GS Retail is completely withdrawing from its supermarket business in Indonesia as it reorganizes its Southeast Asia business strategy. Last year, it halted its home shopping business and this year is exiting the supermarket business, fully pulling out of the Indonesian retail market.
GS Retail plans to focus its investments in Vietnam this year, implementing an aggressive convenience store expansion strategy. The goal is to add over 100 new locations, aiming to reach 500 local stores by the end of the year.
On the 12th, according to foreign media and industry sources, GS Retail sold its six supermarket stores in Indonesia to the local retail company MAP Group. These stores have been operating under the new name "Daily Supermarket" since early this month. A GS Retail official noted, "The sale process has mostly been completed."
Previously, GS Retail established a local corporation to enter the Indonesian market in 2014 and opened its first GS THE FRESH store in Bogor, a high-end residential complex near the capital Jakarta, in October 2016. At that time, GS Retail planned to increase its supermarket stores to 20 by this year, capitalizing on the demand for Korean products driven by the Korean Wave and advanced marketing strategies.
However, the Indonesian supermarket corporation faced a continuous decline in performance, putting it in a difficult position to continue operations. Last year, the corporation reported revenues of 18.5 billion won and a net loss of 11.5 billion won. Compared to the previous year, revenues decreased by 8.7%, and the loss expanded by 163%. Over the past five years, revenues have hovered around 20 billion won, but cumulative losses reached 25.8 billion won.
Last year, GS Retail also withdrew from its home shopping business in Indonesia. The company had established a joint venture with the Indonesian media group GMC in July 2012, during the pre-merger GS Home Shopping period, and began home shopping operations. However, as the global influence of TV channels diminished, the business environment worsened, leading to continuing losses, and the company halted its related operations early last year.
GS Retail, withdrawing from the Indonesian retail business, plans to concentrate on investments in Vietnam, implementing an aggressive expansion strategy. GS Retail entered Vietnam in 2018 and currently operates over 350 convenience stores, including company-owned and franchise locations.
GS25 has been focusing its store expansion in the southern region, including Ho Chi Minh City, Vietnam's largest city, and Binh Duong and Dong Nai. As a result, it has overtaken Circle K to become the number one convenience store brand in southern Vietnam as of 2023.
Having succeeded in the south, GS Retail plans to target the northern region starting this year. In March, GS25 simultaneously opened six stores in Hanoi, the capital of Vietnam, featuring large convenience stores ranging from 115㎡ (35 pyeong) to 540㎡ (164 pyeong) to differentiate from local competitors. GS Retail plans to open more than 100 additional stores by the end of the year, aiming to reach 500 stores within Vietnam.
In the process of expanding its distribution network, it also expects improvements in profitability due to economies of scale. Last year, GS Retail's Vietnam subsidiary recorded revenues of 110.4 billion won and an operating loss of 6.9 billion won. A GS Retail official stated, "GS25 has established a dominant position in the Vietnamese market. We aim to increase the business scale and turn the local subsidiary profitable."
GS Retail is conducting strong profitability improvement activities at the corporate level while continuing to invest in promising businesses. Oh Jin-seok, head of the platform business unit at GS Retail, said at a shareholders' meeting in March this year, "Bold investments must be made in necessary areas for sustainable growth and strengthening core competitiveness."