E-Land Group's Kim's Convenience Store has announced its full-fledged entry into the convenience store business this year. In the first half of the year, Kim's Convenience Store plans to convert some of its directly managed stores into franchisees. Kim's Convenience Store targets the niche market between convenience stores and corporations (corporations supermarkets). It aims to represent a convenience store near homes while pursuing the sale of fresh foods, such as fruits and meat, usually seen in corporations. The distribution industry has pointed out that this is a 'trick' by Kim's Convenience Store to avoid regulations on convenience stores and corporations.
According to the related industry on the 15th, E-Land Group's Kim's Convenience Store has a total of five directly managed stores. These include the Kim's Convenience Store in Seoul's Bongcheon, which opened for the first time in June 2023, as well as stores in Sinjeong, Yeomchang, Sinchon, and Dogok. E-Land Group plans to convert one of the five directly managed stores into a franchise within the next month. A representative from E-Land Group noted, 'The conversion to franchise is still in the experimental stage,' adding, 'There are no plans for large-scale expansion.'
The distribution industry is not welcoming news of Kim's Convenience Store's business expansion, even if it is still in the experimental (pilot) stage. This is because Kim's Convenience Store has aimed to maximize revenue while minimizing the applicable regulations for its business type. Although Kim's Convenience Store is a subsidiary of the large corporation E-Land Group, it is not classified as a corporation and thus does not face sales restrictions.
Under the current Distribution Industry Development Act, corporations are subject to operating hour and location restrictions from local governments (such as not being allowed to open within 500 meters of traditional markets). Major corporations affected by these regulations include GS The Fresh, Homeplus Express, Lotte Super, and Emart Everyday. These companies operate under regulations such as a ban on opening before 10 a.m. and mandatory weekend closures as stipulated by local government ordinances.
Sources in the large supermarket and corporation industry stated, 'SSMs operated by large corporations are key regardless of size and whether the operating entity is registered as a supermarket or similar.' They added, 'Kim's Convenience Store undoubtedly resembles a corporation-operated SSM. It is employing tricks to avoid regulations.' In reality, major large corporation SSMs are registered as supermarkets and grocery stores focused on food and beverages, even if their area is small, and are subject to the same regulations as large supermarkets.
Currently, Kim's Convenience Store is registered as a convenience store. It operates from 8 a.m. to 10 p.m., does not sell cigarettes, but primarily sells fresh foods such as fruits, vegetables, and meat. These fresh foods account for about 20–30% of total sales. Additionally, it sells partly-cooked food products from Ashley, a restaurant chain under E-Land Group. A representative from the convenience store industry explained, 'Typically, if fresh foods are dealt with or sold based on weight, they are classified as supermarkets; if they operate 24 hours without that, they are registered as convenience stores.' He noted, 'This is essentially promoting a concept of a convenience store with relatively fewer outlet regulations.'
Another representative from the convenience store industry said, 'In the convenience store sector, there are unspoken restrictions on new stores based on existing store distances.' He added, 'Kim's Convenience Store has relatively completely disregarded this, and there have been instances where some convenience stores near Kim's directly managed stores saw decreased sales.'
Representatives from E-Land Group stated that their business strategy is not to avoid convenience store and corporation regulations. Instead, they said they introduced specialized stores linked to E-Land Group's strengths in fresh food logistics and distribution to target the niche market as a latecomer in the saturated convenience store market. A representative from E-Land Group explained, 'We sought differentiation, such as specialized stores for fresh foods, to survive in the convenience store market popular among single-person households. This is merely a challenge to the market as a new form of convenience store, not an attempt to evade regulations.'
Some have raised opinions suggesting that regulatory adjustments are necessary to reflect the industry phenomenon where the lines between convenience stores and corporations are becoming blurred. This is because the size of corporation stores is on a downward trend, while convenience stores are increasingly enlarging or presenting specialized stores. An official from the Ministry of Trade, Industry and Energy stated, 'We are reviewing whether there are any legal issues with this matter and if legal regulations need to be supplemented.'
Sung-Yong Yoo, a professor of business administration at Sookmyung Women's University, remarked, 'Kim's Club Convenience Store's business may seem like a loophole to bypass regulations on corporations and convenience stores.' However, he noted, 'Rather than letting the industry clash and fight against each other, it is indeed the time for legal systems to be supplemented, especially as the boundaries among large supermarkets, corporations, and convenience stores are blurring.'