CU opens record number of convenience stores in Korea

2024.05.10 10:52:02 | 2024.05.10 10:56:44

[Photo by Lee Hyo-seok]이미지 확대

[Photo by Lee Hyo-seok]

South Korea’s CU became the first convenience store chain in the industry to open more than 18,000 stores. The achievement is attributed to the development of exclusive products such as the Yonsei University Cream Milk Bread and the Fresh Lemon Highball that are only available at CU stores, which have contributed to improving store profitability.

According to industry sources on Thursday, CU opened its 18,000th store in Samjeon-dong, Songpa-gu, Seoul, on April 30th, 2024. The milestone comes 34 years after CU opened its first store in 1990.

With this accomplishment, CU firmly secures its position as the leading convenience store chain in Korea based on the number of stores. As of the end of last year, GS25 had 17,390 stores, while 7-Eleven had 13,130 stores and Emart24 had 6,598 stores.

Despite concerns about market saturation, CU’s multi-store strategy continues to thrive due to the enhancement of store profitability. Profitable stores incentivize potential store owners to continue seeking business opportunities under the CU brand. CU has been focusing on developing differentiated products that are exclusively available at CU stores and high-value private label (PB) products.

CU’s flagship product series, the Yonsei University Cream Milk Bread, has sold over 50 million units. Its recently introduced Fresh Lemon Highball has also become a hit. Launched on April 23rd, 2023, the Fresh Lemon Highball has surpassed sales of both soju and the top-selling imported beer to continue ts success.

The success of differentiated products and PB products are also contributingnto increasing per store sales. According to the Fair Trade Commission’s disclosure of franchise business information, CU’s average annual sales per store have increased from 589.91 million won in 2019 to 584 million won in 2021, and 621.8 million won in 2022.

CU’s franchisee support measures have also contributed to the success of its multi-store strategy. The company provides support to its franchisees, including by new product introduction support, disposal support, cooperation loan support, operating cost support, and corporate welfare program support.

CU will also invest in reducing costs associated with its multi-store strategy. Parent company BGF Retail plans to invest about 190 billion won by 2026 to establish a large-scale logistics center in Busan to build an efficient store operation system.

Due to the increase in fixed costs associated with store expansion, pareny company BGF Retail saw a decline of over 20 percent in operating profit in the first quarter of 2024. In contrast, GS25’s first-quarter revenue increased by 5.4 percent to 1.96 trillion won and operating profit soared by 15.9 percent to 26.3 billion won.

By Lee Hyo-seok and Minu Kim

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