The competition between GS25 and CU for the top spot in the convenience store industry is intensifying. There are expectations that CU, which showed a relatively significant sales growth in the second quarter of this year, could surpass GS25 in sales.
Until now, GS25 has ranked first in terms of sales, while CU has held the top spot in terms of the number of stores. Despite the saturated convenience store market, both companies are engaged in fierce competition, forecasting a net increase of about 300 stores each this year.
According to the retail industry on the 22nd, GS Retail recorded sales of 2.98 trillion won and operating profit of 845 billion won in the second quarter of this year. These figures represent increases of 1.7% in both sales and operating profit compared to the same period last year. Focusing only on GS25 (convenience store institutional sector), sales increased by 1.5% year-on-year to 2.22 trillion won, while operating profit decreased by 9.1% to 590 billion won.
BGF Retail recorded sales of 2.29 trillion won and operating profit of 694 billion won in the second quarter. Compared to the second quarter of last year, sales increased by 4%, while operating profit decreased by 8.9%.
BGF Retail has not yet disclosed its performance by institutional sector, but historically, CU (convenience store institutional sector) has accounted for 98–99% of total sales. Last year's cumulative sales for CU (8.59 trillion won) represented about 98.77% of total sales (8.70 trillion won), and in the first quarter of this year, this ratio was recorded at 97.96%. If we assume that BGF Retail's convenience store institutional sector sales ratio for the second quarter is 98%, it will surpass GS25's sales by about 20 billion won.
Both companies are fiercely competing for the top spot in the industry. In terms of the number of stores, CU is ahead of GS25. As of the end of last year, the number of CU stores nationwide reached 18,458, which is 346 more than GS25 (18,112).
In terms of sales, GS25 has maintained first place for a long time. However, the annual sales gap with CU narrowed from about 800 billion won in 2020 to 114 billion won in 2023, reaching 74 billion won last year.
According to the Ministry of Trade, Industry and Energy, the sales decline rate for the convenience store sector compared to the previous year was recorded at -0.6% in April, -0.2% in May, and -0.7% in June. Nevertheless, the increase in sales for GS25 and CU is interpreted by the industry as a result of continuing to expand the number of stores.
CU plans to close about 1,100 existing stores this year and open around 1,400 new stores. GS25 has also proposed a net increase of 250 to 300 stores nationwide this year.
Both companies are working on expanding the profitability of individual stores while also renewing existing stores alongside new openings. CU has expanded its number of renovated stores from about 200 in 2016 to over 700 in 2023, with a goal of about 1,200 by the end of this year.
GS25 is also focusing its new openings on converting verified existing retail stores and is promoting renovations in the form of 'Scrap and Build' for older stores. Scrap and Build refers to the expansion of convenience store space by additionally renting adjacent commercial spaces or moving to better locations in nearby commercial areas.
Last year, the number of convenience store locations in Korea reached 54,852. The density relative to the population is more than twice that of Japan, which is called a 'convenience store powerhouse.' As a result, the domestic convenience store industry is also actively pursuing overseas expansion.
Since 2018, CU has expanded into Mongolia, Malaysia, Kazakhstan, and other countries, currently operating about 680 overseas stores. GS25 operates about 630 overseas stores, primarily in Vietnam and Mongolia.
The convenience store industry is expecting additional sales expansion during the third quarter, which is the peak season. Convenience stores have been identified as key consumer destinations for the 'people's livelihood recovery consumption coupons,' which were distributed to all citizens starting last month.
According to the Ministry of the Interior and Safety, as of the 3rd, out of the 57.679 trillion won in consumption coupons distributed via credit and debit cards, 26.518 trillion won (46.0%) has been used. Of that amount, the spending at convenience stores was recorded at 2.579 trillion won (9.7%).
You Jeong-hyeon, a researcher at DAISHIN SECURITIES, noted, 'In the two weeks following the distribution of the consumption coupons, an average of 18.4 billion won was spent daily at convenience stores. This corresponds to 20% of the average daily sales of convenience stores (91.6 billion won) in the third quarter of last year,' adding, 'Taking into account the remaining consumption coupons and additional distribution at the end of September, the actual sales increase effect for existing stores in the third quarter is estimated to exceed 0.7–0.8 percentage points.'