South Korean convenience stores wind back 24-hour service
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South Korean convenience-store owners are canceling 24-service as minimum wage rise has eroded profits.
Last year, president Moon Jae-in launched a campaign to raise the hourly minimum wage by 29 percent over two years. With night-shift employees earning time-and-a-half pay, franchisees have been struggling to pay part-time staff during the small hours.
Not all stores traded around the clock when Shinsegae group launched the Emart convenience-store chan in 2014. Three Korean c-store giants, GS Retail, BGF Retail and Lotte Group, now allow its franchisees to close stores at night if the outlets lose money overnight for three months.
In a market with the highest rate of c-stores per capita, South Korean convenience-store owners are shifting their focus to automated, unmanned stores. Emart is trialing a cashier-free store in Seoul with more than 30 cameras installed. Payments are made with credit card information stored in advance. Meanwhile, Lotte operates 17 unmanned outlets where products are scanned and identified by its shapes.
Last year, many 7-Eleven and Familymart stores in Japan had to overturn its 24-hour operations as they were suffering from the labor shortage.
Questions & Answers
Q.Which specific companies are allowing their franchisees to stop 24-hour service?
Which specific companies are allowing their franchisees to stop 24-hour service?
Three major Korean convenience store chains, GS Retail, BGF Retail, and Lotte Group, are now permitting franchisees to close stores overnight. This option is available if the individual outlets consistently lose money during night-time operations over a three-month period.
Q.How much has the minimum wage increased in South Korea, and over what timeframe?
How much has the minimum wage increased in South Korea, and over what timeframe?
The South Korean president launched a campaign to raise the hourly minimum wage by 29 percent. This significant increase is being implemented over a two-year period, impacting the operating costs for convenience store owners, especially for night shifts.
Q.What technological changes are South Korean convenience stores making in response to these challenges?
What technological changes are South Korean convenience stores making in response to these challenges?
Convenience store owners are focusing on automated, unmanned stores. Emart is testing a cashier-free store in Seoul with many cameras, using pre-stored credit card information for payments. Lotte operates 17 unmanned outlets where products are scanned and identified by their shapes.
Q.Were all Emart stores originally open 24 hours when the chain launched?
Were all Emart stores originally open 24 hours when the chain launched?
No, not all Emart stores operated around the clock from the outset. When the Shinsegae group launched the Emart convenience store chain in 2014, some outlets did not offer 24-hour service.
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