[Edaily Reporter Han Jeon-jin] The “American Dream” is gaining momentum once again in the domestic retail sector. Whereas in the past, companies simply manufactured and shipped high-quality products, their expansion strategies are now evolving in all directions—establishing local logistics hubs, opening physical stores, and acquiring companies to scale up operations. This shift is the result of the K-culture craze—spanning everything from cosmetics to food—combined with a strong won, which has propelled the U.S. into a market offering both profitability and stability.

According to industry sources on the 18th, Korean retailers’ push into the U.S. is evolving beyond mere exports to establishing a local foothold. Kurly is a prime example. Starting on the 15th of this month, Kurly began operating frozen food distribution centers in Chambersburg, Pennsylvania, on the East Coast, and in Turlock, California, on the West Coast. The company has shifted from its previous method of shipping frozen foods by air from Korea on a per-order basis to a system where goods are imported in bulk, stored locally, and then delivered. A Kurly official stated, “Our plan is to expand our product lineup and delivery areas based on local feedback and sales trends.”

The company is also seeing success with its direct offline expansion. CJ Olive Young’s first U.S. store, which opened in Pasadena, California, on the 29th of last month, recorded over 1,000 transactions on its opening day. A line stretching over 400 meters formed in front of the store, and the opening rush continued for three consecutive days. The opening of this Korean cosmetics store was even covered by a local broadcaster, which deployed a helicopter to broadcast the event. This confirms that K-Beauty, already proven through online sales and cross-border e-commerce, is also successful in brick-and-mortar stores right in the heart of the U.S. Olive Young opened its second store in Century City, Los Angeles, on the 13th of this month and is expanding its presence to the East Coast and the South Central regions.

The company is also refining its localization strategy. Moving beyond simply selling products, it is establishing a firm foothold in the market through mergers and acquisitions and investments in local infrastructure. #Amorepacific boosted its North American sales by acquiring the skincare brand COSRX in 2023, and in 2024, its sales in the Americas surpassed those in Greater China for the first time. With the U.S. as its core market, the company is also expanding its distribution network. #LG Household & Health Care’s hair care brand, Dr. Groot, is leveraging the brand awareness it has built at Costco and Amazon to launch in about 90 key Sephora stores, with a full rollout to approximately 400 locations scheduled for August.

The shift toward the U.S. is primarily aimed at reducing dependence on China, which is subject to fluctuations due to geopolitical risks. As recently as 2021, 53.2% of South Korea’s cosmetics exports were destined for China, but last year, exports to the U.S. surpassed those to China for the first time, propelling the U.S. to the top spot. According to the Ministry of Food and Drug Safety, exports to the U.S. rose 40.9% to $620 million in the first quarter of this year, maintaining its top position, while exports to China, in second place, fell 9.6% to $470 million. Last year, cosmetics exports reached a record high of $11.4 billion, and agri-food exports also surpassed $10 billion for the first time.

The strong won is also a factor accelerating this shift toward the U.S. market. With the won-dollar exchange rate exceeding 1,500 won, the value of dollars earned in the U.S. has increased. As domestic demand remains sluggish, the importance of overseas operations is growing even further. In fact, #APR recorded 1.2258 trillion won in overseas sales last year—a 207% surge—with the U.S. at the center of that growth. Analysts predict that companies with a higher share of U.S. sales will have greater potential for future growth.

However, the picture isn’t entirely rosy. While a strong exchange rate boosts the value of dollar-denominated sales, it also increases the burden of purchasing raw materials and components in won. Local operating costs—such as logistics, labor, and rent—are also significant. Additionally, the burden of marketing grows as companies expand their sales networks. If the business model involves importing products manufactured in Korea into the U.S., tariffs and shipping costs also become key variables. Ultimately, as U.S. operations expand, the ability to secure a stable local logistics and distribution network is expected to be the deciding factor in profitability. This is why Korean retailers are racing to establish local bases in the U.S.

A retail industry official stated, “While barriers to entry into the U.S. market have lowered compared to the past as the recognition of K-Beauty and K-Food has grown, competition has actually become even fiercer,” adding, “We’ve now reached a stage where it’s difficult to differentiate ourselves simply by selling products.” The official continued, “Ultimately, performance will depend on how well companies internalize local logistics, distribution, and marketing capabilities,” and concluded, “U.S. operations will become a core challenge for the industry in the long term.”