E-Mart 24 store in Incheon / Korea Times file
By Kim Jae-heun
E-Mart 24, a convenience store brand of the country’s largest retailer E-Mart, has joined the bid to acquire No. 4 convenience store chain Ministop, an industry source said Sunday.
E-Mart 24 is the only convenience store operator that joined the tender along with local private equity funds Anchor Equity Partners Korea and Unison Capital.
Analysts said the acquisition will offer E-Mart 24 a chance to catch up with rival 7-Eleven, the third-largest convenience store brand in the country which runs 10,501 shops. E-Mart 24 operates 5,169 branch stores and Minstop runs 2,603 stores.
Running a convenience store business is all about economies of scale ― meaning the number of stores matters the most in creating profit. As a result, acquiring Ministop is the most effective and fastest way for E-Mart 24 to bring up its performance in the market.
The domestic convenience store market is already saturated and the government regulates firms from opening new stores within a 100-meter radius from one another.
7-Eleven rose as another strong candidate to join the bid for Ministop, but the American convenience store chain did not make the move. It would have been a good chance for 7-Eleven to increase its store numbers to compete against No. 1 and No. 2 firms CU and GS25, while staying ahead of E-Mart 24.
However, 7-Eleven apparently believes that taking over Ministop will not help generate more profit. Also, even if E-Mart 24 takes over all of Ministop’s stores, 7-Eleven still has 2,000 more stores. However, market insiders said there is still a chance that 7-Eleven may join the bid later.
“Recently, E-Mart 24 has shown it has competency against 7-Eleven in practical performance. In the long term, if E-Mart runs a similar number of stores as 7-Eleven, it could deal a blow to the No. 3 player,” an industry source said.Internet Explorer Channel Network