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South Korea’s FTC (Fair Trade Commission) approved a set of voluntary rules agreed by convenience store operators to better protect struggling franchisees.

Minimum distance between stores

Five members of the Korea Association of Convenience Store Industry, CU, GS25, 7-ELEVEN, MINISTOP, C-SPACE and Emart24, came up with a voluntary agreement to curb excessive competition.

A key centerpieceof the agreement is that stores of rival brands should be at least 50 metres away from each other. This is the first time the convenience stores have set the minimum distance since 2000.

Move to ease market saturation

FTC’s approval will see the voluntary agreement to be applied to to 96% (38,000) of convenience stores nationwide.

The number of convenience stores has risen sharply to at least 40,000 last year, driven by an increase of single-member and two-people households.

Kim Sang-jo, chairman of the FTC, said the regulations could ease saturation and prevent reckless new openings in areas where there are already many existing stores.

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Quarterly revenue improved by 1% from previous year.

Positive expectations for remainder of 2018

7-Eleven Malaysia reported third quarter earnings of MYR568.5m, driven by its increased store network, a higher average spend from shoppers and targeted promotion activities. The improvement in sales revenues also boosted net profits by 4.1% to MYR16.8m.

Moving into the end of the year, the retailer foresees a sustained momentum and expects trading as well as gross margins to improve further. This will be achieved through a focussed execution of key strategies.  

It is targeting to boost sales of private label products by increasing the range and assortment. The other focus for 7-Eleven is developing its fresh food category as well as rationalising its existing product portfolio to maintain a profitable product mix.

Colin Harvey, CEO 7-Eleven Malaysia said, “We expect to see further improvements in the next quarter by pursuing our core strategy pillars of operations excellence, cost management and commercial innovation. I look forward to the challenges ahead in ensuring that 7-Eleven Malaysia remains the customers first choice convenience store.”

 

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We’ve identified the top five trends shaping the Asian retail market and influencing retailer strategy in 2019 and beyond. Nick Miles, our head of Asia-Pacific, discusses each one and reveals what it means for suppliers in the region.

The top five trends

  1. Ultimate convenience
  2. Partnerships shaping the future of online
  3. Health and freshness at the heart
  4. Social shopping
  5. Technology transformation

1. Ultimate convenience

Changing lifestyles mean shoppers across Asia are becoming increasingly demanding. Shopping little and often is a growing trend and consumers expect to be able to source products anywhere, anytime and anyhow they like.

ReRetailers are adapting their operations in response. Convenience store chains continue to rapidly expand their networks and stores are using space in new ways. Retailers are developing smaller, more unique stores, and online delivery times are being cut.

Nick said: “Convenience is not purely about speed. Retailers that are able to meet different shopper demands through their stores, ranges, services and the experience they offer will win. These experiences will need to be fast, relevant and seamless. So, suppliers will need to ensure they also have the necessary flexibility in their businesses.”

2. Partnerships shaping the future of online

Over the past few years, major partnerships have helped share expertise and accelerate online growth across Asia. These partnerships come in many forms as retailers, suppliers and technology businesses increasingly look to blur the boundary between offline and online. In 2019, we expect to see more partnerships emerge, existing ones develop further and the influence of Asia’s largest online players to spread across the region.

Nick said: “Asia’s online landscape is incredibly fluid and competitive. Collaboration between partners will help online expand both within individual markets and across borders, faster than previously thought. Suppliers should ensure they stay on top of the latest online partnerships.”

3. Health and freshness at the heart

Asian shoppers are increasingly aware of the importance of healthy living, fresh food, nutrition and product sourcing. That’s thanks to factors like growing levels of affluence, improved education, targeted government campaigns and historical food safety scares. Retailers are responding by highlighting healthy ranges and freshness using innovative concepts, layouts and technologies.

Nick said: “Fresh food, foodservice options and health and wellness ranges will feature more prominently in-store in the future as retailers respond to changing shopping habits. Suppliers should be aware that competition for space in-store will intensify.”

4. Social shopping

Social commerce is rapidly growing in importance across Asia. Brand communication via social media platforms is commonplace, influencing shopper behaviour and giving smartphone users easy ways to shop online. Innovations will continue to emerge in 2019, as retailers and suppliers deliver targeted marketing and new ways to make online shopping more social.

Nick said: “Shopping via social media platforms is a key route to market in the region. Retailers and suppliers must therefore truly understand the landscape and have a clear social media strategy to engage shoppers and stay relevant.”

5. Technology transformation

Asian consumers are exceptionally open to new technology. In 2019 we will be keeping a close eye on digital and technological innovations in Asia. We’ll look particularly at those helping retailers to differentiate their offer and raise service levels. Those that help them develop stores set up for an online future and deliver more efficient operations in the face of rising costs.

Nick said: “Technology is revolutionising the food and grocery industry in Asia. This could have big implications for how shoppers interact with brands in store in the future. However, it’s not only about a focus on customers – it’s also about reducing costs and improving efficiency. Suppliers need to understand which technologies are set to have the biggest impact on their category.”

See these trends in action and gain access to free Asia insights.

7-Eleven is trialling an unmanned locker service called Seven Locker in Seoul, South Korea.

Profit-generating initiative

The service is part of company’s initiatives to diversify operations and generate more profits for its convenience stores.

The lockers will be set up near tourist attractions and entertainment areas where there is demand for such services among locals and visitors. Depending on the size of the space, storage fees will range from KRW2,000 (US$1.8) to KRW4,000 for a four-hour period.

The plan going forward

The trial starts with two stores in Seoul’s Hongdae and Jongno districts, with another eight to open by end of 2018. Further 100 lockers are planned to be placed at 7-Eleven stores across the country in the first half of 2019. The service is to be extended to all key stores.

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