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By Kwak Yeon-soo
Convenience store chains are mobilizing more resources to establish a larger presence abroad as they struggle with sluggish consumption and intensifying competition at home, according to industry officials Tuesday.
According to data from the Korea Association of Convenience Store Industry, Korea was home to 40,950 franchise convenience stores at the end of 2018, compared to 37,800 a year earlier.
BGF Retail, which operates CU convenience stores, announced it signed a master franchise deal with Vietnamese convenience store operator CUVN on Sept. 24.
A master franchise deal is preferred because it can reduce risk and investment costs while receiving steady loyalty income.
Under the agreement, BGF Retail will provide know-how on its brand management system while its partner CUVN will be responsible for investment and operations.
The company said it plans to open its first CU outlet in Vietnam next year.
"We will actively tap into emerging markets that have high growth potential while focusing on stable growth in Korea," a BGF Retail official said.
The official said that the Vietnamese market looks lucrative because the country has been recording an annual GDP growth rate of 6.8 percent in recent years. Moreover, people under the age of 30 account for about half of Vietnam's 100 million population.
In 2018, CU successfully ventured into Mongolia by signing a master franchise contract with local retailer Central Express. It currently operates more than 50 branches there.
Another convenience store GS25 has already entered Vietnam by opening a store in January last year.
GS Retail, which operates GS25, has seen brisk sales of snacks thanks to the soaring popularity of K-pop in Vietnam.
Young millennials in Vietnam have shown growing interest in the snacks K-pop stars reportedly enjoy, like Honey Butter Chips and Idol Sandwiches.
"There are currently 45 GS25 outlets in Vietnam, and we plan to increase the number of outlets to 2,000 by 2028," a GS25 official said.
Korea Seven, the local operator of the 7-Eleven chain, announced recently it will export five types of its private brand snacks, including Tteokbokki Snack and Sour Cream & Onion Popcorn, to Hawaii.
The company said it plans to export Korean snacks to three or four Southeast Asian countries within this year.
"We plan to utilize our global network to increase the variety of our export products," a 7-Eleven official said.
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