CU maintains No. 1 position but faces challenges
[THE INVESTOR] Along with the rise in single- and double-person households, there has been an increasing demand for home meal replacements and other convenient facilities here.
In light of this trend, the convenience store industry has enjoyed substantial increases in profits, with the combined sales of convenience stores here surpassing 20 trillion won ($17.6 billion) and the number of convenience stores reaching 30,000 nationwide last year.
Hong Suk-jo, the “king of the convenience store,” was able to make a fortune owing to this.
Hong is a prosecutor-turned-businessman. His posts at the prosecutors’ office until 2006 included the chief of the planning division at the Supreme Prosecutor’s office, director of the Prosecution Bureau at the Ministry of Justice and chief prosecutor at the Gwangju High Public Prosecutor’s Office.
He has a strong network among his family. His father, Hong Jin-ki, is the father-in-law of Samsung Chairman Lee Kun-hee, who is married to his sister Hong Ra-hee, the former director of Leeum Samsung Museum of Art. The senior Hong was the chairman of Joongang Ilbo. His older brother Hong Seok-hyun recently stepped down from the chairman post of JoongAng Media Network to become more involved in politics.
Among Hong Suk-jo’s younger siblings are Bokwang Investment Chairman Hong Seok-joon, Bokwang Group CEO Hong Seok-kyu, and Leeum Senior Deputy Director Hong Ra-young.
Hong Suk-jo has become stock rich thanks to the listing of BGFretail on the stock market on May 2014. The 34.82 percent of shares that he owned were worth 350 billion won before the listing. Although the amount of his shares shrunk slightly to 31.81 percent as of March 31, his stock assets are worth much more at around 1.7 trillion won as of April 2017, according to the Superrich Team’s “Korea’s Richest 100.” Hong also owns 2.06 percent of shares of Phoenix Material, a subsidiary of Bokwang Group, as well as unlisted stocks of Bokwang Venture Capital, Bokwang and Joongang Ilbo.
Hong became the chairman of BGFretail (former Bokwang Family Mart), CU’s operation company, in 2007. He developed CU into the No. 1 domestic convenience store chain and changed its name from “Family Mart” in 2012 to break away from its Japanese origins.
However, CU has been facing some difficulties, as its major rival, GS25, has been aggressively catching up. The difference in the number of stores nationwide was only 70, with 11,092 CU stores and 11,023 GS25 stores at the end of February. As GS25 stores are increasing at a faster pace this year, there is a chance that a reversal may take place in the market.
Another challenge came recently when the CU headquarters was blasted for failing to quickly handle an incident in which a part-time worker was killed by a drunk customer last December. CU released its “Crime Prevention and Accident Management Method” only last month, three months after the incident took place. The company plans to discuss the issue with franchisers to provide information on safety regulations and inspect the 112 hotline report system during the first half of the year.
BGFretail President Park Jae-koo also made an official apology on April 4.
By Lee Se-jin, Yim Ji-min/The Superrich Team (firstname.lastname@example.org)