Korea’s ‘Big 2’ convenience store names in thrilling competition for top spot

CU and GS25 logos [Courtesy of each company]

CU and GS25, two leading convenience store chains in South Korea, are engaged in a fierce competition for the top spot in the market. BGF Retail Co.’s CU has successfully expanded its reach across the country, closing the sales gap with GSRetail Co.’s GS25 in the first quarter of this year to a mere 17.1 billion won ($12.77 million), according to sources from the industry on Sunday.

This significant reduction in the gap from the previous quarter indicates that CU is making impressive strides.

Both CU and GS25 recorded impressive quarterly sales of 1.8 trillion won, making the difference between them less than 20 billion won, which can be considered negligible. In terms of total sales in the convenience store market in 2020, GS25 and CU held 35 percent and 31 percent respectively. However, CU has been rapidly narrowing the gap by strategically increasing the number of its stores nationwide. By the end of last year, CU had surpassed GS25 in terms of store count, reaching 16,787 stores compared to GS25’s 16,448. CU continued its upward trajectory, achieving the milestone of 17,000 stores in March of this year.

It is worth noting that while CU has a greater number of stores, GS25 achieves higher sales per store. This can be attributed to the strategic placement of GS25 stores in prime locations such as the Seoul metropolitan area and baseball stadiums, which attract a high volume of foot traffic. As of the end of last year, GS25’s daily sales per store stood at 1.74 million won, approximately 100,000 won higher than CU’s figures.

When it comes to operating profit, however, things are different. CU’s operating profit, which has been ahead since 2020, increased further in the first quarter of this year, widening the gap with GS25 to 14.3 billion won from 3.8 billion won in the first quarter of last year. This is because CU has more hit products with minimal marketing costs.

CU’s “Yonsei Milk Cream Bread” series, the industry’s biggest hit product last year, still maintained its top spot in the dessert category, contributing to an increase in its operating profit. Its ultra-low priced private-label brand (PB) product, the Deuktem series, also sold 15 million units. The key was that their popularity was gained through word of mouth rather than costly marketing. Its short-form drama on YouTube called “Convenience Store Part-timers,” which has exceeded 180 million views, also had an impact. With one well-made branded content, the company significantly saved marketing costs by raising its recognition.

In contrast, GS 25’s hit product, Won Soju, a distilled soju called “Jay Park soju” as it was created by Jay Park, a rapper and record producer, lost popularity after its initial sales rally, due to its high price of 12,900 won per bottle and the launches of similar traditional liquors.

GS25’s exclusive product, “Beurre Beer,” better known as butter beer, also saw its sales plunge due to the controversy over “butter beer without butter.” The price, which was 6,500 won per can, was sold at a discount for 4,950 won, which affected the company’s profitability.

“Companies can effectively increase their operating profit and sales only when they increase competitiveness in their product planning (MD),” said an industry insider.