By Kim Hyun-cheol
Staff Reporter
Following moves by E-Mart and SK Networks, discount stores are getting sporty in seeking refinery partners to muscle into the gas station business.
Lotte Mart is purportedly in talks with S-OIL and Homeplus is holding discussions with GS Caltex for opening gas stations at the discount chains.
Interest from both the discount stores and refineries are fueling partner searches. The alliances have spurred others to do the same so as not to lag behind, business sources say.
E-Mart, the nation's biggest retail operator, announced last month that it will launch gas pumps in collaboration with SK Networks, which runs stations for the SK Group's oil affiliate, SK Energy. E-Mart will start at one or two of its stores in the Seoul area this year.
Cheaper prices are the main advantage of filling up at a discount store. E-Mart said its stations will sell fuel for about 100 won less per liter than other places.
Earlier this year, the government allowed retail tycoons to run gas stations in a measure to galvanize more competition and induce a markdown in gasoline prices.
The new entries, however, still have a long way to go ― they have to tackle the growing backlash from existing players and skepticism from inside the industry.
The Korea Oil Stations Association (KOSA) is taking action against discount stores, saying they will only end up gobbling up the entire industry instead of achieving the original intention of the measure.
The organization will hold an emergency meeting next week on a resolution to have retailers withdraw from the business, as well as file petitions against their move with provincial governments.
KOSA says that the retailers' moves are at odds with the competition-inducing government policy and that consumers don't really benefit from retailer-run gas stations because the price perk is confined to their customers as an exclusive lure.
Some of the refineries are also questioning the overall perspective of the move.
"I can't safely say retailers will benefit from this new business," said a manager at one of the major refineries, who declined to be identified.
"Retailers here cannot expect the same outcome from running gas stations as in the United States. Operating expenses are not the same in Korea, where land prices in big cities are much higher than in many other countries."