Korean convenience store chains are branching out to Southeast Asia, getting into markets where the industry is just taking off.
Emart24 opened its first Malaysian store in Kuala Lumpur on June 24. It is the company’s first overseas store.
“To enter the Malaysian market, we signed a master franchise deal with investment firm United Frontier Holdings (UFH),” said a spokesperson for Emart24.
Emart24 will offer its products, services and business know-how while receiving royalties from UFH. The chain plans to operate 10 stores in Malaysia by end of 2021 and 300 within five years. The company is also interested in other Southeast Asian and Indochinese markets such as Indonesia and Vietnam.
Korean companies are looking for opportunities abroad because the local convenience store market is saturated. There are over 45,000 convenience stores in Korea, with CU operating some 14,900 and GS25 14,600.
“The convenience store market has just recently started to develop in developing nations, and countries in Central Asia and Southeast Asia are some key emerging markets,” said a spokesperson for Emart24.
CU and GS25 were ahead of the game, with their first overseas branches opening three to four years ago. GS25 chose Vietnam for its first overseas store, opening one in Ho Chi Minh City in January 2018. The company now has 110 stores in the country. CU entered Iran in 2017 but pulled out in 2018. CU then entered Mongolia in 2018, opening its first store in Ulaanbaatar. The convenience store chain now successfully runs 120 stores in the country. Malaysia was CU’s third destination. It opened its first store in Kuala Lumpur in April, two months before Emart24.
Although CU has the most stores in Mongolia, GS25 wants to catch up. GS25 opened its first three stores in Ulaanbaatar in May and is planning to operate 11 by the end of June. In the long term, it aims to have 300 stores there by 2025.
According to CU, Japanese and U.S. convenience stores used to be key players in Southeast Asia, but the popularity of Korean products are giving Korean chains an advantage. When CU opened its first store in Kuala Lumpur, people formed long lines to get in.
In Malaysia, its top 10 bestselling products were not local foods, but products made by Korean-based companies such as samgak gimbap, a triangular gimbap, instant noodles and chips.
“Young locals [in Southeast Asia] show a strong preference for Korean products,” said a spokesperson for CU. “There are a lot of Southeast Asian companies that want to sign master franchise deals with Korean convenience store companies.”