With new store openings increasingly difficult, quick commerce is becoming a new growth engine for convenience stores.
The race for 24-hour delivery is heating up, but expectations for a sudden surge in demand remain limited.
GS25 and CU, the two major players in Korea’s convenience store industry, have joined hands with Coupang Eats to launch late-night delivery services.
[Insight Korea = Lee Suk-yeong]
GS25 and CU, the two major players in Korea’s convenience store industry, have joined hands with Coupang Eats to launch late-night delivery services. From outside the industry, the move may appear to be a simple extension of delivery hours. But the two companies have shown they are serious, issuing major press releases and actively promoting the new service.
The reason convenience store operators are putting so much effort into promotion is that quick commerce is emerging as a new growth driver. With new store openings becoming increasingly difficult, quick commerce is becoming a breakthrough strategy for growth. Convenience store companies are now moving aggressively to capture even a slightly larger share of the market.
A Saturated Convenience Store Market and a Growing Quick Commerce Market
For years, convenience store operators relied on store expansion as a core strategy. But there are now few places left to open new stores. In fact, the number of convenience stores has been declining since last year.
According to the Ministry of Trade, Industry and Energy, the number of convenience stores nationwide stood at 53,266 at the end of last year, down 2.78 percent from a year earlier.
In this saturated market, convenience store operators have turned their attention to quick commerce. Instead of expanding by physically adding stores, they are seeking to expand their commercial areas by increasing the influence of existing stores, or their delivery radius. They also expect online customers to eventually lead to offline store visits.
Convenience store companies had already been investing in quick commerce before this latest late-night delivery push, and related sales have been rising. Last year, GS25’s quick commerce sales increased 64.3 percent from a year earlier, while CU’s quick commerce sales grew 65.4 percent over the same period.
The domestic quick commerce market itself is also expanding. Industry officials expect the Korean quick commerce market to reach 5 trillion won this year. Global market research firm Statista estimated last year’s market size at 4.4 trillion won and projected it would grow to 5.9 trillion won by 2030.
Late-Night Delivery Competition Heats Up, but Demand May Not Explode
The expansion of quick commerce in the convenience store industry is not expected to stop with GS25 and CU.
According to industry sources, 7-Eleven, which currently provides 24-hour delivery services at some stores, is expected to expand its service area next month through a partnership with Coupang Eats.
E-Mart24 is also reportedly reviewing the introduction of late-night delivery services. Competition to establish 24-hour delivery systems appears to be spreading across the industry. Going forward, how each company uses quick commerce is likely to become a key factor in industry competition.
Convenience store operators are paying attention to the rise in late-night delivery demand and are hoping it will help boost sales. GS25 emphasized in a press release that late-night delivery’s share of total delivery sales rose from about 17 percent last November to the 21 percent range in April this year.
Still, expectations that late-night delivery will immediately have an explosive impact on sales should be treated with caution. Even if late-night delivery demand has increased compared with the past, the overall scale remains limited, which may make it difficult to produce meaningful sales growth right away.
“Objectively speaking, demand during the early morning hours is not that large, so it is hard to expect sales to suddenly explode,” one industry official said. “The significance is that customers who used to visit offline convenience stores late at night can now place delivery orders as well, which improves convenience for existing users.”
- This article was translated by ChatGPT. (이 기사는 챗GPT가 번역했습니다.)
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