South Korean convenience store openings slow down
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South Korean convenience store openings in South Korea fell last year, according to industry data. Thought to be the effect of increasing labour costs and market saturation, the slowdown has manifested amongst several industry operators – including BGF Retail’s CU, which opened 980 fewer stores than the previous year’s total of 1646; and GS25, which opened 1023 fewer stores last year after launching 1701 outlets in 2017.
A government advisory to chain stores to maintain more of a distance between competing branches signals a likely continuation of the downward trend, as well as new laws mandating higher levels of paid leave to staff and a higher minimum wage. The same pressures have seen 19 per cent of convenience stores closing at night rather than operate 24 hours, compared with 10 per cent in 2017.
A statement issued by CU said that the firm is prioritising profitability of existing stores over opening new locations.
Questions & Answers
Q.What factors are thought to be causing the slowdown in new convenience store openings in South Korea?
What factors are thought to be causing the slowdown in new convenience store openings in South Korea?
The slowdown is thought to be a result of increasing labour costs and market saturation. Government advice on spacing stores, alongside new laws for higher paid leave and minimum wage, also contribute to this trend.
Q.How many fewer stores did major operators CU and GS25 open last year compared to the previous year?
How many fewer stores did major operators CU and GS25 open last year compared to the previous year?
BGF Retail’s CU opened 980 fewer stores last year compared to 2017's total of 1646. GS25 opened 1023 fewer stores after launching 1701 outlets in 2017, showing a significant reduction in expansion.
Q.What is BGF Retail's CU's current strategy regarding store expansion?
What is BGF Retail's CU's current strategy regarding store expansion?
A statement from CU indicates that the firm is now prioritising the profitability of its existing stores. This new focus means they are less concerned with opening new locations than before, shifting their business strategy.
Q.How has the trend of 24-hour operation changed for South Korean convenience stores?
How has the trend of 24-hour operation changed for South Korean convenience stores?
The same pressures causing the slowdown have led to 19 per cent of convenience stores now closing at night, rather than operating 24 hours. This is an increase from 10 per cent in 2017, indicating a significant shift.
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