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| People drink beverages on the terrace of a CU convenience store in Ulaanbaatar in this 2018 file photo. Courtesy of BGF Retail |
By Kim Jae-heun
Local retail giant BGF Retail is seeking to build its CU convenience store chain into a global brand starting in Asia.
The confidence comes from the success of its convenience store business in Mongolia. BGF Retail entered the market there in 2018 and expanded its presence quickly by opening more than 100 stores. CU is currently the No.1 convenience store brand in Mongolia.
The achievement contrasts with American convenience store chain Circle K that only managed to open 20 stores in Mongolia after entering the market at the same time as CU.
Around 1,000 people visit CU stores in Mongolia on average every day, which is 3.2 times more than the visitor traffic at its stores in Korea.
CU's success can be attributed to its master franchise contract with a local firm called Central Express. Under a master franchise contract, the master franchisor hands over control of franchising activities in a specified region to a person or entity.
BGF Retail sent a taskforce to Mongolia consisting of experts in item merchandising and logistics to aid the launch of the business. It shared its know-how in operating convenience stores with its local partner.
Another local convenience store brand, GS25, is also preparing to enter the Mongolian market in the first half of this year. It will sign a master franchise contract with ShunKhlai Group, the second-largest player there.
Mongolia is seen as a land of opportunity for retail firms here as the franchise business has yet to develop in the Northeast Asian country. Although the country has a population of just 3.3 million, 70 percent are less than 40 years old and Mongolia has achieved 5 percent to 6 percent economic growth in the past three years. Recently, a number of restaurant and retail franchises have entered the Mongolian market and competition has been intensifying.
BGF Retail figured out there aren't many coffee shops in Mongolia either. The firm took advantage of that and set up tables in front of CU convenience stores for people to enjoy beverages. The move has boosted sales of CU's "GET COFFEE" brand.
"Over 200 cups of caffeinated beverages are sold per convenience store in Mongolia. CU is even referred to as Starbucks there," a BGF Retail official said.
Riding on the growing popularity of its convenience store brand, BGF Retail will open its first CU store in Malaysia in the first half of this year. The retail firm hopes to open 50 stores this year and expand the number to 500 over the next five years.
