South Korean Retailers Use New Services to Reel in Customers

Convenience stores there have expanded their services to include things like sending and receiving packages.

August 04, 2010

SEOUL - South Korean convenience store are evolving into multi-purpose locations that provide a myriad of services beyond products, Yonhap News reports. The retailers are trying to stave off an increasingly aggressive competitive retail environment by offering additional services, such as sending and receiving packages, online banking via ATMs and disposable DVDs.

"Mounting rivalry among retail channels is pushing convenience stores to make changes. They are recreating their business models," said Jung Sang-ik, a researcher at the Korea Chamber of Commerce & Industry (KCCI).

South Korea is a relatively newcomer to the convenience store market, with its first seven stores debuting in 1989. Since then, an additional 15,112 locations have opened their doors nationwide, according to the Korea Association of Convenience Stores (KACS).

With the number of single-person households on the rise, the demand for smaller goods and groceries has also blossomed. "Selling ready-to-eat food also helped differentiate convenience stores from other retail channels. They generate 7 percent to 8 percent of total sales from this sector," said Lee Deok-wu with KACS.

To stay ahead of the competition, convenience stores are becoming creative. For example, Bokwang FamilyMart Co. has an agreement with Seoul to install charging stations for electric vehicles in 10 of its locations. GS25 added disposable DVDs that stop working after 48 hours. The chain also sells imported luxury cars and yachts.

Korea Seven Co., which operates 7-Eleven stores, added official document printing capabilities to its stores. "The service is popular among businessmen since they find it difficult to visit government offices during the daytime on weekdays. We provide a 24-hour service at the same rate government offices charge," said Cho Yun-jeong with Korea Seven.

Convenience stores appear to be doing well with these innovations. In June, convenience stores grew more than department stores in sales, jumping 15.4 percent on-year, according to Statistics Korea. This year, sales are predicted to reach 8.23 trillion won for the fourth consecutive year of double-digit growth.

Advertisement
Advertisement
Advertisement