GS Retail eyes new acquisition to bolster online business

GS Retail's corporate image / Courtesy of GS Retail

By Kim Jae-heun

GS Retail, which runs the country's largest convenience store chain GS25, could acquire another firm to strengthen its online business.

GS Retail has already decided to merge with GS Home Shopping in order to benefit from the explosive growth of the e-commerce market. But it seems one acquisition is not enough to remain competitive against Coupang or Naver.

“We will focus on maximizing the synergy created between online and offline businesses after merging GS Retail and GS Home Shopping,” GS Retail CEO Huh Yeon-soo said during a general meeting of shareholders, Thursday. “If there is a good opportunity that comes out in the market to assist our short-term goal, we are willing to acquire a new firm too.”

Huh did not express interest in any specific companies by name.

GS Retail's convenience store brand GS25 in Gangnam, Seoul / Courtesy of GS Retail

GS Retail has a tough road ahead.

Other competitors, like Lotte Shopping, have challenged Coupang and Naver, but did not succeed.

Watching Lotte Shopping's online mall, Lotte ON, display sluggish performance, GS Retail realized that its online business needs an additional boost. Lotte's case showed that even one of the biggest retail companies in the country cannot achieve decent performance on its own in the highly competitive e-commerce market here.

That is why Lotte Group and Shinsegae are attempting to take over eBay Korea.

Coupang went public recently in the New York Stock Exchange and raised over 5 trillion won to invest in building more distribution centers here. Naver has formed an alliance with the country's largest discount store chain E-mart to confront Coupang.

Meanwhile, GS Retail proposed a bill during its shareholders' meeting to add a delivery service to its business portfolio as well as a logistics network and an open market. It is preparing to start an e-commerce business prior to its merger with GS Home Shopping.

The combination of the two firms is expected to affect the local e-commerce market, since they are the No.1 players in the convenience store and home shopping sectors.

GS Retail aims to increase its annual gross merchandise value (GMV) to 25 trillion won ($22.1 billion) until 2025. Considering that its GMV stands at 15 trillion won when combined with that of GS Home Shopping now, it needs to boost its performance by 60 percent in the next four years.