CU opens first overseas store in Iran

The Korea Times

The Korea Times

Business

Tue, September 26, 2023 | 07:14

Companies

CU opens first overseas store in Iran

Posted : 2017-11-21 16:10

Updated : 2017-11-22 21:56

People pass by a CU convenience store in Tehran, Iran. BGF Retail, which operates Korea's largest convenience store chain, opened its first overseas store in the Middle Eastern nation to find a new source of income abroad. / Courtesy of BGF Retail

By Lee Hyo-sik

BGF Retail, which operates the country's largest convenience store chain CU, has opened its first overseas store in Iran, embarking on its global expansion campaign.

CU became Korea's first convenience store chain to set up an outlet abroad. In August, its rival GS25 said it would open a store in Vietnam, but has yet to do so.

BGF Retail plans to open more stores in the Middle Eastern nation and make inroads into nearby countries to find new sources of income as Korea's convenience store market has reached the saturation point.

The opening came four months after the retailer signed a master franchise agreement with Iranian retailer Entekhab Investment Development Group.

Under the contract, BGF allows its Iranian partner to use its brand and control franchise activities in Iran. In return, it receives a certain percentage of revenue from Entekhab Investment Development.

"Iran is the most populous nation in the Middle East with 80 million people. In Tehran alone, the population is more than 15 million," a BGF official said.

"Given its strategic location, it will be easier for us to expand into nearby countries if we set up a strong presence in Iran. We will first open more stores in Iran with our business partner."

The official said the concept of a convenience store is still new to Iranian consumers, adding it will soon become a mainstream retail channel as it offers a pleasant shopping environment and a wide range of items. The store is open from 6 a.m. to midnight.

"The 250-square-meter store sells a wide array of daily necessities. In particular, it focuses on providing a variety of precooked food items because it cannot sell beer and other alcoholic beverages in Iran," he said. "Currently, the convenience store offers goods produced in Iran or imported from nearby countries. But we will bring in made-in-Korea products in the near future as most Iranian consumers hold a highly favorable view of Korea."

The official then said BGF Retail will accelerate its global expansion, adding it has been talking to retailers in Southeast Asia on forming a partnership.

In 2016, the company earned 4.9 trillion won ($4.45 billion) in sales, up from 3.3 trillion won in 2014. It operates nearly 11,000 stores in Korea.

In August, rival GS25 said it would set up a joint venture with Vietnam's SonKim Group to bring the convenience chain to the Southeast Asian nation.

Both CU and GS25 have long had their eyes set on making inroads into emerging markets as it has become more difficult to expand business at home, due to intensifying competition, tightening regulations and rising labor costs.

leehs@ktimes.com