7-Eleven is the only convenience store among the 'top 3' this year to improve revenue compared to the previous year, accelerating its shift to profitability. Despite continuing to incur losses for the third consecutive year due to the acquisition of Ministop in 2022, 7-Eleven is gradually reducing its losses through the restructuring of inefficient stores and enhancing synergies among its group and brands.
According to the related industry on the 5th, Korea Seven, the operator of 7-Eleven, recorded sales of 1.1363 trillion won and an operating loss of 34 billion won in the first quarter of this year. Compared to the first quarter of last year, sales decreased by 10.9%, but the loss was also reduced by 7.1%.
Among the three convenience store operators in Korea in the first quarter of this year, only Korea Seven improved its profitability. During this period, BGF Retail, which operates CU, recorded an operating profit of 22.6 billion won, a decrease of 30.7% compared to the same period last year. GS Retail, which operates GS25, also saw its convenience store sector operating profit drop to 17.2 billion won, down 34.6% from the same period last year.
In April 2022, Korea Seven acquired 100% of the shares of Korean Ministop from Japan's Aeon Group for 313.4 billion won. Along with this, it secured approximately 2,600 Ministop stores distributed nationwide, rising to the third position in the domestic industry. Typically, in the convenience store industry, having more stores enables the realization of economies of scale in logistics, marketing, and product procurement.
However, the integration process post-acquisition incurred more expenditures than expected, increasing the burden. The remodeling costs associated with converting Ministop stores to 7-Eleven, along with the increased expenses for employee salaries, significantly raised the burden of selling and administrative expenses. The oversaturation of the domestic convenience store market due to aggressive expansions by competitors also contributed to the decline in performance.
In response, Korea Seven has recently been pushing for a rigorous 'elimination of excess' initiative. It has boldly restructured low-profit, inefficient stores, reducing the number of nationwide stores from 14,265 in 2022 to 13,130 in 2023, and further to 12,152 in 2024. In February of this year, it sold its ATM (automatic teller machine) business, classified as a non-core business, for around 60 billion won.
In addition, it is actively utilizing its unique position as a subsidiary of Lotte Group and a global brand. For instance, since April, 7-Eleven has launched 17 types of packaged products of various vegetables, fruits, and meats that are in high demand among single-person and two-person households in collaboration with Lotte Mart and Lotte Super. They handle products that are directly selected and packaged at the Lotte Fresh Quality Innovation Center, and procurement takes advantage of the logistics network of Lotte Group, resulting in a price reduction of about 5-10% compared to existing fresh food.
7-Eleven is also collaborating with Lotte Mart to jointly develop products under its private brand (PB) '7-SELECT.' It is also introducing products exclusively for the Lotte Giants baseball team, such as 'Lotte Bread', in partnership with Lotte Wellfood, its food manufacturing subsidiary.
7-Eleven is also actively leveraging the brand power of the global convenience store chain. Known worldwide, 7-Eleven operates about 85,000 stores in over 20 countries and has a history approaching 100 years.
Since October 2023, Korea Seven has been implementing a differentiated product operation strategy through the global 7-Eleven network and has imported about 190 types of global products over the past year. The cumulative total sales volume during this period surpassed 10 million units. In the second half of this year, there are plans to install exclusive machines nationwide that sell 'original instant smoothies,' which are popular in Japanese 7-Eleven stores.
A representative from Korea Seven noted, "Until last year, we concentrated on securing the stability of our business and building a foundation to enhance brand competitiveness from a mid- to long-term perspective, and this year, we will continue to reduce our loss while striving for profitability."