Mar. 24, 2017
FamilyMart once again tries for the convenience store market in Korea
FamilyMart who withdrew from Korea in March 2014 has a plan to re-land in Korea in April or later this year.
The company signed a franchise agreement with Shinko Group (currently BGF Retail) of Samsung business group in 1990 and deployed more than 7,900 "FamilyMart" units across Korea. But in 12 years the store name was changed to "CU with FamilyMart" according to the change of the contract with Shinko and eventually they completely withdrew from Korea.
FamilyMart withdraw by the reason of convenience store regulation explained as "it was not a withdrawal but a part of restructuring overseas business. Korean is a prospective market and there is a possibility of going back again."
Why does they re-enter Korea? It seems that the reason is a strong situation of Korean convenience store coming with "an aging society proceeding at a speed higher than Japan".
In the convenience store market in Korea, the sales of the entire industry which was 10 trillion won (about 980 billion yen) in 2012, doubled to more than 20 trillion won (1.96 trillion yen) in the year of 2016. The best condition of this Korean convenience store is shown in the market capitalization of BGF who operates CU and the largest convenience store in Korea which rose from 1.36 trillion won (about 133 billion yen) at the first day of the listing (May 14, 2002) to 5.12 trillion won (50 billion). The earnings pillar of the Korean convenience store used to be cigarettes and alcoholic beverages but currently the sales of lunch boxes with large gross profit are increasing rapidly due to increasing of aging and living alone.
Also, in Korea where the frequency of using credit cards is the largest in the world, the increase rate of the card payment amount of convenience stores has surpassed department stores and large supermarkets.
Although sales per store is about a quarter of that of Japan, there is still a growth margin so there will be a sufficient winning opportunity.