Korean convenience stores, arguably a slump-free business in times of weak local demand, are increasingly teaming up with services firms to attract more customers and to differentiate their business models, industry officials said.
The latest move came from Korea’s biggest convenience store franchise GS Retail, which joined hands with budget telco service firm Annex Telecom to sell a low-cost USIM card.
The two firms launched the USIM card, which offers 50 minutes of free phone calls or 100 megabytes of data service for one month for an initial payment of 5,500 won ($4.65) on the 3G network or 8,800 won on LTE, on Nov. 22.
The first 5,000 USIMs flew off the shelves, as they did not require a compulsory two-year contract. In response to such popularity, the telecom extended the contract-free USIM promotions at GS25 until Nov. 30.
A GS Retail official said the company also saw rising demand for budget phones at convenience stores.
“Driven by stronger demand for data use, we are seeing new opportunities in budget phones that can be sold at convenient stores,” said Jeon Kwang-ho, GS Retail’s head of service products at convenience stores.
A smaller competitor, BGF Retail’s convenience store CU, teamed up with social commerce firm Ticket Monster to allow customers to pick up deliveries purchased on the mobile shopping app TMon.
After signing a memorandum of understanding in January, the two companies launched the service in September after testing it from March.
The pickup service assures the safety of deliveries in case recipients are not at home.
Ticket Monster spokesman Edgar Choi said, “The number of TMon users who picked up their deliveries (from convenience stores) increased 27 percent in November from the October test figure,” declining to offer specific figures.
With Me, owned and operated by retail giant Shinsegae, provides cash withdrawal services from cashiers in partnership with KEB Hana Bank. Customers buying products at With Me with debit cards and credit cards linked with a bank account can withdraw cash of up to 100,000 won per day.
The cash service targets those who need urgent cash when ATMs are hard to find nearby, a bank official said.
Analysts had positive views on convenience stores’ attempts to offer new services.
“The new services do not directly increase revenues but people to come into the store and buy something more. The trends are positive for growth of the convenience store sector,” said Aiden Lee, an analyst at Mirae Asset Daewoo. According to his analysis, the convenience store sector’s revenue grew 15.5 percent in October, while that of large discount stores only inched up 0.9 percent.
“Although consumer sentiment turned very gloomy recently, it will mainly affect luxurious goods and barely hit convenience store business,” he said.
Nam Seong-hyeon, an analyst at Hanwha Investment & Securities, said new services at convenience stores would help them build their own business models and create new added value.
“In the retail market, convenience store sector’s proportion will increase up to 5-10 percent in the long term,” Nam said.
By Kim Yoon-mi (email@example.com