CU eyes new niche in form of gas station outlets

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CU eyes new niche in form of gas station outlets

BGF Retail, which operates the nation’s largest convenience store franchise CU, formerly Family Mart, said yesterday it will establish stores at gas stations to focus on a new niche amid a saturated market.

The retailer said it has signed a contract with a recently renovated SK gas station in Heukseok-dong, southwestern Seoul, to open the first CU store attached to a gas station.

It is scheduled to open on Aug. 1. The move comes amid heavy competition among retailers and a recent government regulation that restricts the establishment of new stores within a 500-meter (1,640-foot) radius of the same brand.

There are currently 24,000 convenience stores run by retailers in Korea.

Additionally, an increasing number of self-service gas stations have been attracting retailers.

As drivers are forced to leave their cars to work the pumps, expectations are high that they will also make more purchases from any affiliated store. The number of self-service stations reached 775 in May, up 334 from one year earlier.

BGF Retail is even set to introduce drive-thru stores under the same CU brand at gas stations for customers’ added convenience, according to an employee at BGF Retail.

He said the stores will offer a greater variety of goods than their gas-station rivals Joy Mart, run by GS Nextation, an affiliate of GS Group, and OK Mart, which is operated by SK Networks.

The company is still discussing whether its first CU store exclusively for motorists will be operated by the company or by a franchisee.

Neither GS25 nor 7-Eleven have any plans to operate retail stores at gas stations, they said.

Industry experts say the store wil likely appeal to drivers who spend much of their time on the road, including taxi drivers and delivery truck drivers.

The biggest challenge, however, will be raking in profits as convenience stores attached to gas stations tend to be less visited by customers than those located in neighborhoods.

BGF Retail announced last month that it would change its brand name from Family Mart, which it has used for 20 years, to CU.

The retailer has over 7,200 convenience stores across the country. It earned 2.6 trillion won last year in sales and recorded 93 billion won in operating profit. It also has a store in North Korea.

By Kim Jung-yoon [kjy@joongang.co.kr]

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