'K Convenience Store' Plants Flag in Hawaii..CU, First Entry into the U.S.

[Financial News] Convenience store CU has chosen the world's largest distribution market, the United States, as its fourth entry country following Mongolia, Malaysia, and Kazakhstan. This is the first time a domestic convenience store is entering the U.S. market, the origin of convenience stores.
The convenience store industry, which has been growing alone as a 'winner in recession' in the distribution industry, is now facing growth limits due to sluggish domestic demand and market saturation. It is analyzed that they are seeking breakthroughs in active overseas expansion amid the wave of K-culture.  
BGF Retail, which operates convenience store CU, announced on the 27th that it has established 'BGF Retail Hawaii Corporation' and signed a master franchise contract (MFC) with 'CU Hawaii LLC', a newly established convenience store specialist corporation of local Hawaiian company 'WKF Inc.'. A master franchise is a structure where the headquarters transfers the business rights of a certain area to a local business operator, who then recruits and operates individual franchise stores.
CU plans to open its first store in Hawaii in October this year and expand stores to various commercial areas. Hawaii is a representative American resort visited by 10 million tourists annually. CU chose the U.S. as its fourth entry country because Hawaii is a beloved tourist destination in Korea, and the high percentage of Asians in the Hawaiian population makes them familiar with and fond of Korean culture. A CU official explained, "The recent popularity of Korean culture, such as the Korean food boom among teenagers and the 2030 generation in the U.S., is also considered helpful for business expansion." CU plans to discover so-called 'K-Food Killer Items' and introduce various K-foods such as ready-to-eat meals and instant cooking, along with localized menus. They will also launch products collaborated with local famous chefs, such as Hawaii's representative menus, poke and loco moco.
The convenience store industry's active overseas expansion is because domestic growth has hit a limit. According to the Ministry of Trade, Industry and Energy, convenience store sales in the first quarter of this year decreased by 0.4% compared to the same period last year. This is the first time since the second quarter of 2013, when related statistics began to be compiled, that quarterly convenience store sales have decreased. The domestic convenience store market has reached saturation, and it is increasingly losing ground in price competition with warehouse discount stores that emphasize large volume and ultra-low prices, and in convenience with e-commerce.
In this situation, overseas expansion of the convenience store industry has become a necessity rather than a choice. GS25 has entered Vietnam and Mongolia, continuing explosive growth. As of the first quarter of this year, the number of stores in operation is 355 in Vietnam and 274 in Mongolia. Overseas sales, which were in the 3 billion won range when it first entered Vietnam in 2018, grew to 204 billion won last year. In the first quarter of this year alone, it achieved nearly 50 billion won in sales.
Emart24 will add two more stores to the four stores it operates in Cambodia this month. It aims to open its 100th store within five years. In Malaysia, where it operates 88 stores, it plans to increase the number of stores to 130 by the end of this year. CU also aims to open 500 stores in Mongolia by the end of this year, and in Malaysia and Kazakhstan by 2028 and 2029, respectively.
An industry official said, "The domestic convenience store market has already reached its growth limit, and it is difficult to recover domestic demand due to rising prices and shrinking consumption," adding, "Meanwhile, interest in Korean culture, including K-food, is increasing overseas, so the Korean convenience store model can have sufficient competitiveness."
clean@fnnews.com Lee Jeong-hwa Reporter