The South Korean convenience store industry is seeking to push into the global market. This is part of its efforts to secure growth by targeting the overseas market as the domestic industry is facing a saturated market and the government is set to significantly raise the minimum wage next year that can lead to a worse business environment.
According to industry sources on November 21, BGF Retail, which operates the country's largest convenience store chain CU, has opened its first overseas store in Tehran, the capital of Iran, embarking on its global expansion campaign. BGF Retail had been preparing for a foray into the Iranian market after it formed a master franchise partnership with Ideh Entekhab Iranian Chain Stores, a subsidiary of Iran’s largest investment company Entekhab Investment Development Group, in July.
“Iran is a strategic location connecting Asia, the Middle East and Europe,” said Hong Jung-kook, vice president of BGF Retail in charge of CU’s global operation. “It is one of the biggest markets in the Middle East with a population of 80 million. Iran also has excellent public safety and city infrastructure. After making a success in the Iranian market, we will break into the global market in earnest including emerging countries.” Starting with the first store in Sadeghieh, BGF Retail and Entekhab Group will open more stores in main business areas in Tehran.
In addition, GS Retail, which operates GS25, signed a deal with Vietnamese investment firm SonKim Group in July to open a store in Vietnam through a 30-70 joint venture. The two companies will open the first store in Ho Chi Minh City under a master franchise agreement. Under the contract, GS Retail provides the joint venture with the trademark rights and expertise and know-how in convenience store management. In returm, joint venture pays royalties to GS Retail while expanding GS25 in Vietnam.
An official from GS Retail said, “Turning Vietnam into a strategic base, we will make more efforts to break into Southeast Asian markets, like Cambodia, in the future.”