GS Retail, Collaboration with Danggeun Market: Where Did the 'Synergy' Go?

Carrot Market Collaboration Service 'Magam Discount Sale' Ends

The synergy from the collaboration between the local community application Danggeun Market and GS Retail has fizzled out.

A customer purchased a product offered by GS25 through the 'Closing Discount Sale' service on Danggeun Market and is picking up the product at a GS25 store.
[Photo by GS Retail]

According to the distribution industry on the 28th, the ‘Closeout Discount Sale’ service provided by Danggeun Market was confirmed to have ended at the end of May. The Closeout Discount Sale was a service that sold products nearing their expiration date at a discount in about 17,000 stores operated by GS Retail, including convenience stores ‘GS25’ and supermarkets ‘GS The Fresh.’ Through the Danggeun Market app, users could receive information on products available at nearby stores (GS25, GS The Fresh) and purchase items at up to 60% off. This was a joint project first introduced through a memorandum of understanding (MOU) between GS Retail and Danggeun Market in February 2021. At the time, GS Retail anticipated that it would significantly contribute to reducing waste products and increasing profits for GS25 and GS The Fresh franchise stores.

However, the service failed to create a significant impact among consumers and did not achieve the expected results, ending after about two years. Danggeun Market stated, "The collaboration period ended in the first quarter of this year, leading to the discontinuation of the service," and added, "There have been no discussions about resuming the service or adding other services."

Previously, GS Retail had been strengthening its relationship to expand partnership services with Danggeun Market. The company believed that integrating Danggeun Market’s neighborhood-based infrastructure with distribution could contribute to its growth. In fact, after the MOU, in August of the same year, when Danggeun Market raised 180 billion KRW in Series D funding, GS Retail participated as a strategic investor (SI) by forming Leverant Partners, Shinhan Capital, and Leverant-Shinhan Vista New Technology Investment Association. The total fund contribution was 20.8 billion KRW, of which GS Retail paid 18.3 billion KRW, accounting for an 86.54% stake.

With the discontinuation of the Closeout Discount Sale service, there are currently no partnership services between GS Retail and Danggeun Market. This marks another setback to GS Retail’s ambition to become a platform leader through strategic collaboration with Danggeun Market. GS Retail had planned to transform into an integrated shopping platform through aggressive investments in recent years but has faced bitter failures. The company invested 50.8 billion KRW (19.53% stake) in Mesh Korea, which operates ‘Booroong,’ and 32.5 billion KRW (30% stake) in ‘Pet Friends,’ a pet specialty mall, but the investment in Mesh Korea was fully written off. Pet Friends has been experiencing prolonged losses. As the platform investments have not yielded significant returns, GS Retail’s business stance has shifted conservatively this year. The company plans to focus on existing businesses to improve profitability rather than making new investments.

A GS Retail representative said, "The cooperation between the two companies is not completely severed, and we expect to provide partnership services again through future discussions," adding, "Rather than additional investments, we will consider ways to create synergy within the current relationship."