GS25, one of South Korea's two largest convenience store chains, saw its store count decline for the first time in its history as CEO Heo Seo-hong's "substance-focused management" strategy at GS Retail (007070.KS) shifts into full gear. The chain is pivoting away from aggressive store expansion toward improving profitability at individual locations.
According to GS Retail's annual business report released Thursday, GS25 operated 18,005 stores at the end of last year, down 107 from 18,112 a year earlier. It marks the first-ever decline in the chain's store count. GS25 had been adding more than 1,000 stores per year through 2022 and 2023, but growth momentum slowed in 2024 before turning negative.
The shift is attributed to Heo's emphasis on operational efficiency since taking the helm last year. Instead of expanding the store network, GS25 has adopted a "scrap and build" strategy — renovating or closing stores whose performance has stagnated for more than a year and reopening in competitive, high-traffic commercial districts. Despite the reduction in stores, GS25's total sales grew approximately 6%.
The results of the efficiency drive emerged quickly. Average per-store sales growth year-on-year stood at just 0.9% in the first quarter and 0.1% in the second quarter of 2025, shortly after Heo's appointment. The figure then accelerated to 4.4% in the third quarter and 3.6% in the fourth quarter, showing a clear improvement trend.
GS25 is also investing in boosting individual store competitiveness. The chain has expanded small-portion fresh food products targeting single-person households and increased the number of Fresh & Convenience Stores (FCS) in residential areas to capture nearby grocery shopping demand. It also operates a range of specialty formats including sports-themed stores, retail-tech outlets, and Cafe25-focused locations. The moves are seen as an extension of Heo's pledge at the shareholders' meeting on March 19 that "all decisions and actions will be anchored in the customer experience," aiming to enhance the value and experience customers can tangibly feel.
Behind GS25's fundamental strategic shift lie growth limits and profitability pressures facing the broader convenience store industry, analysts say. According to the Ministry of Trade, Industry and Energy, the total number of major convenience stores nationwide fell by 1,586 year-on-year to 53,266 at the end of last year — the first-ever decline in total store count since convenience stores were introduced in South Korea.
"The era when opening one more store automatically translated into market expansion is over," an industry official said. "Especially with the market entering a mature phase starting last year, qualitative factors such as strengthening product competitiveness and growing existing stores through fresh food-focused formats are becoming increasingly important."
Meanwhile, rival BGF Retail's CU has maintained its expansion trajectory even amid these market conditions, reinforcing its specialization strategy. CU operated 18,711 stores at the end of 2025, up 253 from 18,458 a year earlier.
According to industry sources, CU is targeting a net increase of approximately 300 stores this year, focusing on prime locations. The company aims to simultaneously drive top-line growth and operational efficiency by restructuring its store network around high-profitability outlets.