South Korea's Home Shopping Industry Faces Structural Decline

SEOUL — South Korea's home shopping industry, once a thriving sector with annual sales exceeding 20 trillion won ($15 billion), is now facing a structural decline that threatens its very existence. The combination of declining television viewership and the rise of e-commerce has eroded the industry's customer base, leading to a projected drop in total sales to around 19 trillion won ($14.4 billion) by 2024, according to data from the Korea TV Home Shopping Association.

The shift in consumer behavior has been stark. In 2022, the broadcasting segment of home shopping generated about 10 trillion won ($7.5 billion) in sales, but this figure is expected to fall to approximately 8 trillion won ($6 billion) by 2024. This decline is compounded by rising operational costs, particularly the broadcasting fees that home shopping companies pay to cable operators, which have surged from about 1.13 trillion won ($850 million) in 2015 to nearly 1.94 trillion won ($1.46 billion) in 2024. The proportion of these fees relative to broadcasting revenue has also increased dramatically, from 54.1% in 2020 to an alarming 73.3% in 2024.

As the industry grapples with these challenges, a troubling demographic trend has emerged: over 80% of home shopping customers are aged between 40 and 60. The lack of engagement from younger consumers—those in their 20s and 30s account for only 0.9% and 6.0% of buyers, respectively—has led to concerns about the industry's long-term viability. "The home shopping sector is trapped in a vicious circle of an aging customer base and fierce competition from e-commerce platforms," said Professor Seo Yong-gu from Sookmyung Women's University.

In response to these challenges, major players in the home shopping sector are exploring new strategies. Companies like CJ ENM's CJ Onstyle have demonstrated resilience, reporting steady growth in both revenue and operating profit from 2023 to 2025. CJ Onstyle's sales are projected to rise from 1.33 trillion won ($1 billion) in 2023 to 1.52 trillion won ($1.14 billion) in 2025, with operating profits increasing from 693 billion won ($520 million) to 958 billion won ($720 million) during the same period. This growth is attributed to the company's successful integration of mobile live commerce and content commerce strategies.

Conversely, GS Retail's GS Shop and Lotte Home Shopping have reported declines in both revenue and operating profit over the same period. GS Shop's sales are expected to drop from 1.13 trillion won ($850 million) in 2023 to 1.01 trillion won ($760 million) in 2025, with operating profit falling from 1.17 trillion won ($880 million) to 930 billion won ($700 million). Lotte Home Shopping also faces a similar fate, with sales projected to decrease from 941.6 billion won ($700 million) in 2023 to 902.3 billion won ($680 million) by 2025.

In light of these developments, the home shopping industry is undergoing a transformation, seeking to redefine its business model beyond traditional TV sales. Companies are increasingly investing in artificial intelligence (AI), intellectual property (IP) development, and digital platforms to capture a broader audience. For example, GS Shop has recently implemented an AI-based data analysis system named 'AI BI' to optimize its product planning and broadcasting strategies. This system integrates customer data to provide insights on purchasing behavior, helping the company tailor its offerings more effectively.

CJ Onstyle and Lotte Home Shopping are also leveraging IP and content to differentiate themselves in a crowded marketplace. CJ Onstyle has launched a series of exclusive products based on popular IPs, including collaborations with K-drama and sports franchises. The company has established an IP-X team dedicated to maximizing the value of its partnerships. "As customer preferences become more segmented, the value of IP-based products is increasing," a CJ Onstyle representative stated.

Lotte Home Shopping is capitalizing on its popular character, Vellygom, by enhancing its global presence through exhibitions and pop-up stores. The company is also employing a dual strategy in the beauty category, distinguishing between TV and mobile offerings to cater to different consumer needs. Their beauty consulting experience, offered through mobile live shopping, has reportedly sold out quickly, indicating a positive response from consumers.

Meanwhile, Hyundai Home Shopping is aiming to expand its reach through both online and offline channels. The company has launched a low-cost online outlet named 'D Shop,' targeting budget-conscious consumers with discounted products. This initiative marks the first time a home shopping company has created a separate online outlet, aiming to attract customers looking for value. Hyundai Home Shopping's strategy includes a beauty editing shop called 'Coasis,' which focuses on offering high-quality products at competitive prices.

The overarching challenge for the home shopping industry is to break free from the physical limitations of traditional TV platforms and develop unique content and operational efficiencies. Professor Seo emphasized the need for the sector to embrace innovative changes: "The home shopping industry must move away from past practices and adopt a new approach to survive in an era of hyper-personalization. This includes developing content and services that cater to modern consumer demands and leveraging AI technology."

As the home shopping industry navigates this tumultuous period, the focus will be on how effectively it can adapt to the changing retail environment and whether it can successfully engage a younger demographic. The next few years will be decisive for the sector as it attempts to redefine itself and find sustainable growth.