South Korean convenience store operators have agreed not to engage in cut-throat competition in the latest move to better protect struggling franchisees.
A key centerpiece of the voluntary deal calls for CU, GS25 and 7-Eleven and three other convenience store brands to decide “carefully” over whether to open a new convenience store near an area where a rival convenience store is already located.
The deal said that convenience stores of rival brands should be at least 50 metres away from each other. Currently, convenience stores of the same brand should be located at least 250 metres away from each other to make sure that they do not compete against each other.
The latest move came as South Korea has been struggling to protect franchisees in a country where chaebol, or family-controlled conglomerates, have dominated the economy for decades.
“The voluntary regulation, if implemented in good faith, could help ease saturation and improve management conditions of franchisees of convenience stores,” Kim Sang-jo, chairman of the Fair Trade Commission, said in a signing ceremony of the voluntary deal in Seoul today.
Last week, President Moon Jae-in instructed the antitrust chief to support a voluntary deal among South Korean convenience store operators so as to address the saturation of the market.
Convenience stores have sprung up in commercial areas in Seoul and other major cities in recent years, driven by growth of single-member households.
Last year, the number of convenience stores surpassed 40,000, a dramatic increase from 1989 when the first convenience store opened in eastern Seoul.
Kim said the voluntary deal could prevent convenience store operators from recklessly opening new outlets in areas where there are already many convenience stores.
- Original reporting by Yonhap, via Korea Bizwire.