When South Korean versions of drugstores were first introduced here in the 2000s, it took time for people locally to grasp what they actually were.

They sold makeup, over-the-counter medicine and even snacks, a product lineup that at first seemed random, with items people were used to buying separately in specialty stores -- pharmacies, department stores and convenience stores.

It took little time for the concept of health and beauty stores, or H&B, to become common among consumers here, boosted by the aggressive expansion of branches led by major conglomerates, leading to their ubiquity.

The easy access, long opening hours, reasonable prices and diverse range of products that not only included household names but also rare imported brands and innovative products from startups soon made the H&B stores habitual shopping destinations.

Now with the additions of small beauty appliances, electronic goods and even underwear, H&B stores have become the place to go to find almost anything and everything needed in one’s daily rituals.

The popularity has translated into market growth -- valued at 1.7 trillion won ($1.5 billion) as of 2017, marking 30 percent growth on-year from 2016. The market was worth just above 150 billion won in 2009.

“Previously, the local cosmetics market was driven by major cosmetics companies like LG Households & Healthcare and AmorePacific, which had brand shops as offline channels. But with the advent of H&B stores and online retailers, even small and medium-sized cosmetics companies have been able to better approach customers, leading to their sales increase,” said Kyong Jong-wook, head of the marketing division at life and beauty company Aekyeung.

While more than half the sales of H&B stores are currently from cosmetics, industry experts say the market is expected to exceed 2 trillion won this year and hit 3 trillion won within five years, backed by the continued popularity of the all-you-can-find concept of H&B stores.

“The growth of H&B stores began to draw a steep upward graph in 2011, when the government revised the law to allow over-the-counter drugs such as nutrition drink Bacchus-D to be sold at retail stores including convenience stores,” said an industry insider.

Ji So-hee, a 24-year-old university student and frequenter of such stores, said, “At H&B stores, which can be found basically on every other corner of the street, I can compare the price and test the cosmetics including budget makeup items that went viral on social media or are recommended by YouTubers.”

“They are different from department stores or duty-free stores, as I also get to use my mileage freely (without being limited to certain brands) and get discounts depending on the promotion items,” Ji added.

For retail giants, H&B stores are becoming a survival strategy, not only in terms of diversifying the cosmetics distribution platform, but also as new alternative to possibly replace convenience stores.

“An increase in minimum wage this year has put the brakes on the growth of convenience stores, which are closely related with operating logistics and distribution channels that are complex,” said business professor No Eun-jeung of Sookmyung Women’s University.

But with such rapid growth, concerns follow as well.

“Amid H&B stores’ expansion and diversified categories of products, there are voices of concern that these stores can also be a threat to small business operators who sell overlapping or similar products,” she said, adding that the Fair Trade Commission has recently hinted at introducing a policy to regulate H&B stores’ distribution.

Last year, Olive Young, operated by CJ Olive Networks, logged 1.5 trillion won in sales, 18 years after the store’s launching. The amount accounted for 80 percent of total revenue of CJ Olive Networks, which also runs information and communication technology-related business. The amount was five times greater than the combined sales of Lalavla, LOHB’s and Boots, run by E-Mart under retail giant Shinsegae.

The number of Olive Young stores came to 1,070 as of March, accounting for 80 percent of the total H&B store market. In 2017 alone, Olive Young opened 200 outlets across the country.

In an apparent move to notch up competition, Shinsegae has been rapidly expanding its network of Boots stores as well as its multibrand boutique for beauty products Chicor.

British drugstore Boots entered the Korean market in May last year, with E-Mart signing an exclusive sales and operation contract.

The 12th Boots branch was opened Thursday in Gasan-dong, Seoul, while the 10th branch of Chicor is set to open Friday in Times Square of Yeongdeungpo, Seoul. Chicor was launched just one year and four months ago.

“Since E-Mart joined the race most recently, we will promote our stores with an upgraded and premium concept by introducing selected overseas cosmetics brand and inner beauty items, as well as providing beauty adviser services to all visitors,” said an E-Mart official.

Lotte Shopping opened the 100th LOHB store in Itaewon last month, Lotte Shopping said it will open 50 more stores by the end of this year.

AK Group’s AK Plaza has also introduced its own version in multibeauty store Tag On Beauty in April last year. The company said Thursday that in their first year the number of visitors has surpassed 200,000 at the two branches opened so far, achieving 120 percent of target revenue. It plans to open two more within this year.

By Kim Da-sol (ddd@heraldcorp.com)