands requested store closures, ultimately leading to its shutdown. The cosmetics sector is particularly concerning, as it accounts for roughly 60% of total duty-free revenue.

Industry experts anticipate that Lotte Duty Free Busan will take a substantial revenue hit due to the simultaneous departure of six L’Oréal brands. The Busan branch has already been operating under austerity measures, having reduced its footprint from the 7th and 8th floors of the Lotte Department Store Busan branch to operating only on the 8th floor. A Lotte Duty Free official stated, "We plan to do our best to increase customer satisfaction by attracting new brands that meet the needs of our customers at the Busan branch."

Sales staff who previously sold L’Oréal brands at duty-free shops are expressing increased anxiety over job security. Because L’Oréal is closing multiple stores at once, employees are at risk of losing their jobs overnight. Currently, L’Oréal TR (Travel Retail), which handles the company's duty-free business, has contracted the subcontractor Hicos to sell its duty-free goods. The L’Oréal store staff are employees of Hicos.

The labor union claims that Hicos has not provided clear answers regarding job retention. Han Young-sook, head of the L’Oréal Duty Free branch of the Department Store & Duty Free Sales Service Union, noted, "They should inform us about rotation or transfers, but the company has not said anything yet." She pointed out, "In the case of Busan, because the downtown duty-free brand is closing, they would need to transfer to Gimhae Airport, but they say there is no room there. Ultimately, we could be posted as far as the Seoul metropolitan area. People whose lives are based in Busan cannot keep working if they are transferred to the capital. This feels like an attempt to induce resignations."

The union argues that L’Oréal has been cutting personnel to improve profitability and decided to close offline stores as part of large-scale staff restructuring. Branch head Han asserted, "They have continuously proceeded with voluntary resignations. The number of employees has decreased by more than 50% compared to before COVID-19. Even so, since the number of people leaving hasn't met expectations, L’Oréal seems to be moving toward closing brands. They are pressuring employees and inducing resignations under the pretext of calculating efficiency per person."

The L’Oréal Duty Free branch of the Department Store & Duty Free Sales Service Union is currently holding picketing protests to demand job stability for workers. They also plan to conduct a one-person protest in front of the Hicos headquarters starting from the 22nd.

Regarding the employment issue, a L’Oréal TR division official responded, "We are working closely with our service partners in Korea to seek other opportunities internally first, and providing necessary support during that process." Regarding whether the company plans to withdraw from the domestic market, they stated, "L’Oréal Korea is not currently considering withdrawing brands from the domestic market."