New retail is rising online and moving offline. Convenience stores, the most representative retail format, are flourishing across the country, showing strong growth momentum. Convenience stores are deeply embedded in the consumption of daily life circles, influencing our lives in a point-to-area manner. With the surge of new retail, online traffic is boldly encircling offline, and retail is undergoing subtle changes under the penetration of the internet. Convenience stores are at the forefront of this change. Capital is entering, growth is rampant, and momentum is strong. On May 10, during the 2017 China Convenience Store Conference, the organizer, China Chain Store & Franchise Association, together with Boston Consulting Group, released the "2017 China Convenience Store Development Report" (hereinafter referred to as the "Report"). The Report points out that the number of chain-branded convenience stores in China is close to 100,000, with sales reaching 130 billion yuan. A relevant person in charge of the China Chain Store & Franchise Association introduced that the Report, through a survey of convenience store development in 36 cities across the country, combined with precise data extraction and analysis from core convenience store brand sample enterprises, and assisted by managers from more than 50 convenience store enterprises, conducted a comprehensive review, analysis, and summary of the development of China's convenience store industry from data to characteristics, from current status to trends. It is believed to be the most authoritative reference for industry benchmarking and for relevant institutions to understand the industry. A relevant person in charge of Boston Consulting Group stated that during the drafting of the Report, both parties combined Boston Consulting's understanding of global consumption trends with a large amount of data and experience from foreign counterparts, analyzing the development of China's convenience store industry from an international perspective. The Report points out that the development and current status of China's convenience stores present eight major characteristics:
1. In 2016, the convenience store industry grew at a rate of 13%, with a market size exceeding 130 billion yuan. Both the number of store openings and same-store sales increased.
2. There is large market space, with first- and second-tier cities being growth hotspots. At the same time, regional patterns are obvious, and a national layout has not yet emerged.
3. There is large room for profitability improvement. Although per-store sales and profit levels have improved over the years, there is still a large gap compared with leading international enterprises.
4. Operating costs are rising rapidly. Rent and labor costs both showed an upward trend in 2016.
5. The product structure urgently needs improvement. The proportion of fresh and semi-processed food is low, and the proportion of private labels is low.
6. The franchise mechanism is not perfect. The proportion of franchising is low, three-tenths of enterprises have not yet carried out franchising, and franchise management is relatively loose.
7. Digitalization is beginning to take shape. Half of the enterprises have introduced online shopping, with online shopping accounting for about 11%; mobile payment technology is popular, but the usage rate is low.
8. The membership system needs to be strengthened. 55% of enterprises have established a membership system, and sales of members in enterprises with a membership system are steadily rising. The Report also analyzes the six major elements for the future development of China's convenience store industry: 1. Terminal model: Be close to the lifestyle of target customer groups, and subdivide products, store groups, or sub-formats.
2. Product mix: Closely focus on private labels and fresh and semi-finished products to establish product differentiation.
3. Business extension: Integrate composite formats and value-added services to provide a one-stop experience.
4. Digitalization: Self-build and cooperate to improve the application capability of new technologies and create an omni-channel model.
5. Supply chain model: Facing the complex operating environment, continuously improve the lean nature of the supply chain.
6. Expansion model: Establish a reasonable franchise model to improve expansion efficiency. The simplified version of the Report is as follows: Source: Pintu Business Review