Korean retail giant jumps into convenience store business

Shinsegae Group, Korea’s largest retailer, is planning to expand in the country's crowded convenience store sector, aiming to open 1,000 With Me outlets by the end of this year, according to a report in the Korea Herald.

Shinsegae, which owns Emart and Shinsegae Department Store, acquired With Me, a mid-size convenience store operator, in December.

The country’s top three industry players ― BGF Retail’s CU, GS Retail’s GS25 and Lotte Shopping’s 7-Eleven ― currently dominate more than 90% of the South Korean market, which consists of some 25,000 stores nationwide.

Despite being a latecomer, With Me believes it can open up to 1,000 stories this year, up from the current 137. “We expect to break even in the next three to four years when the number of outlets exceeds the 2,500 mark,” said Cho Doo-il, the chief executive of With Me, at a press conference yesterday.

With Me plans to secure a competitive edge by maximizing the benefits for the franchisees to offer them a motivation to ramp up sales, Cho said, according to the Korea Herald. The company has decided against charging owners of its With Me stores franchise fees ― an unprecedented decision when other operators collect fees accounting for up to 35% of sales. Instead, With Me operators pay a fixed membership fee each month, meaning they make 20-50% more profit compared to those operating rival chain stores, according to Shinsegae’s calculations.

In addition to the no-royalty fee policy, the company also will allow store owners to adjust business hours depending on their store traffic.