From Samgyeopsal to Hoe... Convenience Store Sales Soar with 'Territory Expansion'

Increase in Food Sales Proportion... Tobacco Declines
Expansion of PB Foods Including Livestock Products and Ready Meals
"Food Sales Proportion Expected to Rise Further"

The domestic convenience store industry is strengthening sales of food products, including fresh foods. Considering the ongoing high inflation, re-launched ready-to-eat meals are targeting consumers with thinner wallets by emphasizing cost-effectiveness (performance relative to price). As convenience stores focus their sales strategies on food items, the proportion of food sales has been increasing every year, while the share of tobacco products, which traditionally accounted for a high sales proportion, is decreasing.

Convenience Stores Focus on Fresh Foods Such as Livestock and Seafood

According to the industry on the 20th, GS25, a convenience store operated by GS Retail, has been selling refrigerated livestock products such as pork belly and neck meat regularly in some general stores since November last year. Previously, pork belly was sold only in limited quantities at stores specializing in fresh products, but considering the increased demand for convenience store grocery shopping, the sales channels were expanded to general stores.

As a result, sales of livestock products also surged. GS25's sales of refrigerated pork belly from January to February 12 this year increased about 7.5 times compared to the same period last year. GS25 explained that refrigerated pork belly, neck meat, and other livestock products are especially popular in stores near amusement parks or resorts. Customers favored the convenience of being able to purchase livestock products at nearby convenience stores.

CU, a convenience store operated by BGF Retail, is also focusing on strengthening fresh foods. In particular, CU stores in the metropolitan area sell fresh sashimi. They provide a fresh sashimi pickup service from fish markets in collaboration with the seafood distribution platform In-eo Gyoju Haejeokdan. This service has gained popularity among customers, with a reuse rate reaching 74.1%.

Citizens visiting a convenience store in Seoul during lunchtime are eating lunch boxes and ready-to-eat meals. Photo by Jang Jin-hyung aymsdream@

Cost-effective Ready-to-Eat Meals Re-launched Amid High Inflation

The convenience store industry is selling re-launched ready-to-eat meals rapidly, considering the ongoing high inflation. GS25 re-launched the "Hyeja Brand" lunchbox named after actress Kim Hye-ja in February last year, and it sold 28 million units in one year. This translates to an average of about 77,000 units per day, or 53.3 units per minute, with a direct sales effect of 110 billion KRW, according to the company. GS25 added that the popularity of the Hyeja Brand increased overall lunchbox sales by about 51% compared to the previous year.

The re-launched Hyeja Brand products focus on cost-effectiveness. While the average price of a bowl of jajangmyeon (black bean noodles) has soared beyond 6,000 KRW due to persistent high inflation, the Hyeja lunchbox was priced in the 5,000 KRW range on shelves. Gimbap is also priced around 2,000 KRW, cheaper than market prices. A GS official said, "In the past, cost-effectiveness simply meant cheap, but now the price must be reasonable relative to the contents," adding, "The Hyeja Brand products basically offer substantial contents while lowering prices."

At CU, the spicy fish cake triangle gimbap priced at 1,000 KRW was re-launched last month after five years. Amid rising labor and material costs pushing convenience store triangle gimbap prices up to 1,700 KRW each, this product was re-launched to target demand for a cost-effective meal.

Consumer responses have been positive. According to CU, the spicy fish cake triangle gimbap ranked first in triangle gimbap sales within one week of re-launch. Sales rates are gradually increasing. The sales growth rate over the recent week (February 12?18) rose 15.7% compared to the first week after launch. A CU official said, "Combining an 880 KRW yukgaejang ramen with a 1,000 KRW spicy fish cake triangle gimbap allows a meal for less than 2,000 KRW," adding, "We plan to develop more products that can contribute to price stabilization in the future."

Sales Structure Changes Amid Food Product Strength

As food product categories grow in major convenience stores, the sales structure is also changing. The sales proportion of tobacco, which had long accounted for a high share in convenience stores, is decreasing, while food sales are increasing. CU's food sales proportion rose from 54% in 2019 to 56.8% last year. During the same period, tobacco's sales proportion dropped from 40.1% to 37.3%. In 2019, the sales proportion gap between food and tobacco was 13.9 percentage points, but last year, the gap widened to 19.5 percentage points.

GS25 also recorded a steady increase in food sales proportion, reaching 56.9% last year. Meanwhile, tobacco sales proportion gradually decreased to 37%. The sales proportion gap between food and tobacco at GS25 was 16% in 2020 but increased to 19.9% last year.

Considering that tobacco sales traditionally accounted for a large share in convenience stores, this is a significant change, according to industry analysis. An industry insider explained, "In the past, there was a perception that 'convenience stores are tobacco shops' because tobacco sales were high, but factors such as the overall decline in smoking rates have contributed to the decrease in tobacco sales proportion."

The industry expects the shift toward food-centered sales in convenience stores to continue for the time being. The insider said, "The industry has generally strengthened food product categories by launching private brand (PB) products," adding, "As convenience store sales gradually increase, the sales proportion of food products will grow further."

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