Shinsegae Embarks on Aggressive Business Expansion

The Shinsegae Group has embarked on an aggressive business expansion. While the group has traditionally been focused on distribution of products, now it is turning its attention to producing goods on its own.

As part of such a move, Shinsegae Department Store is entering the cosmetics manufacturing business. The group has thus far been distributing color cosmetics and some imported fragrances through Shinsegae International. Its cosmetics business has focused on sales via department stores and "Chicor" beauty specialty shops, both of which are distribution channels. The Shinsegae Group is now beginning to directly manufacture and sell cosmetic products. This is the first time that a department store directly manufactures and distributes cosmetic products in Korea.

Shinsegae Department Store will launch a cosmetics brand based mainly on plant extracts in August. The brand name has not been confirmed, but it is said that “Yeonjak” is a strong candidate. Shinsegae Department Store was found to have filed the Yeonjak trademark in Korean and English on April 19. The distribution and sales of the cosmetic products will be handled by Shinsegae Department Store, while Shinsegae Intercourse Korea will take care of their production.

On June 11, Shinsegae Food opened a multi-cuisine dining space at COEX. The space features three brands -- craft beer pub Devils Door, organic ice cream shop Three Twins and burger store Berger Plant. Considering that Shinsegae Food has focused mainly on the sales of processed foods through big discount stores and department stores, its opening of the dining space is a very unusual move.

In January, the Shinsegae Group announced that it would integrate the online business divisions of its diverse subsidiaries, including Shinsegae Department Store and E-Mart, into a separate e-commerce corporation. The group plans to nurture the e-commerce unit into the group’s core sales channel. To this end, Shinsegae has attracted one trillion won in foreign investment. The group is also building a dedicated logistics center in order to strengthen online channels.

Shinsegae will also make massive investment and recruit new employees. On June 8, it announced a plan to invest 9 trillion won over the next three years and recruit more than 10,000 people every year during the period.

"Shinsegae is actively expanding new businesses while at the same time showing an increase in investment," said an official in the distribution industry. "It will be interesting to see how Shinsegae's move will change the landscape of the domestic distribution industry."