Convenience store emerges as slump-free business

By Choi Sung-jin

Despite the protracted economic slump, convenience stores are enjoying thriving business, thanks to the increase in single-member households and changing consumption patterns, industry sources said Wednesday.

CU, the nation’s largest C-store chain with 9,409 shops last year, will see its 10,000th shop open during the first half of this year, unless something unexpected comes up, the sources said. GS25, No. 2 with 9,285 stores, will also pass the 10,000-mark in the latter half.

The total number of convenience stores will top 30,000 this year, 27 years after the new type of retail business made its debut in Korea.

Their share of sales out of total retail sales, which stood at 2.5 percent in 2010, more than doubled to 5.1 percent last year. Their aggregate sales rose from 12.8 trillion won ($1.06 billion) in 2013 to 13.8 trillion won in 2014 and to 15.1 trillion won last year. The total number of convenience stores in the nation has also exceeded bank branches (7,322), gas stations (15,522) and pharmacies (21,365) to emerge as neighborhood caves.

The sales growth rates of 7.8 percent and 9.4 percent in 2014 and 2015, respectively, compare with the near-zero, or minus, increases recorded by other retail businesses such as department stores and giant discount outlets, they said.

Contributing to the robust expansion of convenience stores is the sharp rise in the number of single households and lack of regulations in opening new stores, according to industry analysts. Also helpful was the brisk sales of “PB (private brand)” products, including cheap but tasty brewed coffees and lunchboxes.

Another weapon of the convenience stores is the wide variety of services they provide, ranging from recharging cell phones to Internet banking. Seven Eleven, for instance, has teamed with Lotte Shopping to help shoppers return their items to vendors, and GS25 is delivering goods for online shopping malls.

“Convenience stores are popular among the would-be self-employed because of their stable and competitive business structure,” said an industry executive. “If they enter into an era of 10,000 stores, the win-win effects will increase for both franchise headquarters and affiliated stores.”