"This Is the Must-Visit Spot for Foreigners in Korea—Not Olive Young or Daiso... How Foreign Tourists Are Changing the Profit Formula [Weekend Money]"

Convenience Stores Shift Focus to Quality Over Quantity
Rising Sales to Foreigners Drive High-Margin Product Gains
Beverages and Snacks, Not Cigarettes, Hold the Key to Margin Improvement

There is one place that has become a must-visit destination for foreign tourists traveling in Korea: not Gyeongbokgung Palace, Seongsu-dong cafes, or even Olive Young, but convenience stores. Visitors buy banana milk to make lattes and combine Buldak Bokkeummyun (spicy chicken noodles) in their own ways. While neighborhood convenience stores are an everyday fixture for Koreans, for foreigners they have become a “value-for-money K-food experience hub.”

On September 12, Daishin Securities maintained its overweight rating on the convenience store sector in its retail industry report. The key reason is not just top-line growth, but the shift in sales composition. Between 2024 and 2025, the domestic convenience store industry underwent a major store rationalization process for the first time in 15 years, resulting in a decrease in the total number of stores. Moving away from the previous era of indiscriminate store expansion, the industry is now reorganizing around high-quality and profitable locations, closing down low-profit outlets.

Yonhap News

The effects of this shift began to appear in the second half of last year. The convenience store market grew from a 2.2% increase in the first quarter of this year to a 4.5% increase in the second quarter. While a domestic consumption recovery played a role, increased use of convenience stores by foreign visitors also contributed to the rebound in sales.

During the same period, sales from foreign customers rose by more than 60% compared to the same period last year, and their proportion of total sales also climbed by 0.8–1 percentage points. By region, Busan’s foreign sales growth rate reached 97.6%, and double-digit growth rates were also recorded in Jeju, Incheon, and Seoul.

The significance of this trend lies in which products foreigners tend to buy. Cigarettes have the largest share of overall convenience store sales at around 36%, but offer low margins. In contrast, foreign tourists are more likely to purchase beverages, snacks, treats, and daily necessities rather than cigarettes. As the share of low-margin cigarettes falls and high-margin general merchandise rises, gross profit margins improve.

In the second quarter of this year, convenience stores recorded a gross profit margin in the 19% range. Given that the third quarter will be the peak season, there is a strong likelihood that sales of high-margin products will continue to expand. The combined operating profit growth rate of the two major convenience store operators, BGF Retail and GS Retail, was 49% in the first quarter and 22% in the second quarter.

Of course, it is not as if convenience stores have suddenly become solely reliant on tourism to drive the sector. Rather, the key is that a new customer base has been added atop a conveniently restructured network of stores. Analysts point out that even if the proportion of foreign sales rises modestly, say, from 3% to 4–5%, it could make a meaningful difference in margins.

Daishin Securities recommended both BGF Retail and GS Retail as preferred stocks. Jung Hyun Yoo, a researcher at Daishin Securities, explained, “With the structural improvement of the convenience store business, BGF Retail, as a pure-play convenience store operator, may see stronger profit and loss improvement than GS Retail.”

This content was produced with the assistance of AI translation services.