It’s past midnight and visions of chips, ice cream and soda dance in your head. You shuffle to the kitchen for a late-night snack but discover that therefrigerator is empty and the cabinets are bare. So how exactly do you ease your grumbling tummy?
If you’re like many Seoulites, you head to one of the ubiquitous 24-hourconvenience stores found on virtually every street in the city. In many cases, such trips involve a stop at Bokwang FamilyMart, which ranks as the nation’s leading convenience store group and sells an array of simple consumer staples ranging from bread, milk and ramyeon (noodles) to pens and stationery. The retail group was founded in 1989 when the convenience store industrywas relatively new in the country - unlike today’s super-competitive environment, where numerous heavyweights are battling it out for market share. Bokwang FamilyMart, which was the Bokwang family’s leading retail company before it was spun off, has managed to grow into a force sincethen. It now controls 35.8 percent of the market, followed by GS25, 7-Eleven - which recently acquired Buy the Way - and Ministop.
Last year, it generated 2.5 trillion won ($2.2 billion) in sales, a 16.5 percent increase compared with the previous year. It now has 4,700 branches across Korea, including ones at the Kaesong Industrial Complex and Mount Kumgang in North Korea. Fueled by sales growth, the company has been expanding its business portfolio beyond the retail sector and now holds around 12 different businesses. In January, it acquired GateBank, a company focusing on banking automation equipment, and renamed it Family Bank. This summer, FamilyMart has plans to officially announce its future vision as a group based on distribution and fresh food. Though the independent corporate body of Bokwang FamilyMart was established in the 1990s, its roots date back to the late 1980s, when Hong Jin-ki (1917-1986) - the co-founder and former chief executive and chairman of the JoongAng Ilbo - founded the Bokwang Company.
While Korea was undergoing rapid industrialization and evolving into a world power, Hong Jin-ki started his own manufacturing business focused on producing components for Braun television tubes before expanding into the retail sector by operating vending machines. He then further diversified the business into the production of artificial diamond gemstones in 1989 - the same year the company started its convenience store business as part of its retail unit. As part of those efforts, the first branch of Bokwang FamilyMart opened in Garak-dong in southern Seoul in 1990.
Over the years, Bokwang further expanded into other sectors. As part of itsdistribution business, it operated Bokwang FamilyMart and Phoenix Vending Service, the nation’s largest vending service firm, and as part of its finance business, it managed Bokwang Investment Corporation.Its business stretched further to leisure sector, as it established the Bokwang Phoenix Park, which is a condominium and golf resort in Pyeongchang, Gangwon. As part of its cultural business, the Bokwang group as a whole operated the Korea Culture Promotion, which prints out gift certificates that can be used to watch films or musicals, among other events.
As the company grew into a group, it spun off into three separate entities led by the sons of the founder. Hong Seok-joh, the second-eldest son of the founder and the younger brother of JoongAng Ilbo chairman Hong Seokhyun, is currently heading Bokwang FamilyMart.Hong Seok-joon, the third son of the founder, is the chair of BokwangInvestment Corporation, while Hong Seok-kyu - the fourth son - is in charge of Bokwang Corporation, which manages Bokwang Phoenix Park and Phoenix Communications, an advertisement consulting firm. Bokwang FamilyMart separated into a group in 1994 and has since been focusing on enhancing its competitiveness by differentiating its product sales and services and opening more branches. Its aim is to operate a total of 5,000 branches and reach 3 trillion won in sales by the end of the year. In the long term, it aims to open 500 new branches annually and hit 8,000 locations by 2015.
The competition, however, is expected to be fierce as other chains in the industry such as GS25, 7-Eleven and Ministop aim to expand their market share by opening new branches. Last year, total sales volume in the industry reached 7.2 trillion won, which was an 11 percent increase from 2008. In 2010, total sales are predicted to exceed 8.2 trillion won.
“Local convenience stores including FamilyMart are expected to compete for sales based on differentiation as the industry itself is currently saturated,” said Yum Min-seon, senior researcher at the Korea Chamber of Commerce and Industry’s retail commission.
To ensure growth amid the competition, Bokwang FamilyMart has been implementing new services and marketing techniques and differentiating itsproduct lines to include ice coffee, wine and bakery items among other goods, based on consumers need and trends. It’s also been setting up portable convenience stores in locations where goods are hard to find, such as parks and expressway rest areas.
Behind the drive to diversify is Bokwang FamilyMart Chairman and CEO Hong Seok-joh. After studying law at Seoul National University, he passed the judicial examination in 1976. Before being named Bokwang FamilyMart chairman in 2007, he served as head of the Gwangju Supreme Prosecutors’ Office. Baek Jeong-gy, president of Bokwang FamilyMart, is the company’s economy expert. Baek worked for Amorepacific Corporation’s business management and human resources department before joining Bokwang FamilyMart in 2008. Baek is currently the chair of the Korea Association of Convenience Stores.Park Jae-koo, executive managing director of the development division, is also among those helping the chairman in diversifying the retail group’s businesses based on new growth engines.
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