CU marks first entry of S.Korean convenience store into Kazakhstan

South Korean convenience store heavyweight, CU, has announced its first foray into Central Asia, beginning with Kazakhstan. The retailer's goal is to establish over 500 stores in the region within the next five years, according to a Tuesday announcement by BGF Retail, the operator of CU.

The strategic expansion is being spearheaded through a master franchise agreement between BGF Retail and Kazakhstan's Shin-Line, a leading player in the local ice cream market with a substantial 40% market share. The agreement gives Shin-Line the right to operate under the CU brand, set up stores, and manage operations in Kazakhstan.

Shin-Line's broad distribution network throughout Central Asia, particularly its comprehensive cold chain infrastructure, promises to be a boon for the convenience store chain's operations, enabling effective handling of temperature-sensitive goods.

CU's entrance into the Kazakhstani market signals a groundbreaking move by a global convenience store operator. The move was fueled by mutual understanding and ambition shared by BGF Retail and Shin-Line.

Shin-Line's CEO, Shin Andrey, a third-generation Korean, brings a profound understanding of Korean culture to the table, having visited Korea several times to familiarize himself with CU's operational system.

CU's groundwork for entry into Kazakhstan started last year with a thorough market survey of the local distribution landscape. This led to discussions with Shin-Line and the signing of a memorandum of understanding (MOU) in November, followed by specific business plans and a feasibility study conducted in the first half of this year. The contract with CU Central Asia was the final step.

BGF Retail sees significant potential in the Kazakhstani market, noting the country's purchasing power, population distribution, and a post-COVID-19 surge in local shopping demand. The existing underdeveloped small-scale retail environment compared to large-scale hypermarkets further strengthens the case for CU's market entry.

Additionally, the popularity of K-culture in the region is expected to enable CU to quickly establish a foothold.

CU's first store in Kazakhstan is set to open in the first half of next year, supporting the ambitious goal of reaching 500 stores in five years.

BGF Retail also plans to consider expanding into neighboring countries, underscoring its vision to establish a strong presence of global convenience store brands in the Central Asian region.

Write to Kyeong-je Han at hankyung@hankyung.com