[Convenience Store Empire] '1+1' Is Basic... Private Brands Wage Ultra-Low Price War with Large Mart

⑮Near-Range Grocery Shopping Platform 'Anchored'

CU Sells 15 Million Units of Deuktem Series
GS25 Introduces Real Price General Merchandise
Increased Sensitivity to 1+1 Bonus Gift Promotions

Amid the ongoing high inflation, convenience stores are engaging in a "ultra-low price war" by offering products that are even 10 won cheaper. Their strategy is to secure price competitiveness against large supermarkets through private brands (PB) and buy-one-get-one (BOGO) promotions, aiming to solidify demand for convenience store shopping.

A customer is purchasing a product at GS25.
Photo by GS Retail.

Expansion of Ultra-Low Price PB Brands

According to CU on the 15th, the ultra-low price PB "Deuktem Series" currently operates about 20 product types, with cumulative sales surpassing 15 million units. The sales growth rate of the Deuktem Series compared to the previous year was 8.4 times in 2022 and 7.7 times from January to April 2023. Representative products include Ramyeon Teuktem, Rice Deuktem (6-pack), Egg Deuktem (15-pack), Kimchi Deuktem (1.9kg), Milk Deuktem (1.8L), and Roll Tissue Deuktem (24 rolls).

GS25 introduced GS The Fresh's ultra-low price win-win PB "Real Price" general merchandise. Real Price actively discovers small and medium-sized enterprises with excellent product quality but difficulties in market access and sells their products at about 70% to 80% of the price of regular products. Currently, six types are sold, including Real Kitchen Towel (4 rolls), Real Sanitary Gloves (100 pieces), Real Sanitary Pack (200 pieces), Real Roll Bag (200 pieces), Real Natural Pulp (24 rolls), and Real Beauty Tissue (3 packs).

Seven Eleven launched the ultra-low price product brand "Goodmin." They sell about 20 products such as Goodmin White Milk (900ml), Goodmin Safe Bean Sprouts, Goodmin Safe Eggs (15 pieces), Goodmin One-Meal Tofu, and Goodmin Wet Tissues (70 sheets). Seven Eleven has established a system to stably supply high-quality products at low prices through pre-contracts on raw materials and production with competitive partners.

Emart24 sells about 50 products through its cost-effective line "I'm e." Packaged ramyeon is priced at 550 won, and cup ramyeon at 800 won, which is more than 40% cheaper than regular brand ramyeon. As a result, the I'm e line products have recorded an average annual sales growth rate of 40%. Each company is actively applying the low-price strategy mainly used by large supermarkets, breaking the stereotype that convenience stores are expensive.

Sales Proportion of 1+1 Products Soars

Convenience store BOGO promotions are the most preferred products among thrifty consumers. According to CU, the sales proportion of 1+1 promotion products increased from 17.2% in 2020 to 29% in January-February 2023, while the proportion of 2+1 promotion products decreased from 67.1% to 61.4%. Among 1+1 promotions, beverage products saw the highest sales increase, jumping from 8.3% to 17.8%. This reflects consumers' heightened sensitivity to giveaways amid rising prices and their desire to minimize spending.

Convenience stores are expanding the number of items eligible for giveaway promotions. CU has increased the number of giveaway promotion products by more than 50% compared to three years ago. GS25 raised the number of 1+1 promotion items from about 300 in January to over 400 currently. Major products this month include tomatoes, sweet potatoes, Andong salted mackerel, dried pollack, and seasoned seaweed flakes. Seven Eleven offers discounts such as 1+1 and 2+1 on about 1,663 products throughout this month, and Emart24 provides similar discounts on about 2,000 products. Considering that the average number of products operated per store is about 3,000, more than half of the products are subject to discount benefits.

An industry insider said, "As consumer burdens increase due to high inflation, we are striving to offer essential daily necessities and fresh foods at the most reasonable prices possible." They added, "By expanding the range of products from small to large sizes, we aim to become the closest shopping platform to customers."