[Convenience Store Empire] Korea Resembling Japan... Promoting PB Products to Digital Transformation

③ Strengthening PB Products and Digital Transformation... Now as Regional Service Hubs

In Japan's High Inflation Era, Strengthening PB Products Ensures Profitability
Currently Promoting Digital Transformation Including AI Logistics System Development
Beyond Simple Technology Development, Functioning as Service Hubs for 'Care Services'
Experts: "Industry Should Specialize in Services, Government Should Ease Regulations"

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[Asia Economy Reporter Jeon Jin-young] Recently, in line with the era of high inflation, domestic convenience stores are focusing on ultra-low-priced private brand (PB) products that are even 10 won cheaper. CU launched Heyroo Deuktem, GS25 has Silsok Pick, 7-Eleven offers Goodmin, and Emart24 runs I'm e, expanding their 'cost-effectiveness' lines. This resembles the appearance of Japanese convenience stores in the early 1990s. PB products appeal to consumers through price by bypassing intermediate distribution processes, reducing logistics and marketing costs. When Japan fell into a long-term recession due to the 'real estate bubble,' the convenience store industry lowered prices and increased profitability through PB products, continuing growth.

◆Japanese Convenience Stores Promote Digital Transformation... Developing AI Logistics Systems

According to the Korea Trade-Investment Promotion Agency (KOTRA), Japanese convenience stores, which grew through PB products, are currently promoting digital transformation based on artificial intelligence (AI) and cloud computing.

Japan's 7-Eleven developed a logistics system utilizing AI. It appropriately allocates vehicles and drivers and optimizes delivery routes. The AI logistics system is designed to optimally allocate effective resources by properly assigning vehicles and drivers, optimizing delivery routes, and enabling joint delivery of products from various suppliers. FamilyMart introduced unmanned payment stores. In these stores, customers pick up desired products and stand in front of a touch panel for payment. Since shopping is fast and convenient without long queues, customer responses are positive, and the industry benefits from reduced labor costs, leading to cost savings. Lawson is also focusing on smartization by piloting fully unmanned stores.

Besides AI, Japanese convenience stores function as regional hubs offering various services. They have launched nursing care services in preparation for an aging society. Since 2015, Lawson has operated 'nursing care convenience stores.' These stores have elderly care managers on-site providing massages and widened aisles to accommodate wheelchairs. They began offering customized services focusing on areas with a high elderly population.

◆Korean Convenience Stores Transform into All-Purpose Hubs... "Regulatory Relaxation Needed"

Experts foresee future convenience stores functioning as all-purpose hubs handling government offices and civil affairs. Professor Eunhee Lee of Inha University’s Department of Consumer Science said, "Convenience stores are the smallest commercial zones located throughout neighborhoods, so they quickly understand and reflect what nearby consumers need," adding, "They will gradually expand services with many companies and government offices." Professor Siwol Kim of Konkuk University’s Department of Consumer Science also advised, "Customized services for commercial zones are necessary through expanding life services such as postal, banking, and finance," and "Convenience stores should change the perception that they are expensive and lack products by developing PB products that attract customers."

Voices are also calling for regulatory relaxation for the future evolution of Korean convenience stores. Professor Yonggu Seo of Sookmyung Women's University’s Department of Business Administration emphasized, "With about 50,000 stores, Korean convenience stores are practically saturated. It is time to pursue qualitative growth rather than quantitative growth," and "Regulatory relaxation is needed to leverage the advantage of 24-hour operation and provide services closely linked to daily life, such as increasing sales of emergency medicines." Professor Kyungja Kim of Catholic University’s Department of Consumer and Housing Studies also raised her voice, saying, "The more diverse the choices for consumers, the better," and "Although conflicts of interest may arise, if regulatory relaxation leads to more options at convenience stores, it would be welcomed from the consumer’s perspective."