Why can convenience stores expand against the trend under the background that the proportion of online retail continues to increase

Why convenience stores can expand against the trend

　　Photo by our reporter Wang Wenzheng

　　You can buy vegetables and fruits, you can also buy breakfast, and receive express delivery... Many people find that there are more and more chain convenience stores around them.

In the context of the continuous increase in the proportion of online retail, convenience stores have become one of the fast-growing industries in the field of physical retail.

　　The "2022 China Convenience Store Development Report" (hereinafter referred to as the "Report") jointly released by the China Chain Store & Franchise Association and KPMG shows that the sales of China's convenience store industry have maintained rapid growth of more than 10% for three consecutive years.

In 2021, the sales of convenience stores nationwide will reach 349.2 billion yuan, a year-on-year increase of 17.7%, of which the sales of brand chain convenience stores will reach 305 billion yuan, a year-on-year increase of 12.3%.

Why can the convenience store industry achieve contrarian growth?

What are the advantages of convenience stores compared to other brick-and-mortar retail formats?

　　Stand out from the competition

　　During the interview, many consumers reported to reporters that they went to supermarkets less and went to convenience stores more and more frequently.

　　Since the beginning of 2020, the physical retail industry, especially large supermarkets, has been hit hard by the epidemic.

According to data from the China Chain Store & Franchise Association, in 2021, the overall operating performance of China's top 100 supermarket companies is not very optimistic, and the sales scale is on the decline, of which 62 companies have sales decline.

At the same time, the convenience store industry is "thriving" and has entered a rising period.

From 2019 to 2020, the sales growth rate of the convenience store industry will increase from 13% to 16%, and will further increase to 17.7% in 2021, which is much higher than that of large supermarkets, small supermarkets, department stores and other formats.

　　Not only global chain convenience store brands such as "7-11" are accelerating their deployment in China, but local chain convenience stores are also on the rise.

Sinopec's "Easy Jie" convenience store has become the largest chain convenience store in the country, with about 30,000 stores and over 200 million omni-channel members, becoming an important channel for many brands to "carry goods".

Meiyijia, the largest domestic non-petroleum chain convenience store brand, has moved from Guangdong to the whole country. The number of stores exceeds 29,000, distributed in more than 200 cities in 20 provinces, and has maintained an annual expansion of more than 2,000 stores in recent years. speed.

　　Compared with foreign "peers", China's convenience store industry still lags behind the United States and Japan in terms of volume, but the development momentum is bright.

The "Report" shows that from 2019 to 2021, the sales of convenience stores in mainland China increased from US$37.1 billion to US$54.1 billion, a growth rate much higher than that of the United States and Japan; the number of convenience stores in mainland China has nearly doubled in three years, from 13.2 The number of stores increased to 253,000, while the number of stores in the United States and Japan both experienced negative growth during the same period.

　　With the advantages of fast pace, many commodities, long business hours, and high level of automation, convenience stores are "like a duck to water" in large cities with dense populations, commercial districts and many office buildings, and they also once took root in communities, towns and rural areas. Well water does not make river water.”

Today, better services, lower prices, and more diversified products are enabling the convenience store industry to gain more market share and accelerate its entry into the sinking market.

　　"There is a chain brand convenience store downstairs, which is open 24 hours a day. While the prices are basically unchanged, the selection of products has obviously improved to a higher level. There are automatic coffee machines and microwave ovens in the store, and door-to-door delivery services are provided, and you can buy them when you go to work. A warm breakfast." Jiang Chenchen, a 30-year-old white-collar worker in Shenzhen, is very satisfied with the convenience store in front of his home. "Compared with a grocery store, a branded convenience store can better meet the needs of office workers for a fast-paced life."

　　The "Report" shows that from 2019 to 2021, the proportion of community-based convenience stores in various convenience stores has soared from 30.4% to 58.7%, and more than half of the convenience stores have opened community group buying business.

　　Integrate multiple advantages of online and offline

　　Compared with other physical retail industries such as large supermarkets, small and medium supermarkets, and department stores, why has the convenience store industry achieved a contrarian rise?

　　For offline channels, since the outbreak of the new crown epidemic, convenience stores have played an important role in the supply of materials for people's livelihood by virtue of their dense offline outlets, mature supply chains and the advantages of "small, large, flexible, and near".

　　In May last year, the Ministry of Commerce and other departments issued opinions calling for promoting the construction of a convenient living circle in the city for a quarter of an hour, proposing to encourage large enterprises to export brands, standards, management and services, and to develop community convenience stores.

In cooperation with the government and communities, it undertakes some public service functions such as ensuring supply and stabilizing prices, and further integrates into the urban public service infrastructure system, becoming an important development opportunity for the convenience store industry.

　　According to the analysis of the "Report", in the face of fluctuations in the epidemic, convenience stores have strong fresh food supply chains, better supply organization capabilities and management levels, enabling them to maintain normal operations when other retail industries are cold.

At the same time, due to the impact of the epidemic, consumers prefer offline retail venues with lower gatherings of people and closer physical distances and new models such as community group buying and instant retailing. The convenience store industry has timely adapted to consumer needs and won the favor of the market.

In addition, with the withdrawal of some catering and retail entities from the market, the leading companies in the convenience store industry have used the store resources released thereby to promote the expansion of outlets in a timely manner, achieving growth against the trend.

　　Online channels, the increasingly active instant retail format has also given the convenience store industry more competitive advantages.

　　"In the past, I purchased ingredients through the self-built logistics line of large supermarkets, but due to the long distance of the outlets and limited transportation capacity, I often placed the order in the morning and delivered it at one or two o'clock in the afternoon. Sometimes I even needed to place the order a day in advance. If not, the whole family can’t eat lunch, so it’s better to order takeout.” He Miao, a resident of Haidian District, Beijing, said, “Later, a convenience store not far from home has a third-party delivery service, which can guarantee delivery within 45 minutes after placing an order. . Buy groceries online at convenience stores, and you don’t have to get up early to buy groceries when you have friends at home on weekends.”

　　Consumers place orders through online trading platforms, and offline physical retailers such as convenience stores and community supermarkets perform door-to-door delivery services through third-party or own logistics systems, delivering food, beverages, fruits and vegetables, fresh food, and medicines within 60 minutes. Delivery from offline stores to consumers... Relying on the supply of physical outlets, the instant retail format combines the advantages of online consumption, rich choices and the safety and speed of offline consumption, so as to have the advantages of both.

According to data released by Meituan, from January to July this year, instant retail orders for branded supermarket convenience stores on the platform increased by 39% year-on-year, and the instant retail format is becoming a new choice for consumers.

　　The delivery speed is faster than express delivery, there are more product categories than takeaways, and the density of outlets is larger than that of merchants. The "small, many, smart, and near" convenience stores just match the real-time retail format.

In this context, convenience store companies have accelerated the integration and development of online and offline businesses.

　　The "Report" shows that the proportion of convenience store companies that have opened online business has increased from 29% in 2016 to 88% in 2021, of which over 70% of the companies conduct online business through cooperation with third parties.

Pei Liang, president of the China Chain Store & Franchise Association, analyzed that instant retail, as a retail model innovation, through the integration of offline resources, the cooperation between the platform and offline retailers has produced the effect of "1+1>2".

"Instant retail enables retail stores to play the role of front-end warehouses while completing daily operations, and realizes the value re-creation of retail stores in the entire supply chain." Pei Liang said.

　　Will become a "generalist" in the life service industry

　　Create its own products and brands, develop new tracks such as cooked food and fresh food, and promote the extension of the industrial chain to both ends... Industry insiders believe that the future convenience store scene will break through the boundaries of traditional physical retail formats and become a "multi-faceted" in the life service industry. .

　　According to expert analysis, it is a major advantage of convenience stores and other life service outlets to meet consumers' "last mile" consumption needs through a chain network throughout parks, communities, and universities.

Today, as an important part of the urban convenience business service network, the convenience store scene is integrating various functions such as retail, light meals, fueling, laundry, coffee, hairdressing, terminal distribution outlets, etc. The convenient life circle of "going out for a quarter of an hour".

　　In Beijing, various life service outlets, including convenience stores, are accelerating their integration and development.

According to the relevant person in charge of the Beijing Municipal Bureau of Commerce, as of the end of last year, Beijing had more than 90,000 basic convenience commercial outlets in 8 categories, including convenience stores (community supermarkets), breakfast, hair and beauty, terminal distribution, washing and dyeing, and convenient maintenance. Within the scope, the full coverage of the community with convenient commercial service functions has been basically achieved.

In July this year, multiple departments in Beijing jointly issued a series of measures to promote the transformation and upgrading of the life service industry, requiring the realization of the full coverage of the city-wide "quarter-hour convenient life circle" in 2025, and the formation of a diversified, diversified life service system covering both urban and rural areas. .

　　Blacksmith need its own hardware.

Facing the new requirements for high-quality development of the industry, how can Chinese convenience store companies "strengthen their internal strength"?

　　Improve the membership system and increase user stickiness.

The "Report" shows that from 2017 to 2021, the proportion of convenience store companies with a membership system will increase from 40% to 80%; among convenience store companies with a membership system, the proportion of sales from member consumers will increase from 18% to 28%. %, the unit price of member consumers is about 40% higher than that of non-member consumers.

How to increase the proportion of member sales and tap the needs of member consumers is becoming an important focus of convenience store brands.

　　Deeply cultivate the sinking market and achieve scale expansion.

Through acquisitions, regional franchises, etc., leading brands are sinking into the market for scale expansion, and some small and medium-sized brands that have local advantages in the provincial market and single-city market have become regional franchisees of large brands.

According to analysis, with the intensification of internal competition in the convenience store industry and the gradual increase in industry concentration, the expansion momentum of leading companies in second- and third-tier cities and other markets will continue to increase.

　　Pei Liang believes that the convenience store industry will form a development pattern of mutual promotion of online and offline operations, and home-based business, group purchase business, live broadcast business, etc. will be an important part of online business.

To this end, convenience store companies should seek more core driving forces, explore the creation of a "central kitchen", and achieve higher management capabilities for their own brands and categories; at the same time, improve their digital operation capabilities, on the one hand, through the front desk to achieve private domain traffic Precision marketing, on the other hand, improves the quality of product selection and operation level based on background data, and drives development based on consumer demand; in addition, it should also improve the organization of teams and talents to achieve high-quality and sustainable development of the industry.

　　Wang Wenzheng