Convenience Stores in South Korea Experience Recovery Amid Consumer Spending Boost
The convenience store industry in South Korea, which had been experiencing a downturn due to market saturation and weakened consumer sentiment, has successfully rebounded in the third quarter of this year. The recovery is attributed to government initiatives like the distribution of consumer coupons aimed at revitalizing daily life, which have contributed to improved sales performance.
According to the Financial Supervisory Services electronic disclosure system, GS Retail, which operates the GS25 convenience store chain, reported a consolidated operating profit of 111.1 billion KRW for the third quarter, marking a 31.6% increase compared to the same period last year. During the same timeframe, sales rose from 3.431 trillion KRW to 3.2055 trillion KRW, an increase of 5.3%, while net profit turned into the black.
The convenience store division was the primary driver of this improved performance. GS25s operating profit in the third quarter reached 85.1 billion KRW, a 16.7% increase year-on-year, with sales also climbing to 2.4485 trillion KRW, up by 6.1%. The exclusion of department stores and hypermarkets from the list of consumer coupon redemption locations has positioned convenience stores as a key retail destination.
GS25 attributed its ability to reverse the previous trend of negative growth to its Scrap and Build strategy, which focuses on enhancing the competitiveness of existing stores rather than opening new locations. This approach involves expanding the size of existing stores or relocating them to better locations. The continuous introduction of differentiated products, such as the collaboration with K-Pop Demon Hunters, desserts from Seoul Milk, and Anseongjae highballs, has also positively impacted their food offerings, further strengthening their market position.
BGF Retail, which operates the CU convenience store chain, also reported strong performance. For the third quarter, BGF Retails consolidated operating profit was 97.7 billion KRW, an increase of 7.1% from the previous year. Sales during the same period reached 2.4623 trillion KRW, reflecting a 5.9% increase.
Despite challenging conditions across the offline retail sector due to high inflation and the dominance of online channels, both GS25 and CU exceeded market consensus estimates, indicating a positive shift in consumer behavior and a potential recovery in the retail landscape.
According to the Financial Supervisory Services electronic disclosure system, GS Retail, which operates the GS25 convenience store chain, reported a consolidated operating profit of 111.1 billion KRW for the third quarter, marking a 31.6% increase compared to the same period last year. During the same timeframe, sales rose from 3.431 trillion KRW to 3.2055 trillion KRW, an increase of 5.3%, while net profit turned into the black.
The convenience store division was the primary driver of this improved performance. GS25s operating profit in the third quarter reached 85.1 billion KRW, a 16.7% increase year-on-year, with sales also climbing to 2.4485 trillion KRW, up by 6.1%. The exclusion of department stores and hypermarkets from the list of consumer coupon redemption locations has positioned convenience stores as a key retail destination.
GS25 attributed its ability to reverse the previous trend of negative growth to its Scrap and Build strategy, which focuses on enhancing the competitiveness of existing stores rather than opening new locations. This approach involves expanding the size of existing stores or relocating them to better locations. The continuous introduction of differentiated products, such as the collaboration with K-Pop Demon Hunters, desserts from Seoul Milk, and Anseongjae highballs, has also positively impacted their food offerings, further strengthening their market position.
BGF Retail, which operates the CU convenience store chain, also reported strong performance. For the third quarter, BGF Retails consolidated operating profit was 97.7 billion KRW, an increase of 7.1% from the previous year. Sales during the same period reached 2.4623 trillion KRW, reflecting a 5.9% increase.
Despite challenging conditions across the offline retail sector due to high inflation and the dominance of online channels, both GS25 and CU exceeded market consensus estimates, indicating a positive shift in consumer behavior and a potential recovery in the retail landscape.
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