South Korea’s Convenience Stores Expand Private Label Strategy to Boost Profitability
South Korea’s leading convenience store chains are ramping up their private-label (PL) offerings to strengthen margins amid rising costs and intensifying competition. Major players such as CU, GS25, and 7-Eleven are expanding their proprietary product lines to attract cost-conscious consumers while enhancing profitability.
Private Labels Drive Higher Margins
Convenience store operators are increasingly promoting PL products as a strategic move to differentiate themselves from competitors and secure better profit margins than traditional name-brand items. Industry sources indicate that the profit margin for PL products can be up to 5 percentage points higher than that of branded goods. This margin advantage incentivizes retailers to invest in developing exclusive offerings that appeal to budget-conscious shoppers.
GS25, operated by GS Retail, has seen success with its YOU US private-label brand, which spans snacks, beverages, and household essentials. In response to growing demand, the company has expanded its PL product portfolio, including collaborations with well-known food manufacturers. Similarly, CU, run by BGF Retail, has introduced its own proprietary product lines, focusing on affordability and unique offerings designed to compete directly with national brands.
Consumer Demand for Value and Differentiation
Price-conscious consumers seeking quality alternatives to national brands have contributed to the growing popularity of PL products. With inflation affecting household budgets, South Korean shoppers are increasingly opting for private-label items that provide comparable quality at lower prices. This trend is further fueled by shifting consumer perceptions, as younger demographics are more open to purchasing store-brand goods without associating them with lower quality.
Retailers are also focusing on developing exclusive and premium PL products that go beyond traditional budget-friendly items. CU and 7-Eleven, operated by Korea Seven, have introduced innovative products exclusive to their stores, leveraging unique flavors and packaging to appeal to a broad customer base.
Strategic Partnerships and Future Growth
Collaboration with local and international manufacturers plays a crucial role in enhancing the appeal of PL goods. Many convenience stores partner with well-established brands to create co-branded or limited-edition private-label items, offering consumers familiar tastes at competitive prices.
Analysts expect South Korea’s convenience store chains to continue expanding their private