The golden age of convenience stores is over. Here's what's tanking their sales.

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The golden age of convenience stores is over. Here's what's tanking their sales.

Published: 12 May. 2025, 17:09 Updated: 13 May. 2025, 18:30

Audio report: written by reporters, read by AI

A customer looks through food products at a convenience store in Seoul on May 8. [NEWS1]

If you think you've been seeing fewer convenience stores in Korea, you're probably right.

The once-booming Korean convenience store industry is showing signs of fatigue. For the first time since 2013, both the number of stores and their overall sales have declined, marking a turning point for a sector that had been steadily expanding even as department stores and large retailers struggled against the rise of e-commerce.

Convenience store sales in the first quarter of 2024 fell 0.4 percent from the previous year — the first drop since the ministry began tracking the sector, according to data from the Ministry of Trade, Industry and Energy.

The number of stores also declined for the first time. As of the end of 2023, the combined number of outlets operated by the four major players — CU, GS25, 7-Eleven and Emart24 — stood at 55,194, down slightly from a peak of 55,202 the previous year, according to the Korea Association of Convenience Store Industry.

Earnings are also slumping. Operating profit at CU operator BGF Retail and GS25 fell 30.7 percent and 34.6 percent in the first quarter from the same period of 2024, respectively, while 7-Eleven, which is scheduled to report earnings on May 15, is also expected to remain in the red.

Convenience stores are pictured on a street in Seoul on May 8. [NEWS1]

The bubble finally pops

Analysts say the industry’s expansion strategy — driven by rapid store growth — has finally reached saturation.

Korea, with 55,194 convenience stores, has nearly as many as Japan’s 55,736 despite having half its population. That translates to one store per 937 people in Korea compared with one per 2,153 in Japan.

“There’s practically a convenience store on every corner now,” one insider said. “It’s become difficult to find new areas to open.”

E-commerce’s expansion into the food sector is also eating into sales. Convenience stores have traditionally relied on food products for more than half their revenue. In February 2024, food sales at convenience stores rose 10.7 percent year over year, but by February of this year, they had dropped 5.4 percent compared to the year prior.

Online food sales, on the other hand, rose by an average of 21 percent over the past year, following a 36.2 percent spike in February 2023.

Coupang delivery trucks are parked in Seoul on May 7. [YONHAP]

"People used to grab snacks or drinks from convenience stores late at night, but now they just order online, before bed, and have it delivered by morning," an industry official said on condition of anonymity.

The trend has shifted consumer behavior — people who once bought triangle gimbap (seaweed rice rolls) or sandwiches for breakfast are increasingly opting for overnight e-commerce delivery instead.

The deadly cutthroat competition

Price competition has further eroded margins.

As the economic slowdown persists and consumers become more price-conscious, convenience stores have ramped up promotional offers like "buy one, get one free" and ultralow-priced items such as 880 won (63 cents) ramen and 990 won fish cakes.

While these tactics helped maintain modest sales growth of 2 percent to 3 percent in the first quarter of 2025 for CU and GS25 — they came at the expense of profitability, driving convenience stores to sell more but lose more at the same time.

“Without clear differentiators like IT-powered marketing strategies or ready-to-eat meals that emphasize offline strengths, convenience store chains risk falling behind," said an official at the convenience store association.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY CHOI HYUN-JU [[email protected]]