CU is expected to be open in Malaysia in early 2021, with around 30 to 50 stores targeted for the 1st year
MYNEWS Holdings Bhd has entered into a licence agreement with BGF Retail Co Ltd, South Korea’s biggest convenience store operator and owner of the popular convenience store brand CU, to operate and sub-franchise CU outlets in Malaysia.
The country’s largest homegrown retail convenience store chain operator said its unit MYCU Retail Sdn Bhd (formerly known as Eemerge Inc Sdn Bhd) executed the licensing agreement. The deal will last for 10 years, with an option to renew for another 10 years.
MyNews founder and group CEO Dang Tai Luk (picture) said CU is expected to be open in Malaysia in early 2021. CU is one of the leading convenience store brands in South Korea with more than 15,000 stores in the republic.
“Obviously, we would like to start with urban cities where there are heavy footfalls. Klang Valley is where we would start our CU journey,” he told reporters at the signing ceremony of the agreement in Damansara yesterday.
Dang said MyNews has allocated a capital expenditure of between RM30 million and RM40 million in the first two years, and is targeting to open 500 CU stores in five years, with around 30 to 50 CU stores and the first one in the country early next year.
“Our existing retail brands are MyNews, WH Smith and MyNews Supervalue. With CU, we offer Malaysians a new choice and shopping experience from South Korea, which is in line with our core business and passion in retail convenience.
“The addition of CU will open up new growth opportunities and enhance our capability to meet consumers’ demand.
“It will also increase the utilisation of our large-scale food processing centre as CU is a popular destination for its fresh food offerings,” he said.
In terms of earnings contribution, Dang said the licensing is not expected to have a significant impact on the financial performance of MyNews for the current financial year ending Oct 31, 2020. Still, the business is expected to contribute positively to MyNews in the medium to long term.
“Bear in mind, adding a brand that falls under our expansion plan will not affect our margin, but improve our revenue because we foresee something new, from South Korea that everybody would love, especially the younger generation.
“The concept will position us to perform even better in the market. Likewise, CU has its range of in-house brands which will position us to maintain the margin, if not better. The products are exclusive, as they are only available at CU stores,” he said, dismissing concerns of oversaturation in the convenience store market.
“The convenience market in Malaysia is very young. You have seen MyNews and our competitors around for many years, but we have not truly tapped and fully grown the market segment.
“The penetration rate remains low, and the product offerings in stores are also not well-recentred or uniformed, so we continue to modernise and improve. There will come a time when the market will be saturated, but not yet.
“Additionally, with society becoming more affluent, the demand and need for convenience stores will increase. We don’t think it is saturated. Likewise, the statistics and data also show that it is not compared to other countries,” he said.
MyNews, which currently operates 570 MyNews stores, saw its shares end lower by 11.2%, or 7.5 sen, at 65 sen yesterday after it resumed trading in the afternoon session.
Source: The Malaysian Reserve
Full Article: https://themalaysianreserve.com/2020/10/13/mynews-to-operate-s-koreas-cu-stores-in-malaysia/