CU, South Korea’s runner-up convenience store branch, has narrowed the sales gap with No. 1 GS25 after it has successfully expanded its penetration across the country, especially in residential areas, through unified e-commerce platform.
BGF Retail, the operator of CU convenience stores, reported 199.4 billion won ($166 million) in operating profit in 2021, up 22.9 percent from the previous year. Its competitor GS Retail reported that its convenience store unit GS25 posted 214 billion won in operating profit last year, down 6.6 percent year over year.
CU’s annual revenue for 2021 stood at 6.76 trillion won, about 400 billion won less than GS25’s 7.21 trillion won. This sales gap between the two top convenience store brands in Korea last year was much narrower than that in 2020, which neared to 1 trillion won.
BGF Retail attributed the solid earnings of its convenience store unit to CU’s wider penetration into residential areas throughout the country last year. It held 15,855 shops nationwide last year after adding 1,046 in 2020 and 932 in 2021. On the other hand, GS Retail focused on large commercial areas that have been hit hard by Covid-19 restrictions. For example, the GS25 store in Jamsil Stadium runs a huge store but fails to get customers these days due to the pandemic.
In addition, CU can reach out to almost every part of the country because it provides delivery services across the nation in partnership with the country’s top three smart logistics companies like Mesh Korea. Its unified delivery platform called “Pocket CU” also contributed to its sale pickup.
But GS Retail runs various e-commerce platforms, failing to make one application that could enable consumers to make one-stop orders of its different retail units including GS25.
GS25 also attributed its disappointing performance to an increased marketing expenses, one-off costs and large-scale investments last year. GS Retail has no plan to create a unified platform for its retail services, but it expects its convenience store sales improve soon after daily life returns to normalcy.
By Hong Sung-yong and Jenny Lee
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]