The BGF Retail Co., the operator of South Korea’s major convenience store chain CU, announced it will open its first CU outlet in Vietnam next year.
The company signed a master-franchise agreement on September 24 with CUVN, a Vietnam-based convenience store operator backed by local Vietnamese companies including retailer SNB, according to The Investor.
BGF Retail, as franchiser, will share its brand and business know-how in convenience store operations with its Vietnamese partner, which is responsible for investment and operations.
A master franchise contract is preferred because it can reduce the risk and investment costs for the franchiser in a new market while guaranteeing a steady loyalty income. BGF Retail also entered Mongolia last year under a master franchise deal with a local company.
BGF Retail and CUVN plan to open their first store in Vietnam by June next year.
The South Korean convenience store operator expects its experience in successfully launching South Korean-style convenience stores in Mongolia to help it gain a strong foothold in the Southeast Asian market, which has high growth potential.
The company pins high hopes on the Vietnamese market, whose economy has been expanding 6.8 per cent on average over recent years. People under 30 years old make up about half of Vietnam’s near 100 million population.
Park Jae-koo, CEO of BGF Retail, said the company will continue to expand internationally making forays into growing emerging markets. In its domestic operations, it will focus on improving overall business health.
According to The Investor, this deal confirms BGF Retail’s expansion plans overseas while minimizing the burden of substantial investment while earning royalty fees. It signed a master franchise contract with Central Express in 2017, which is the retailing arm of Mongolian conglomerate the Premium Group. BGF Retail now operates more than 50 CU outlets in Mongolia.
With the new expansion, the South Korean convenience store operator expects to gain a strong position in the Southeast Asian market as Vietnam’s economy has witnessed significant growth during recent years.
Rival network GS25 has already launched in Vietnam, opening stores in Ho Chi Minh City.
