South Korean C-stores Work Together

The retailers have agreed “not to engage in cut-throat competition.”

December 05, 2018

SEOUL – The top South Korean convenience store chains have decided to take a gentler approach to competition, saying they will “carefully” consider new store openings near rival stores, Inside Retail Asia reports. The move comes as competition between convenience store operators has heated up in recent years.

The voluntary arrangement of CU, 7-Eleven, GS25 and three other chains says that c-stores should be 54 yards away from a rival brand, and chains shouldn’t open stores within 820 feet of each other. South Korea has been trying to protect franchisees among the family-controlled conglomerates that have been governing the marketplace for years.

“The voluntary regulation, if implemented in good faith, could help ease saturation and improve management conditions of franchisees of convenience stores,” said Kim Sang-jo, chairman of the Fair Trade Commission (FTC). The agreement came on the heels of South Korean President Moon Jae-asking the FTC to broker a deal to address the increase in c-stores.

In 2017, the number of South Korean convenience stores skyrocketed to more than 40,000, a huge upswing. The deal is structured to keep retailers from opening new stores in saturated markets.

“This highlights how businesses of different cultures in different countries compete and cooperate at the same time,” Michael Davis, NACS vice president of member services, told NACS Daily. “One might call it ‘collusion’ in other countries,” he said. “However, in South Korea, as well as other Asian countries, the dominant family-controlled conglomerates (chaebols) makes it very difficult for independent business ownership to be respected and maintained.”

For more insights into the Asian retail environment, attend the NACS Convenience Summit Asia, taking place March 5-7, 2019, in Shanghai, China.