Residential Area Targeted GS25 Smiled, CU Visited Tourist Attractions and Cried

Convenience Stores Ranked 1st and 2nd with Different Store Opening Strategies
Performance Diverges Amid COVID-19 Impact

[Asia Economy Reporter Lee Seung-jin] GS25 and CU, the first and second largest convenience store chains, experienced contrasting fortunes in their first-quarter earnings. Due to the impact of the novel coronavirus (COVID-19), CU, which had focused on targeting university areas and tourist spots, was hit hard, while GS25, which targeted residential areas, saw a significant increase in performance.

According to convenience store industry sources and the Financial Supervisory Service's electronic disclosure system on the 8th, GS25's sales in the first quarter of this year reached 1.6028 trillion KRW, up 2.9% compared to the same period last year. Operating profit surged by 51.3% to 40.6 billion KRW. On the other hand, BGF Retail, which operates CU, posted first-quarter sales of 1.3931 trillion KRW, a 3.2% increase year-on-year, but operating profit sharply declined by 29.7% to 18.5 billion KRW.

The divergent results of the two companies stem from their ongoing store opening strategies. GS25 is known to have more stores in residential and office areas compared to CU. As the COVID-19 pandemic led people to avoid large supermarkets crowded with unspecified masses and instead shop at convenience stores, GS25 relatively benefited.

A GS25 official explained the reason for the performance increase, saying, "In recent years, we have focused all our efforts on expanding various service platform businesses such as half-price parcel delivery, self-checkout counters, and delivery services to utilize our approximately 14,000 stores as local convenience hubs."

On the other hand, CU targeted special stores in provincial regions, airports, university areas, and tourist spots, which were directly hit by the impact of COVID-19. CU operates most convenience stores in major airports such as Incheon International Airport and Gimpo International Airport. Also, as of 2018, the number of CU stores in Jeju was 478, more than 100 stores higher than GS25's 338, and the sharp decline in tourism demand due to COVID-19 affected sales.

The different proportions of stores in the metropolitan area between the two companies also had an impact. CU leads GS25 in the number of stores in Gyeongsang, Jeolla, and Chungcheong provinces. The only region where CU lags behind GS25 in store count is the metropolitan area. GS25 holds a market share in the mid-30% range in Seoul, Gyeonggi, and Incheon, while CU's share is in the low 30% range. Especially this year, both companies have actively expanded delivery services, which were primarily implemented in stores located in the metropolitan area, and the industry views that GS25 relatively gained an advantage.

Meanwhile, regarding the deterioration of first-quarter performance, a CU official stated, "Despite the consumption slump, positive effects such as budget shopping promotions to improve store sales helped general location stores and new stores maintain relatively stable sales," adding, "From the second quarter, gradual performance recovery is expected due to the transition to a daily quarantine system and normalization of the educational environment."

This content was produced with the assistance of AI translation services.