---
title: "Cold Thoughts on the Trend: Several Truths You Need to Know About Convenience Stores"
description: "The retail industry has been abuzz with convenience store news recently. According to the latest 'China Urban Convenience Store Index' released by the China Chain Store & Franchise Association, convenience stores maintained a high growth rate in 2015, with over 20% growth in 47.5% of surveyed cities. However, despite the hype, there are underlying truths: growth is slowing, costs are rising faster than sales, less than half of convenience stores are truly profitable, and the business is capital-intensive and operationally challenging."
author: "赵向阳"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-05-11"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/cold-thoughts-on-the-trend-several-truths-you-need-to-know-about-conveni-97b93b67/"
markdown: "https://xinjignxiao.com/en/articles/cold-thoughts-on-the-trend-several-truths-you-need-to-know-about-conveni-97b93b67.md"
original_source: "https://mp.weixin.qq.com/s/zBuPXEzHgrSC3dmENVzGEw"
translation: "https://xinjignxiao.com/zh/articles/%E9%A3%8E%E5%8F%A3%E4%B9%8B%E4%B8%8A%E7%9A%84%E5%86%B7%E6%80%9D%E8%80%83-%E5%85%B3%E4%BA%8E%E4%BE%BF%E5%88%A9%E5%BA%97-%E4%BD%A0%E9%9C%80%E8%A6%81%E7%9F%A5%E9%81%93%E7%9A%84%E5%87%A0%E4%B8%AA%E7%9C%9F%E7%9B%B8-97b93b67.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/cold-thoughts-on-the-trend-several-truths-you-need-to-know-about-conveni-97b93b67/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Cold Thoughts on the Trend: Several Truths You Need to Know About Convenience Stores

> The retail industry has been abuzz with convenience store news recently. According to the latest 'China Urban Convenience Store Index' released by the China Chain Store & Franchise Association, convenience stores maintained a high growth rate in 2015, with over 20% growth in 47.5% of surveyed cities. However, despite the hype, there are underlying truths: growth is slowing, costs are rising faster than sales, less than half of convenience stores are truly profitable, and the business is capital-intensive and operationally challenging.

These days, the retail industry has been almost dominated by convenience store news. The latest 'China Urban Convenience Store Index' released by the China Chain Store & Franchise Association shows that in 2015, convenience stores maintained a relatively high development speed. According to the statistics, cities with convenience store growth rates exceeding 20% accounted for 47.5% of the total surveyed cities.
At the policy level, due to a series of incentive policies introduced by the Beijing Municipal Commerce Commission in the past two years, the growth rate of convenience stores in Beijing reached as high as 23.5%. Some media even asserted that if this trend continues, Beijing is likely to become the next convenience store-dense area after Shanghai.
At the enterprise level, foreign hypermarket giants such as Walmart and Metro have begun to develop their own convenience store formats, and online companies with BAT backgrounds regard convenience stores as offline traffic entry points in their O2O layouts.
Whether it is industry data, policy support, or corporate initiatives, they all point to the same trend: convenience stores, one of the three traditional retail formats alongside supermarkets and department stores, are beginning to show new vitality and stand at another round of the trend. Their growth rate of over 20% brings a touch of warmth to physical stores amid the 'store closure wave'.
Warren Buffett once said, 'Be fearful when others are greedy.' Is it a good thing that more and more players are entering the convenience store market? 'The Third Eye Retail' believes that it is time to pour cold water on the 'feverish' convenience store investment, apply the brakes, and let outsiders understand the real situation of this industry.
Truth One: Convenience stores are actually also slowing down in growth.
Although statistics show that cities with convenience store growth rates exceeding 20% account for 47.5% of the total surveyed cities, some industry insiders told 'The Third Eye Retail' that based on their knowledge, the entire convenience store industry is also showing a trend of slowing growth. 'Although compared with the hypermarket and department store formats, which are experiencing micro-growth or even negative growth, the growth of convenience stores is quite good, but the momentum is not as optimistic as before,' the above-mentioned person said.
Truth Two: Cost increases are even higher than sales growth.
Areas with developed convenience stores are often first-tier cities like Beijing, Shanghai, and Guangzhou, where rent and labor costs are relatively higher than in other regions. A survey by the China Chain Store & Franchise Association of 19 convenience store companies showed that the average sales per store increased by 8.8%, while the cost increase ratio was 8.1%, and the store operations of various companies continued to face pressure from rising costs. Tao Ye, general manager of Haolinju Convenience Store, wrote last year that from 2009 to 2015, the average sales per store of Haolinju doubled, but the two major costs of rent and labor both increased by more than double, even close to double.
Truth Three: Less than half of convenience stores are truly profitable.
Although convenience stores, along with supermarkets and department stores, are listed as the 'three major retail formats' of traditional commerce, it is strange that so far, no local retail company with convenience stores as its main business has gone public. An industry insider said that among convenience store companies operating in China, less than half can truly achieve profitability. 'For tax optimization reasons, convenience store companies often account for many stores in the form of individual franchise, not paying taxes as general taxpayers. If strictly following relevant tax policies, the profitability of many local convenience store companies would be very worrying,' the above-mentioned person told 'The Third Eye Retail'.
Truth Four: Opening a convenience store is actually very 'money-burning'.
Some investors take it for granted that convenience stores, due to their small size, require relatively low investment. But in fact, convenience stores are a heavy-asset project. Zhang Yungen, former president of Quanshi Convenience, said that the investment for one Quanshi store is conservatively estimated to be between 1 million and 2 million yuan. 'To do a convenience store project, from startup to opening 20 stores in a year, you need to invest at least 50 million yuan. To make a difference in this industry, without a budget of over one billion yuan, it is almost impossible to make a splash,' Zhang Yungen said.
Truth Five: Operating a convenience store is harder than you think.
How much knowledge can there be in opening a small store? In fact, the difficulty of operating a convenience store is even greater than that of a hypermarket. A convenience store can be described as 'small but complete', and behind the expansion of stores is a complete system architecture to support it. From the back end to the front end, from supply chain to operational standards, every detail tests the ability and level of the convenience store operation team.
Truth Six: Local convenience stores have not yet escaped the 'small supermarket' mold.
Although local convenience stores are making unremitting efforts to benchmark against their Japanese counterparts, so far, learning and imitation remain superficial, 'similar in form but not in spirit'. A convenience store expert told 'The Third Eye Retail' that the gaps between local convenience stores and Japanese convenience store companies are in the following aspects: store operation capability and execution of standardization; product development capability, information technology, and private brand development capability; supply chain and logistics distribution capability. The gameplay of most local convenience stores is still the concept of miniaturized supermarkets, which is far from the true meaning of convenience stores.
Undoubtedly, convenience stores are at the forefront of the trend. Wang Hongtao, director-general of the Convenience Store Professional Committee of the China Chain Store & Franchise Association, described the current state of the industry as 'market conditions are good, but enterprises still need to work hard.' From the case of Japan's 7-Eleven convenience store growing and surpassing Ito-Yokado, we can see that in the future, convenience stores may completely surpass hypermarkets and become the dominant format in the consumer market.
So, at present, what kind of mentality should enterprises adopt when operating convenience stores? 'The Third Eye Retail' greatly appreciates the words of Wang Zi, CEO of Linjiali Convenience: 'The basic of store renewal is careful operation.'
✍————————————
Source: The Third Eye Retail
****************-**************** END-
The best learning platform for FMCG distributors in China
Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors
Committed to helping Chinese FMCG distributors grow rapidly
**The most professional and practical knowledge base in the FMCG industry**
Reply with the red number below to get the corresponding content
Reply with number 1 to view the complete knowledge base
| **001** Excellent article selection | **002** Distributor market operations | **003** Terminal visit management | **004** Sales supervisor skills | **005** Sales improvement techniques | **006** Channel expansion | **007** Managing distributors | **008** Distributor development | **009** Distributor internal operations management | **010** Team management | **011** Efficient distribution techniques | **012** Sales manager's eighteen skills | **013** KA operation methods and strategies | **014** First lesson for new salespeople | **015** Internet, brands | **016** Distributor B2B transformation |
[Long press QR code to follow]


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671