Convenience stores in transition

By Choi Kyong-ae

Convenience stores are evolving to woo customers by offering new services such as study rooms, fitting rooms and food courts.

“Faced with tougher competition, convenience stores have come up with more customized, more convenient services. And such services are helping their bottom line,” Oh Kyung-suk, spokesman for the Korea Association of Convenience Stores (KACS), said Monday.

“As single-family homes are rapidly growing in Korea, they shop at convenience stores rather than traditional markets or large discount store chains which are largely preferred by four-member or bigger families. ”

The number of outlets run by the country’s five major convenience store chains reached 24,859 at the end of 2013 and it is on the rise following Shinsegae Group’s entrance into the convenience store market last year with the With me brand, KACS data showed. The five convenience store chains are BGF Retail’s CU, GS Group’s GS25, US’ 7-Eleven operated by Lotte Group in Korea and Japan’s MINISTOP and Hanwha Group’s C Space.

The big five are estimated to have totaled 26,100 stores and their combined sales reached 12 trillion won ($11 billion) in 2014, up from 11.7 trillion won a year earlier, according to KACS data

With an aim to change the landscape in the convenience store market, Shinsegae joined the five in July last year with an aim to open at least 1,000 outlets by the end of this year The retail conglomerate has opened 600 stores so far across the country, a company spokesman said.

“Unlike all other around-the-clock convenience stores, With me store contractors can flexibly operate working hours. We do not oblige them to open 24 hours. We believe flexible hours will lead to better services,” the spokesman said.

Up until now, CU has led others when it comes to new services which customers never expected from convenience stores. They include a study zone, a fitting zone, powder zone, locker service, delivery service and underground music performance, according to CU.

The CU store in the Duksung Women’s University provides space to have largely student customers study, change their clothes and makeup. A CU store in Itaewon offers a locker service where largely foreign customers deposit their belongings while they look around the neighborhood, the CU spokesman said.

“Sales at the stores which offer those new services increased by 20 percent to 30 percent a month,” the spokesman said.

GS25 introduced a document printing services late last year at stores near universities in Seoul and Daejeon. 7-Eleven said it was putting bigger focus on fresh food as it expected growing demand for such “fast but fresh” foods from small families of one or two members.

Statistics Korea expected families of one or two will account for 33 percent of the total in 2030, jumping from 24 percent in 2010.

“If a country has a growing number of small families, convenience stores will be a major beneficiary. Bigger demand will generate more customized and versatile services,” said a spokesman for 7-Eleven.

Globally, the US and Japan had about 150,000 convenience stores and 50,000, respectively, last year Airline ticketing and hotel reservation services are available at some stores in Japan and Taiwan, Oh at KACS said.

The country’s first convenience store, a 7-Eleven, began operating in 1989.

SOURCE: The Korea Times