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Next K-wave in Asia: Convenience stores

Malaysian company asks South Korean operator to open branch; Mongolia firm provides special flight to seal the deal

By Oct 05, 2021 (Gmt+09:00)

South Korean drama Backstreet Rookie raised awareness of GS25 convenience stores in Southeast Asia
South Korean drama Backstreet Rookie raised awareness of GS25 convenience stores in Southeast Asia

When South Korean major convenience store chain CU opened its first branch in Malaysia on April 1, there was a queue of more than 100 meters to get in. Customers flocked to the store and its outdoor tables located at the popular Centerpoint mall in Kuala Lumpur despite about 1,300 daily cases of COVID-19 at the time. The store attracted some 11,000 customers in the first 10 days of opening, about 1,000 people a day, selling some 2,500 containers of Tteokbokki, a popular South Korean street food.

South Korean convenience store chains are rushing to overseas markets despite the COVID-19 pandemic. BGF Retail’s CU and E-Mart 24 entered Malaysia this year, while GS Retail launched stores in Mongolia. Those countries are attractive with huge growth potential given the large population of young people, and the timing seemed right for market entry given the popularity of K-content such as South Korean dramas.
CU's first store in Malaysia
CU's first store in Malaysia

MONGOLIA’S TOP CONVENIENCE STORE CU

BFG Retail started its overseas business in Mongolia. The company dispatched a task force of merchandisers and logistics personnel to the country in 2018. It introduced South Korean street food such as toasts and hotdogs that suited Mongolians’ tastes after being testing by local employees.

BFG Retail is the country’s top convenience store chain with 140 branches, seven times as many outlets as No. 2 Circle K that operates around 20 stores there. In July, BFG Retail opened two exclusive stores in the Chinggis Khaan Airport, the nation’s only international airport. It has even beat its Japanese rivals, which were supported by the Japanese government’s investment.

GS Retail provided its know-how of convenience store operation to domestic staff in other countries. When the company entered Vietnam in 2018, it brought new domestic personnel for marketing, merchandising, sales and information technology (IT) to South Korea for training from 2017 to 2020 before the spread of COVID-19. The retailer made Vietnamese textbooks and experts in every sector taught those local staff through one-on-one classes. It also gave them chances to work at GS25 stores in South Korea for learning how to deal with customers.

“GS25 stores in the country can provide the same products and services only when they accurately learn how the headquarters operates,” said a GS25 source.
A South Korean GS25 employee trains a Vietnamese employee
A South Korean GS25 employee trains a Vietnamese employee

RECREATING STORE APPEARANCE SEEN ON KOREAN TV DRAMA

The recent popularity of K-content has led Asian countries to seek cooperation with South Korean convenience store chain operators.

CU entered the Malaysian market in April through a master franchise deal with the number two player in the country, myNEWS Holdings Bhd., which operates more than 600 myNEWS.com convenience stores. The Malaysian company sent staff to Seoul for talks last year despite the COVID-19. Their most important prerequisite was to implement in their stores the appearance of CU in Korea seen on TV. So, many signs and product names in the Malaysian stores are in Korean.

GS Retail was provided with a special flight in August last year when it signed a deal with Mongolia’s Shunkhlai Group to enter the market. Shunkhlai officials asked the Mongolian government to arrange a flight to bring GS Retail officials to the country. It was the first flight in six months since the route was suspended due to the COVID-19.

BACKSTREET ROOKIE

While other South Korean retailers such as department stores and hypermarkets have made inroads into other Asian countries such as China, it was still rare for convenience store chains to succeed in overseas markets until recently.

But the convenience store industry is trying to expand business in other nations, helped by famous South Korean drama series. For example, the popularity of Backstreet Rookie has raised GS25’s awareness in Southeast Asia as the drama features an owner and a part-time worker at a convenience store chain of GS Retail, which has led the craze for collecting GS25’s uniforms.

The industry expects the stories to flourish in other countries as convenience stores sell necessary products to all people regardless of their nationality or race. In other Asian markets it is also easier to get local approval for convenience stores than for department stores or hypermarkets given the smaller size of convenience outlets.

Write to Yoo-Chung Roh at yjroh@hankyung.com

Jongwoo Cheon edited this article.

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