ANN/THE KOREA HERALD – Facing a saturated market at home, South Korean convenience store operators are turning their attention to overseas expansion, particularly in Southeast and Central Asia.
The rapid economic growth and rising popularity of Korean culture in these regions are driving the demand for Korean-style convenience stores.
Currently, South Korea’s leading chains, BGF Retail and GS25, operate a total of 1,168 stores internationally. GS25 runs 573 stores in Vietnam and Mongolia, while BGF Retail oversees 543 CU stores in Mongolia, Malaysia and Kazakhstan. Meanwhile, Emart24, a smaller competitor owned by Shinsegae Group, manages 52 stores in Malaysia.
These companies are capitalising on their expertise in managing small-scale stores with centralised distribution networks to increase their footprint in Central Asia. According to an official from one of the Korean operators, who spoke anonymously, “Just as neighbourhood supermarkets in Korea only became widespread in the 1980s, supermarkets in Central Asian countries have modernised following the entry of Korean convenience stores.”
As Central Asian countries continue to grow economically, there is a rising demand for sophisticated and standardised convenience stores, where consumers can rely on consistent product quality regardless of location.
The very beginning of the convenience store industry in Korea was not as sophisticated as it is today.
Only after the first three domestic convenience stores owned by Lotte Group – which opened in the early 1980s – all closed in 1984, did the first 7-Eleven store appear in Seoul in 1989, spreading convenience stores across the nation. Since then, homegrown brands began to emerge, primarily focusing on benchmarking Japanese-style neat and modern convenience stores.
“The initial perception of convenience stores among Koreans was not positive due to their higher prices for the sake of ‘convenience’. However, they experienced rapid growth during the economic crisis in the late 1990s and early 2000s, as ready-made meals such as lunch boxes and instant cup noodles became popular for their affordability,” said a professor of tourism and hospitality industry at Kwangwoon University, Chang Woo-cheol.
“The increase in one-person households and the development of new towns in Korea also fuelled the demand for convenience stores. In particular, conglomerate-led centralised logistics systems contributed to the modernised convenience stores we see today,” he added.
In the meantime, industry officials said that the nation’s convenience store industry boom came with various merchandising efforts from domestic companies in recent years.
“Not only Korean customers but also foreign visitors love visiting convenience stores in Korea due to their diverse and unique product offerings,” a BGF Retail official said. “For instance, we release numerous collaboration products in partnership with various conglomerates, with over 1,000 new products launched annually, even including gold bars, cars and massage chairs that you wouldn’t typically associate with convenience stores.”
The BGF Retail official also highlights the growing popularity of Korean culture as one of the key factors in their success both domestically and overseas.
“As Korean convenience stores are frequently featured in media, the demand for Korean-style convenience stores in other countries has also increased. Reflecting this demand, shelves in our stores in Mongolia and Kazakhstan have price tags and product descriptions written in both the local language and Korean.”
Meanwhile, the focus on overseas expansion by Korean convenience stores comes amid the saturation of the market at home.
With BGF Retail and GS25 operating 18,000 and 17,390 stores, respectively, there are about 55,580 convenience stores in Korea.
