More South Korean c-stores are set to launch in-house products as local retailers move to attract more consumers with price competitiveness.
E-Mart24, the convenience-store arm of South Korean retail giant Shinsegae, said it is planning to unveil its own private-label product within this year. Ministop Korea, operator of Ministop, is set to launch its own branded products in September.
The moves are part of the companies’ broader efforts to find a breakthrough in the saturated South Korean c-store landscape. The size of South Korean convenience stores private-label product market is estimated at around 3.5 trillion won (US$3.15 billion).
CU, South Korea’s largest convenience-store chain, operated by BGF Retail, released its own brand, Heyroo, in 2015, and GS25, another major convenience-store chain, joined the move with You Us in 2016.
BGF Retail said sales of its private-label products rose 35.3 per cent year-on-year in 2016. Last year’s revenue was up 19.1 per cent from 2016.
GS Retail, operator of GS25, said sales of its private-brand items accounted for 36.6 per cent of its total revenue in the first half of this year, excluding revenue generated from cigarettes and services. The company has around 2000 products under private label.
Another major convenience store chain, 7-Eleven, said sales of its in-house products accounted for 35.9 per cent of this year’s total revenue as of Sunday. It currently has some 1500 products under its private brand.
“The companies will be able to survive in this saturated market only if they manage to secure consumers who are highly loyal to their private label products,” an industry source said.
The market size for convenience stores in South Korea surpassed 20 trillion won in 2016, up 18.6 per cent from the previous year, according to industry data.
- Original reporting by Yonhap, via Korea Bizwire.