Growth in South Korea's convenience store industry has slowed for years, and the gap between top and bottom players is widening. Industry observers say it is becoming increasingly difficult for smaller operators to catch up with the leading chains, which have already built vast store networks across the country.
The "rich get richer, poor get poorer" dynamic in the convenience store sector deepened in the second quarter, following the same trend in the first, according to industry sources Tuesday. GS25 and CU — each with more than 18,000 stores — continued to grow both sales and profit, while Seven-Eleven (about 11,000 stores) and E-mart24 (about 5,700 stores) remained in a slump. "With new store openings limited by market saturation and the leading chains tightening their grip, it will be hard to change the landscape in the short term," one industry official said.
GS25 posted first-quarter sales of 2.09 trillion won ($1.36 billion), up 3.7 percent from a year earlier. BGF Retail, which operates CU, reported consolidated sales of 2.12 trillion won, a 5.2 percent increase. Convenience store sales, which account for roughly 98 percent of the total, are estimated at about 2.08 trillion won.
Over the same period, Seven-Eleven's sales fell 5.3 percent to 1.08 trillion won, while E-mart24's declined 1.6 percent to 458.3 billion won. Both chains also remained in the red on operating profit, with Seven-Eleven posting a loss of 19.7 billion won and E-mart24 a loss of 10.6 billion won.
The slowdown in the industry is stark. According to the Ministry of Trade, Industry and Energy, the combined store count of the four major convenience store chains stood at 53,266 at the end of last year, down 2.9 percent, or 1,856 stores, from the previous year — the first decline after years of consecutive annual growth through 2023. Combined sales also barely moved, rising just 0.3 percent to 33.66 trillion won last year.
NICE Credit Rating and Korea Ratings have both downgraded the credit outlook of Korea Seven, the operator of Seven-Eleven, from stable to negative. In a recent report, NICE Credit Rating said top-tier operators are set to strengthen their competitive edge by launching fresh food and trend-driven new products, while smaller players are unlikely to see meaningful earnings improvement in the near term, meaning the leading chains' market dominance will only grow stronger.
spa@heraldcorp.com
