SEOUL, Aug. 9 (Korea Bizwire) — Despite stiff competition and declining profits, more and more convenience stores in South Korea are opening, with the number of convenience stores per head surpassing that of Japan, a country thought to be the Asian capital of the industry.
According to industry sources on Tuesday, there were an estimated 34,376 convenience stores operated under the top six major chains including CU, GS25, and 7-Eleven as of last year, meaning one convenience store for every 1,491 people.
The figure is nearly one and a half times higher than Japan, where there is a convenience store for every 2,226 people.
After the first branch of 7-Eleven opened in Seoul back in 1989, the number of convenience stores in South Korea enjoyed a rapid and steady growth for the next few decades, even in recent years while the growth of other retail stores such as department stores and supermarkets slowed down, thanks to the growing number of small-sized households and an aging population.
When broken down by brand, CU was the most popular with 11,949 stores, followed closely by GS25, which also has over 11,900 stores across the country.
7-Eleven and Ministop followed next, accounting for 8,944 and 2,401, respectively.
From January to July, the five major convenience store chains opened more than 3,000 stores in new locations.
Given market performance from earlier this year, industry experts believe the upward trend is set to continue for the remainder of this year.
Despite the growing number of convenience stores, however, average sales and working conditions have been declining.
According to a report released by GS Retail last week, the business profits of the company that owns GS 25 stores dropped a whopping 21.7 percent during the second quarter, compared to the year before, amounting to 53.1 billion won.
Against this backdrop, industry giants like GS Retail and BGF Retail, which owns the country’s largest convenience store chain, CU, have been ramping up efforts to venture into international markets.
Earlier this week, GS Retail announced it will open the very first GS25 store in Ho Chi Minh City this year as part of a joint venture with a Vietnamese company.
Last month, BGF Retail signed a franchise deal with an Iranian firm, making it the first South Korean company to venture into an overseas market.
“There is a lot to be debated, but average sales at Japanese convenience stores are still four times higher,” an industry expert said.
“Given that shopping patterns are shifting towards small portions at easily accessible stores, the market growth will continue for some time.”
Hyunsu Yim (email@example.com)