South Korean Convenience Stores Thrive
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The growing interest in ready-made meals and other necessities—driven by an increase in single-adult households—has fueled the growth of convenience stores in South Korea, Yonhap reports. These retailers stock daily essentials and food in smaller quantities and are open 24 hours a day, which provides more opportunities for working adults to shop.
The three biggest chains—7-Eleven, BGF Retail and GS Retail—opened a combined 2,000 new locations this year. Overall, the number of convenience stores in the country jumped to close to 26,000.
GS Retail, which operates GS 25, generated the largest increase with $3.11 billion in sales from January to September 2015, a 36% bump from the same time period in 2014. Meanwhile, BGF Retail posted a 28.8% rise in sales, while 7-Eleven increased its sales by 26.4%, over the same time period.
Local convenience stores are capitalizing on the boost in customers by launching their own private-label brands to provide a low-cost alternative to name brands. The stores also have changed up their merchandise mix to include more non-food items in addition to the beverages, cigarettes and instant food items.
However, the increasing number of convenience stores has begun to saturate the market. Retailers now experience stronger competition from each other, often with stores on opposite sides of the street vying for the same customers.
Questions & Answers
Q.What factors are contributing to the growth of convenience stores in South Korea?
What factors are contributing to the growth of convenience stores in South Korea?
The increasing interest in ready-made meals and other necessities, coupled with a rise in single-adult households, has driven the expansion. Convenience stores offer daily essentials, food in smaller quantities, and 24-hour access for working adults.
Q.How have the major convenience store chains performed in terms of sales growth recently?
How have the major convenience store chains performed in terms of sales growth recently?
From January to September 2015, GS Retail saw the largest sales increase at 36%, BGF Retail posted a 28.8% rise, and 7-Eleven increased its sales by 26.4% compared to the same period in 2014.
Q.How are convenience stores adapting their strategies to attract customers?
How are convenience stores adapting their strategies to attract customers?
Stores are launching private-label brands to offer low-cost alternatives and diversifying their merchandise to include more non-food items. They are moving beyond traditional beverages, cigarettes, and instant food offerings.
Q.What challenges are the South Korean convenience store market currently facing?
What challenges are the South Korean convenience store market currently facing?
The growing number of convenience stores is leading to market saturation. This has resulted in stronger competition among retailers, with stores often located directly opposite each other competing for the same customers.
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