CU, which launched a large-scale discount event on daily necessities in step with the government's high oil price relief payments, has caught a breather amid the risk of a prolonged strike by the Cargo Solidarity. BGF Logistics, the logistics subsidiary of BGF Retail, reached a tentative agreement on a collective bargaining agreement with the Cargo Solidarity on the 29th, paving the way for lifting blockades at major logistics hubs.
However, during the strike, some CU stores suffered logistics disruptions, including for ready-to-eat meals and promotional items, and franchisees' complaints over the headquarters' lukewarm response also mounted. For BGF Retail, restoring franchisee trust after logistics normalize is expected to remain a challenge.
According to related industry sources, around 5 a.m. that day, the Cargo Solidarity reached a tentative agreement on a collective bargaining agreement through talks with BGF Logistics. After signing the agreement, the Cargo Solidarity plans to lift blockades at major centers. The Cargo Solidarity had demanded higher freight rates, expanded days off, a ban on damage claims, and the complete withdrawal of applications for injunctions against business obstruction. After launching a general strike on the 5th, it blocked the entrances to major CU logistics centers in Jinju, Hwaseong in Gyeonggi, Anseong, and Naju in South Jeolla. From the 17th, it expanded the blockade to the BGF Food plant in Jincheon, North Chungcheong. As a result, some CU stores experienced disruptions in the supply of instant foods such as kimbap, triangle kimbap, and sandwiches.
With the two sides reaching a tentative agreement, CU has managed to avoid the worst logistics gap ahead of the high oil price relief payment period. Since the 21st, CU has been running a roughly 40-day discount event on more than 2,500 items focused on daily necessities through the 31st of next month. The event lineup adds about 50 everyday items such as ramen, instant rice, alcohol, snacks, tissues, beverages, meat, and fruit to the existing roughly 2,400 items in the monthly integrated promotion.
CU timed the discount event to the payment date because of the sales boost confirmed during last year's consumption coupons for livelihood recovery. From July 22 to 28, the first week when the first round of consumption coupons was paid last year, CU's daily sales rose 9% from a year earlier. In particular, sales growth rates in densely populated residential trade areas such as family dwellings, single-person dwellings, and mixed-use dwellings significantly outpaced the average.
In addition, CU's analysis of key product category sales for a month after the coupon payments showed sharp increases in items directly tied to everyday living: instant rice sales rose 37%, health foods 35.8%, ramen 32.6%, and beverages 32.2%. Buoyed by the coupon effect, BGF Retail's third-quarter sales last year increased 5.9% from a year earlier, and operating profit rose 7.1%.
The latest high oil price relief payments are also expected to lift sales across the convenience store industry. The payments are temporary support funds provided by the government to ease the burden of living costs on ordinary people caused by a surge in oil prices from the Middle East. The first recipients are vulnerable groups, including basic livelihood security beneficiaries, the second-lowest income bracket, and single-parent families. Applications began on the 27th.
The support amount is 550,000 won per person for basic livelihood security beneficiaries and 450,000 won per person for the second-lowest income bracket and single-parent families. Residents of non-capital regions or depopulated areas receive an additional 50,000 won per person. Usage of the funds is limited to business sites of small business owners with annual sales of 3 billion won or less. They can be used at traditional markets, neighborhood marts, convenience stores, and franchise outlets such as chicken and bakery chains. E-commerce companies and corporate supermarkets (SSMs) and big-box marts are excluded from eligible use.
Meanwhile, despite the tentative agreement, franchisees' accumulated grievances during the strike are expected to persist for the time being. Logistics disruptions at a time when payments and large-scale discount events overlapped meant they failed to fully capture demand for daily necessities and ready-to-eat meals.
According to the CU Franchisee Association, after the Cargo Solidarity's blockade of the logistics network, individual stores' daily sales were estimated to have fallen by an average of 20% to 30%. In particular, supply disruptions hit ready-to-eat items with high sales shares, such as triangle kimbap and boxed lunches, and losses piled up as waste of previously ordered items also increased. On the 22nd, the CU Franchisee Association sent a content-certified letter to BGF Retail, BGF Logistics, and the Cargo Solidarity demanding compensation for the strike.
A BGF Retail official said, "Once the blockade is lifted after the agreement is signed, we plan to begin operating each center starting today, centered on Jincheon, after internal maintenance," adding, "We will work to achieve 100% normalization of all centers and plants within this week."
The official added, "We have closely examined the damage status of the company and franchisees so far and have listened to voices from the field," and said, "We plan to prepare franchisee support measures as soon as possible."