Korea's convenience store industry has shifted from an aggressive race to open more locations to a qualitative growth strategy focused on improving efficiency per store. As a result, profitability at the four major convenience store operators is also expected to improve together in the second quarter this year.
GS25 and CU, Nos. 1 and 2 by sales, are estimated to see both sales and operating profit rise. Seven-Eleven and E-MART24, Nos. 3 and 4, are expected to see sales fall due to fewer stores, but the size of their losses narrow.
According to FnGuide on the 25th, GS Retail(007070), which operates GS25, is estimated to post second-quarter sales of 3.1221 trillion won and operating profit of 101.3 billion won this year. Compared with a year earlier, sales would increase 4.8% and operating profit 19.9%.
The second-quarter earnings estimate for BGF Retail(282330), which operates CU, came to sales of 2.4141 trillion won and operating profit of 76 billion won. Sales are forecast to rise 5.4% and operating profit 9.5% from a year earlier.
Korea Seven, which operates Seven-Eleven, is hoping to swing to a profit as early as the second quarter. Korea Seven posted first-quarter sales of 1.0758 trillion won and an operating loss of 19.7 billion won this year. Sales fell 5.3% from a year earlier, but the operating loss shrank 42% to 19.7 billion won from 34 billion won.
E-MART24's profitability is also expected to improve in the second quarter. Hanwha Investment & Securities estimated E-MART24's second-quarter results at sales of 514 billion won and an operating loss of 3.2 billion won. Sales would decline 3.4% from the second quarter last year, but the deficit would narrow 27.3%.
The simultaneous improvement in profitability at the four convenience store operators stems from companies changing their growth strategies as the yearslong race to open new stores hit its limits. Korea's convenience store market grew rapidly on the back of more one- and two-person households and the spread of near-distance consumption, but it has now entered a phase where it is hard to boost sales through new openings alone. Prime locations suitable for new stores are dwindling, and as multiple brands open stores competitively in the same commercial districts, the cannibalization of existing stores' sales by new stores has worsened.
The industry views the domestic convenience store market as having entered a full-fledged saturation phase around 2023. The number of convenience stores per capita in Korea is more than twice that of Japan, often called a "convenience store powerhouse." On top of that, increases in labor costs, electricity bills and rent have solidified a structure in which maintaining low-sales stores is a burden for both headquarters and franchisees.
In response, convenience store companies began restructuring to reduce the number of stores, focusing on lower-tier operators with weaker competitiveness. Top-tier operators also slowed the pace of new openings and shifted strategies to selectively secure prime stores.
Since acquiring Ministop in 2022, Seven-Eleven has steadily closed stores that overlap in trade areas or have low profitability. E-MART24 also closed about 1,000 stores from 2024 through last year. It is maintaining a network of around 5,500 stores and focusing on reducing losses rather than expanding scale.
Top operators are also slowing the pace of openings. The number of GS25 stores fell by 107, turning negative for the first time, from 18,112 in 2024 to 18,005 last year. CU was the only one among the four to increase its store count at the end of last year to 18,711, but its annual net additions plunged from 975 in 2023 to 696 in 2024 and 253 last year.
With the change in industry strategy, the number of stores at the four convenience store operators peaked at 54,893 in 2023, then fell to 54,852 in 2024 and 53,266 last year. This marks the first decline in the number of convenience stores since the industry was introduced in Korea in 1988, 36 years ago.
Yoo Jeong-hyeon, an analyst at Daishin Securities, said, "From 2024 to 2025, the convenience store industry exited stores and shifted from quantitative growth to qualitative growth," adding, "Starting this year, the restructuring effects from easing overexpansion and a higher share of prime stores are emerging in earnest."
Park Jong-ryeol, an analyst at Heungkuk Securities, said, "The convenience store format is entering a phase where market reorganization matters more than market expansion," adding, "From now on, profitability rather than scale will drive convenience store results in earnest."