Korea’s Shinsegae to bolster convenience store business

South Korea’s retail giant Shinsegae Group is set to boost its business in the rapidly growing convenience store sector as its supermarket chain unit loses steam amid intensifying competition from e-commerce.

“The convenience store segment is the most promising sector in the local retail industry,” said Shinsegae Vice Chairman Chung Yong-jin on Wednesday at a product fair for its convenience store unit E-Mart24 Inc.

E-Mart24 reported its first profit ever last year thanks to explosive growth in the local convenience store sector given customers' increasing preference to shop at stores near their homes.

Total sales of the country’s convenience stores topped those of hypermarkets in 2021 for the first time. Last year, convenience store sales made up 16.2% of the domestic retail market, exceeding 14.5% of those of hypermarkets.

Chung expressed concerns over its supermarket unit E-Mart Inc., the country’s largest hypermarket chain, however.

“It will not be easy,” Chung said when asked if it is possible to improve the unit’s earnings. “We will do our utmost, but various factors such as external conditions are not sufficient to boost earnings. The profitability of most retail sectors is deteriorating.”

TO FOCUS ON CUSTOMERS

E-Mart’s operating profit more than halved to 145.1 billion won ($109.9 million) on a consolidated basis last year although sales rose 17.7% to 29.3 trillion won.

Chung said the company must focus on customers and products to improve earnings.

“The core of the retail business is customers, while goods and services are elements that consumers and retail companies can discuss,” he emphasized.

He also visited a Starbucks store launched last month around a national park in Seoul. E-Mart is the top shareholder in Starbucks Korea with a 67.5% stake after buying an additional 17.5% stake in the US coffee chain’s South Korean unit in 2021.

Starbucks Korea has opened branches in venues such as an old theater and a traditional Korean house, places other coffee chains are not interested in, to attract more customers.

“Shinsegae Group is not a company that just sells products but a company that occupies the time and space of customers,” he said, stressing that continued innovations are necessary to adapt to customers' needs. 

Write to Jong-Kwan Park at pjk@hankyung.com
 
Jongwoo Cheon edited this article.