---
title: "Can the Lively Convenience Store Business in the City Make Money?"
description: "In early January 2022, JD and Lawson convenience stores opened in some Beijing subway stations, bringing a new breakfast option for commuters. While these stores don't sell fresh food like hot drinks and buns as in Wuhan, the revival of subway retail has excited many. The article explores the growing trend of adding 'lively' elements to convenience stores, the costs involved, and whether it can be profitable."
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published: "2022-02-11"
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# Can the Lively Convenience Store Business in the City Make Money?

> In early January 2022, JD and Lawson convenience stores opened in some Beijing subway stations, bringing a new breakfast option for commuters. While these stores don't sell fresh food like hot drinks and buns as in Wuhan, the revival of subway retail has excited many. The article explores the growing trend of adding 'lively' elements to convenience stores, the costs involved, and whether it can be profitable.

For the working class in Beijing, there is now another way to have breakfast on the way to work.
In early January 2022, as JD and Lawson convenience stores officially entered trial operation at some Beijing subway stations, commuters in Beijing can now feel a stronger sense of everyday life while shuttling through the subway.
Although they cannot sell fresh food like hot drinks and buns in subway convenience stores as in new first-tier cities like Wuhan, which some young people regret, the return of subway retail after a long absence is still exciting.
The beautiful copy on the internet gives the answer to why young people are so fascinated by convenience stores on their way to work: **"There is a convenience store deep in the clouds, selling pink tenderness. So, there should also be a convenience store in the city, not big, but warm enough, weaving the ordinary hustle and bustle of life."**
The existence of convenience stores is not only a quick choice for three meals a day, but also a place to decompress during work breaks. Here, whether it's the bustle of the day or the loneliness of the night, people's various states around the clock are on full display.
When convenience stores enter places closer to young people's livelihoods, such as subway stations and office buildings, the sense of everyday life is combined with this not-so-new business model for the first time.
Reading this article, you will understand the following questions:
**1. How strong is the sense of everyday life in convenience stores under rapid urbanization?**
**2. How do urban convenience stores get a sense of everyday life?**
**3. How much does it cost to "install" a sense of everyday life in convenience stores?**

**The sense of everyday life in convenience stores is getting stronger**
Beijing was once considered a desert for convenience stores.
As early as 2004, influenced by the 2003 Daegu subway fire in South Korea, Beijing issued the "Beijing Municipal Urban Rail Transit Safety Operation Management Measures." The subway in this international metropolis was once insulated from various commercial activities.
In Wuhan, subway convenience stores and even underground commercial complexes were almost born with the opening of each new line. The "everyday life" on the commute in other cities also made young people working in Beijing extremely envious.
**At the beginning of 2020, policy loosening gave people hope for convenience stores to re-enter the subway. First, the Ministry of Commerce and other 13 departments jointly issued the "Guiding Opinions on Accelerating the Development of Brand Chain Convenience Stores," which mentioned "focusing on promoting the construction of brand chain convenience stores and expanding the implementation scope at an appropriate time."**
Subsequently, in August of the same year, the Ministry of Commerce further refined the opinions and proposed the "15-minute convenient living circle" plan. At that time, Beijing subway had already seen the presence of vending machines, photo booths, and other business models.
Of course, the most attention was paid to the trial operation of three subway convenience stores in July 2021: DELIGOGO, Lawson, and JD.
According to Beijing Evening News, in addition to the above brands, FamilyMart, Vango (China Resources Vanguard), and other brands have also confirmed their entry into Beijing subway this year. The stores will be located at some stations on Lines 5 to 15.
"Finally, I don't have to envy friends in other cities who can buy breakfast while catching the subway," said many office workers, who have great expectations for the restart of subway commerce that has been "idle" for a long time.
(Photo by Jiou Pai)
Of course, judging from the trial operation of multiple stores reported by the media, the overall customer flow is not particularly high, and there are some differences between stations.
Obviously, the current scope of Beijing subway convenience stores and the limited products (mostly sandwiches, rice balls, etc.) have limited the rising sense of everyday life.
**This situation is even rarer in new first-tier cities like Wuhan.**
2016 was a crucial year for the development of convenience stores in Wuhan. In that year, Lawson expanded its business territory to Wuhan and other central China regions. Among the newly opened stores, there was an underground convenience store at Jianghan Road subway station.
Wang Bo, who works on Xianggang Road, takes Line 6 from Jianghan Road station every day and gets off at Xianggang Road. He exits the subway and is right at his company, with no suitable breakfast shop along the way.
Now, this Lawson convenience store inside Jianghan Road subway station has become his first choice. It also fills the breakfast needs of most Wuhan commuters.
From 7:40 to 9:00 AM, 11:50 AM to 12:30 PM, and 4:30 PM to 9:00 PM are the three busiest periods for this Lawson subway store, with ready-to-eat products often in short supply.
Of course, besides Lawson, there are also local Wuhan brands such as Today, "7TT," and "Loco" in Jianghan Road subway station, so there is some competition among convenience stores themselves.
Above ground, competition among ground-level convenience stores is even fiercer.
In 2020, Ma Yun, then principal of Hupan University, visited Wuhan and tasted a bowl of hot dry noodles made in a convenience store, saying they were very delicious.
By expanding local foods like hot dry noodles, local Wuhan convenience store brands have gained the capital to compete with foreign brands. Foreign convenience stores like 7-Eleven and FamilyMart, which sell fresh food like oden and rice balls, are not popular in Wuhan. The former has only opened 7 stores in Wuhan.
**"Boss, a bowl of hot dry noodles, a fried dough stick, and a cup of soy milk." This scene, which used to only appear in street breakfast shops, is now almost exactly replicated in some convenience stores in Wuhan.**
According to data from Amap and Baidu Maps, there are 1,632 convenience stores in Wuhan, with about 80% located within the Third Ring Road. The density of convenience stores is closely related to the surrounding commercial layout.
In Fanhai International SOHO City in Jianghan District, Wuhan, there are at least 6 convenience stores in 8 office buildings. Among them, Lawson, Youjia, and Today, which sell local foods like hot dry noodles, have the highest customer flow.
Zooming out, Tianyancha data shows that there are currently more than 1.05 million enterprises in China with names containing "chain supermarket, convenience store, convenience supermarket, convenience chain, chain convenience." In the past decade, the annual registration growth rate has approached 30%.
In 2021, more than 257,000 new convenience store-related enterprises were added in China, a year-on-year increase of 7.3%. This year, the total number of branded chain convenience stores nationwide will reach 300,000, with no less than 200 stores per million people in medium and large cities, and the proportion of 24-hour convenience stores (including unmanned retail stores) will be no less than 30%.
(Image source: Tianyancha)
With policy support, various types of convenience stores have achieved orderly and rapid growth. And the sense of everyday life has become an important weapon in the "urban war" of convenience stores.

**The century of convenience stores: cold and warm**
The trial operation of Beijing subway convenience stores shows that as non-24-hour stores, the peak customer flow usually occurs during morning and evening commute times. Among them, the customer flow from 7 to 9 AM accounts for about 36% of the whole day.
This time period corresponds to the moment when the sense of everyday life is strongest during the day. At the same time, it is also visibly different from traditional 24-hour convenience stores in terms of business format.
**If you know the history of convenience stores, you will definitely wonder how this business model got involved with the sense of everyday life.**
The earliest convenience stores were born in the electrical age. The lack of cold storage equipment such as home refrigerators and air conditioners gave convenience stores the "special" meaning of selling cold drinks and even basic items like bread and milk.
In 1927, with this model, the American Southland Ice Company pioneered the predecessor of the convenience store. After nearly 20 years of piloting and exploration, in 1946, the world's first true convenience store was established. It was named "7-Eleven" because of its business hours from 7 AM to 11 PM.
(The world's first convenience store: "7-Eleven")
In 1974, the number of 7-Eleven stores reached 5,176. In the same year, Toshifumi Suzuki, a director of Ito-Yokado in Japan, obtained the franchise rights for 7-Eleven in Japan through unremitting efforts, truly empowering the convenience store.
Until this time, and even when convenience stores first entered China, their main function was to provide product sales services under the concept of a small supermarket, which sounded "simple and cold."
**"The density of convenience stores in a city measures the degree of commercialization and modernization of a city. If every 3,000 people have one convenience store, it can achieve overall convenience; if every 2,000 people have one, it is a high degree of commercial convenience." Huang Jiangmin, Party Secretary of Renmin University of China, once explained the importance of convenience stores to cities.**
With this concept, crazy domestic brands have launched fierce store-opening battles with more experienced foreign brands in the convenience store market.
In 2021, Bianlifeng planned to open more than 4,000 stores in China, and by 2023, it proposed a grand blueprint of 10,000 stores.
However, even with such rapid growth, the market is not optimistic about the prospects of this domestic brand. In this field, competition among 7-Eleven, FamilyMart, and Lawson has already become white-hot. The latter completed the acquisition of shares in Rainbow Department Store, a listed company, at the end of last year. Despite poor expansion, this listed company still has some influence in the South China market.
At the same time, this intense competition is also reflected in the concentration of the convenience store industry. According to statistics, in 2021, the top ten convenience store chains in China accounted for 67% of the total number of stores nationwide, and the top two were dominated by the "twin giants" of the petroleum system, with a combined share of 36%. Only Meiyijia can compete with them. The overall concentration is also slightly lower than that of the European and American markets.
In the second-tier echelon, Lawson, FamilyMart, and 7-Eleven each have fewer than 5,000 stores, and their annual turnover is far lower than that of the top brands.
With the strong head effect of the top three brands, the ultimate fate of many remaining brands is to become regional leaders.
**Regionalization is the second major feature of China's convenience store market. For example, the well-known convenience store brand Hongqi Chain has long been distributed throughout Sichuan, relying on strong regional effects to achieve operating income of 9.05 billion yuan in 2020.**
Other brands such as Lawson, which started in Jiangsu, Zhejiang, and Shanghai, Tianfu in the Wuling Mountain area, and the newly emerging Beijing brand Bianlifeng all have strong regional attributes in their expansion.
(Table by Jiou Pai)
Of course, increasingly fierce competition means that no brand can stay in its "comfort zone" forever. This year, Lawson made another acquisition, with the seller being WOWO, known as the "King of 24-hour convenience stores in Chengdu." After completing this transaction, Lawson is expected to compete with "mountain king" Hongqi Chain in the Sichuan market.
In the larger Shanghai market, brands such as FamilyMart, 7-Eleven, and newly joined Bianlifeng are also engaged in fierce competition.
Toshifumi Suzuki, founder of 7-Eleven, once wrote in his book: "People always habitually think that the fewer competitors in the market, the better for themselves, but once there are no competitors, business often stagnates."
The obvious regional characteristics, coupled with the suffocating pace of competition, force brands to implement differentiation strategies to meet the diverse needs of consumers and survive in the fiercely competitive convenience store market.
The ups and downs of Beijing subway convenience stores and the lively scenes in convenience stores in other first-tier cities in the morning have made many brands see a new way out in the hustle and bustle of the city: adding a sense of everyday life to convenience stores.
The question is, is this an easy business to make money from?

**Can adding "everyday life" to convenience stores make money?**
People are used to describing the difficulty of making a profit in the convenience store industry as "bending down to pick up coins."
After experiencing a U-shaped development, it is difficult for a single store to be profitable, let alone how to achieve refined management after scaling.
Excluding supply chain, franchise fees, membership fees, and other cost factors required for scaling, how much benefit can the sense of everyday life bring to a convenience store in single-store management, and how much extra cost does it take to "install" a sense of everyday life in a convenience store?
**Among the main cost expenditures of convenience stores, two items account for the vast majority: rent and employee compensation.**
According to the "2021 China Convenience Store Development Report," in the cost structure where major expenses account for 25.8%, rent accounts for 6.5%. In contrast, in larger department stores, rent is not the highest cost item, accounting for only 2.5%.
Taking the restarted Beijing subway convenience stores as an example, according to relevant industry insiders, the monthly rent for Beijing subway convenience stores is 4,000-5,000 yuan per square meter, meaning a convenience store of about 20 square meters will have a monthly rent of 100,000 yuan.
In new first-tier cities like Wuhan, rent is lower, but for convenience stores in prime locations, monthly rent is generally no less than 50,000 yuan.
Another major expense is employee compensation. According to some convenience store employees in Wuhan, their wages are between 4,000 and 5,000 yuan per month, and a standard convenience store is staffed with 1 store manager and 4-5 employees. The total monthly compensation is about 28,000 yuan.
Another set of profit data shows that the average standard turnover of a single convenience store is about 100,000 yuan. This indicates that even without calculating costs such as utilities and inventory, some convenience stores are at risk of losses.
The sense of everyday life is actually seen by brands as a tool to increase revenue: using the immediate demand during peak customer flow periods to expand product dimensions and increase sales.
**So how much revenue can "everyday life" actually bring?**
Jiou Pai (jioupai) visited a Youjia convenience store near Wenchang Road subway station in Wuhan and found that the store offers breakfast products, including buns, boiled eggs, oden, and hot dry noodles.
According to the clerk, on weekdays, the breakfast business has 50-60 customers, with an average transaction value close to 10 yuan. The daily turnover of the breakfast business is about 500 yuan, and the monthly turnover reaches 15,000 yuan.
(Hot dry noodles in a convenience store, photo by Jiou Pai)
After calculation, it was found that "everyday life," represented by breakfast, can bring a 15% increase in turnover to convenience stores. From the perspective of growth rate, it has extremely high development prospects.
**On the other hand, while significantly increasing revenue, the innovation of breakfast has also brought increased costs to convenience stores.**
Take the hot dry noodles, which have the highest sales in the breakfast business, as an example. First, the machine for making the product: according to online information, the market price of a small simple noodle cooker is about 500 yuan, and the retail price of hot dry noodles with seasoning packets is about 5 yuan per pack.
Compared with the increase in operating income, the increase in cost pressure is obviously insignificant. Of course, not every convenience store has the "ability" to sell breakfast services. The franchise model means that whether it's hot dry noodles, oden, or even boiled eggs, additional deposits must be paid to the headquarters before authorization is granted.
From this perspective, the high deposit may be the biggest risk point of the breakfast business, but this still cannot hide the high profit potential of "everyday life."
At the same time, data also verifies this view. According to a person related to 7-Eleven, the gross profit margin of oden, buns, and local specialty foods is as high as 60%. In contrast, the gross profit margin of packaged food is only about 25%.
As a local Wuhan convenience store brand, Song Yingchun, founder of Today, believes that "localization of fresh food" is an important direction for convenience stores to develop fresh food business. According to data, Today was the first convenience store in Wuhan to sell hot dry noodles, with annual sales of hot dry noodles once exceeding 3.8 million servings.
In all stores selling hot dry noodles, fresh food SKUs account for 10%, but sales account for 30%.
Urban convenience stores, the everyday life of the world. In this era that increasingly needs to cater to young people, adding a sense of everyday life to convenience stores, this tireless perpetual motion machine, is gaining more recognition from the market.

**Final Thoughts**
"The current development model of China's subway commerce can learn from the experience of others," said Lai Yang, a member of the Expert Committee of the China General Chamber of Commerce, regarding the future development of Beijing convenience stores. He suggested that we can refer to the development models of some first-tier cities, that is, creating a variety of business formats for subway commerce.
The same is true for the development of the convenience store industry itself. From the initial sale of refrigerated food, to the 24-hour convenient service of all categories, to the sense of everyday life born from differentiated needs today, the business format of convenience stores is constantly optimizing and changing.
**From the current situation, there is a great opportunity for more convenience store brands to embrace the sense of everyday life and truly make it a decent business.**
However, it is still necessary to be vigilant: once entering the fresh food field, food safety issues will be magnified infinitely. The Black Cat platform shows that fresh food products from multiple convenience store brands have received complaints from customers to varying degrees.
While the sense of everyday life in convenience stores attracts customers' attention, it also hides many invisible risks behind it. Between convenience and safety, brands may need to make more trade-offs.
The birth of "everyday life" in convenience stores is the result of both supply and demand driven by consumer needs and fierce competition among convenience stores. From our research, the profit margins of these "everyday life" products are much higher than those of packaged finished products. Therefore, major convenience stores are keen to expand these product categories and counters, even to the point of looking like a restaurant.
Naturally, it has both commercial benefits and full warmth and human touch. A piece of fried chicken or a corn on the cob in the winter subway, what a beautiful day!
Source: Jiou Pai (ID: jioupai) Author: Hei Jialun
References: 1. "Convenience Store Battle in Beijing Subway" Ling Shou Media 2. "Beijing Subway Convenience Stores Press the Restart Button, Future Development Can Learn from 'Stones from Other Mountains'" Securities Daily 3. "War at the Corner: How Did Convenience Stores Rise?" Jinjibo Finance 4. "Commute Has 'Everyday Life', Tianyancha Data Shows: In 2021, China's Convenience Store Enterprises Increased by 7.3% Year-on-Year" Financial Circle 5. "[Industry Deep Dive] Insight 2021: Competition Pattern and Market Share of China's Convenience Store Industry (with Market Concentration, Enterprise Competitiveness Evaluation, etc.)" Qianzhan Economist
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