Convenience Stores Heading Worldwide, All Stop Due to COVID-19

Bloody Domestic Market War, Breakthrough Expected...

CU Terminates Contract with Vietnamese Company
GS25 and Emart24 Indefinitely Postpone Overseas Expansion
"Expansion Blocked, Competition Intensifies"

[Asia Economy Reporter Seungjin Lee] It has been confirmed that convenience store chains' plans to expand into overseas markets have been canceled or indefinitely postponed due to the global spread of the novel coronavirus disease (COVID-19).

According to the Financial Supervisory Service's electronic disclosure system on the 25th, CU announced that it mutually terminated the master franchise agreement signed last September for entry into Vietnam, effective June 29. Earlier, CU had signed a master franchise agreement with CUVN, a company established through investments by local Vietnamese distributor SNB and other enterprises, aiming to enter the Vietnamese market in the first half of this year.

The master franchise agreement is a system where BGF Retail, the franchisor operating CU, provides the brand, system, and know-how, while the local partner company is responsible for investment and operations, holding exclusive rights to use the franchisor's system. However, due to the global spread of COVID-19 early this year, air routes were blocked, and all related activities, including on-site inspections, were halted.

CU stated that this situation has persisted for half a year, and since it is uncertain when COVID-19 will stabilize, they ultimately decided to terminate the contract. A CU representative explained, "As the COVID-19 situation worsened day by day, we decided to terminate the contract. However, we have not completely stopped overseas market entry and plan to resume efforts once the COVID-19 situation improves."

GS25, which has already successfully entered Vietnam, was considering expansion into Mongolia and other overseas markets but has indefinitely postponed related plans. GS25 explored overseas expansion this year, including two visits to Mongolia last year for market research, but halted these efforts at the review stage due to the worsening COVID-19 situation this year. Emart24 also actively planned to expand into Southeast Asia this year but reportedly put these plans on hold due to sudden adverse conditions.

As the number of domestic convenience store outlets approaches saturation, overseas market expansion is seen as a new breakthrough. In fact, GS25 opened its first store in Ho Chi Minh City, Vietnam, in 2018, marking the beginning of its overseas expansion. GS25 has increased its store count to 65 and plans to expand to over 2,000 stores within 10 years.

CU sparked a Korean convenience store wave overseas by entering the Mongolian market. Since opening its first CU store in Ulaanbaatar, Mongolia, in 2018, it has rapidly dominated the market with about 80 stores to date. Emart24 has also knocked on the door of overseas markets by exporting 15 types of its private label (PL) brand "I'm I" products to Australia and Hong Kong.

The convenience store industry, which had planned to accelerate overseas expansion this year, is expected to face intensified domestic cutthroat competition for the time being due to the unexpected COVID-19 pandemic. The number of domestic convenience store outlets surpassed 10,000 for the first time in history in 2007 and has sharply increased every year, reaching saturation. As of the end of last year, the total number of stores in the convenience store market, including GS25, CU, 7-Eleven, and Emart24, is estimated to have exceeded 45,000 and is approaching 50,000.

An industry insider explained, "We are making multifaceted efforts such as developing new stores domestically, but it is difficult due to market saturation. Therefore, we tried to expand externally through overseas expansion, but with that blocked as well, competition within the industry is expected to become even fiercer."

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