01 In just one year, the number of convenience stores in Xiamen increased by 2,264. This coastal tourist city, covering an area of over 1,700 square kilometers with a permanent population of 5.28 million, has attracted numerous well-known domestic and foreign convenience store chains, including 7-Eleven, LAWSON, Jianfu, Meiyijia, Linji, Shifen, Liuyi, and Wanjia. According to Xiamen Daily, in the past year, 2,264 new convenience stores opened in Xiamen, accounting for more than one-third of the total opened in the past five years. Data from the CCFA's 2021 China Urban Convenience Store Index shows that among 39 key cities nationwide, Xiamen ranks first in the convenience store development index, with a growth rate of 7.1%, the highest among all cities.

The perspective of Liu Zhongjian, founder of Linji Convenience, can partly explain why so many convenience store brands are entering Xiamen. Fujian is the second market for Linji after Anhui, and Xiamen was the first choice. In Liu's view, Xiamen is a city with rapid economic development, a good economic structure, and high-quality growth.

"Xiamen has a favorable population structure, with a high proportion of young people with high incomes, and a very high population density. The population density in the island area ranks among the top in the country," Liu told Lingshou. This is evident from Xiamen's GDP growth and per capita income. In 2020, despite the sudden COVID-19 pandemic, Xiamen's GDP grew by 5.7%; in 2021, it grew by 8.1%, with a two-year average growth of 6.9%, basically recovering to pre-pandemic levels. From 2019 to 2021, Xiamen's economic growth rate was 0.3, 2.5, and 0.1 percentage points higher than the provincial average of Fujian, respectively. Especially in 2021, Xiamen's per capita GDP reached 135,000 yuan, 1.7 times the national average and 1.2 times the provincial average. In terms of income, in 2021, the per capita disposable income of all residents in Xiamen was 64,362 yuan, an increase of 10.7% year-on-year. Among them, urban residents' per capita disposable income was 67,197 yuan, with an average annual growth of 8.1%; rural residents' per capita disposable income was 29,894 yuan, with an average annual growth of 9.5%. In the first half of 2022, the per capita disposable income of Xiamen residents was 36,048 yuan, an increase of 5.4%. Xiamen is also one of the few cities in the country where income has been continuously growing. This has laid a solid economic foundation for the development of convenience stores.

Furthermore, Liu emphasized that Xiamen has a very good business environment. "When Linji settled in Xiang'an District, we felt the high attention paid to convenience stores by the Xiamen and Xiang'an governments and commerce departments, who actively serve convenience store enterprises." If economic development and income growth are the foundation, then the business environment is the guarantee.

02 Especially since 2020, Xiamen has introduced a series of policies and measures to support and encourage the development of convenience stores. In September 2020, the Xiamen Municipal Bureau of Commerce and 11 other departments jointly issued the Implementation Plan for Promoting the Development of Brand Chain Convenience Stores in Xiamen, including 14 major policies such as optimizing the layout of convenience store networks, simplifying the process for obtaining licenses and certificates, optimizing conditions for food business permits, promoting green circulation, and strengthening supply chain capabilities. In March 2021, the Xiamen Municipal Bureau of Commerce issued Several Measures to Promote Consumption Growth, providing rewards for new stores opened by large chain convenience stores and fresh food convenience store enterprises in the city, with a maximum reward of 2 million yuan per enterprise. In June of the same year, the Xiamen Municipal Bureau of Commerce and 12 other departments jointly issued Several Measures to Further Promote the Development of Fresh Food Convenience Stores in Xiamen, comprehensively boosting Xiamen's selection as one of the first batch of pilot cities for the 15-minute convenient living circle. According to Xiamen Daily, Xiamen has so far this year provided subsidies totaling 2.75 million yuan to convenience store brand chain enterprises.

Policy support and rising resident income have made Xiamen a "fertile ground" for the convenience store industry. To some extent, 2021 was the beginning of the "takeoff" for convenience stores in Xiamen. That year, Xiamen's economic growth basically recovered to pre-pandemic levels—in 2021, Xiamen's GDP reached 703.389 billion yuan, an increase of 8.1% year-on-year. It was at the end of that year that Fujian-based Sanfu Department Store, which obtained the franchise rights for 7-Eleven in Fujian, opened three stores in Xiamen. As of the end of July, 7-Eleven had opened 11 stores in Xiamen. In January 2022, LAWSON acquired Tianhong Weiwo and opened eight stores simultaneously in Xiamen on June 1. At the opening ceremony, Fujio Fujiwara, General Manager of Guangdong Lawson, stated that LAWSON plans to open 100 stores in Xiamen in 2022, and in the next two to three years, aims to reach 500 stores in Xiamen and its suburbs. As of the end of August, in just two months, LAWSON had opened 19 stores in Xiamen.

In addition, Linji Convenience, which has nearly 1,000 stores in the Anhui market, opened its first 16 stores in Xiamen on June 21. Subsequently, Linji announced that it would set up its regional headquarters in Xiang'an District, and within one month, Linji opened three more stores in Xiamen, bringing the total to 19. Liu Zhongjian, founder of Linji Convenience, told Lingshou, "We plan to open 100 stores within one year and strive to achieve 1,000 stores in Fujian within about five years." At the same time, Linji has invested in building a multi-temperature three-dimensional logistics warehouse in Xiamen covering more than 6,000 square meters, which is expected to meet the distribution needs of more than 600 stores.

If we add the Fuzhou brands Liuyi and Wanjia, which entered Xiamen as early as 2019, and the local brand Jianfu, which already has a certain advantage in the Xiamen market, a battle among convenience stores is unfolding.

03 The Xiamen market looks promising, but it is not easy to do well in the convenience store business. In other words, convenience stores are not easy to operate in Xiamen, and competition will become even more intense in the future. This can be seen from the development of Zhenxi Convenience in Xiamen. In 2016, Zhenxi Convenience began opening stores densely in Xiamen. According to Xiamen Evening News, by the second half of 2021, it had closed all its stores in Xiamen. In July 2021, Liuyi merged with Zhenxi, and Liuyi took the opportunity to enter the subway business. A senior retail industry insider said that many convenience store brands enter Xiamen also considering brand value, because Xiamen has always attracted attention. At the same time, the Xiamen convenience store market is a "touchstone." There are many excellent convenience store enterprises. If you can do well in the Xiamen market, you will also have certain competitiveness in other markets.

At the same time, the Xiamen market is also affected by the repeated pandemic, and the number of tourists is decreasing. "Especially in the last two years, competition has become increasingly fierce, and good store locations on the island are in high demand and not easy to find." Currently, each convenience store brand in Xiamen has its own characteristics, with different customer groups and positioning. "Store location is important, plus product advantages and differentiation. As long as management and service are not too poor, there will still be a part of the market for you," the senior retail insider emphasized.

Some convenience store brands have also announced their store opening targets. Lawson, after taking over more than 30 Tianhong Weiwo stores, also stated that it plans to open 100 stores in Xiamen this year; Linji plans to expand 100 stores in Fujian in 2022 and reach 1,000 stores in the next five years; according to Strait Herald, Zhang Li, chairman of Jianfu Convenience, said that as of the end of last year, Jianfu had a total of 595 stores in Xiamen, with a future goal of reaching 1,000 stores. In addition, another convenience store brand, Meiyijia, now has no fewer than 500 stores in Xiamen. It is clear that competition among convenience stores in Xiamen will become increasingly fierce.

"In the last two years, Xiamen convenience stores have greatly improved in both image and quality. Because competition will push everyone to promote each other and progress together," the senior retail insider said. "As more and more convenience store brands come to Xiamen, Jianfu will also face some pressure. But competition will prompt everyone to pay more attention to differentiation and also stimulate brands to focus on products and services." Even though each has its own focus and advantages, good locations are limited, and competition is inevitable. The key to winning ultimately lies in convenience, products, and services.

In Liu Zhongjian's view, enterprises with the following three characteristics will have an advantage in future competition: first, convenience store enterprises that value product quality and customer experience; second, convenience store enterprises that are customer-centric, actively innovate, and embrace change; third, convenience store enterprises that can persist for a long time and stay true to their original aspirations.

Judging from the store opening targets of various convenience store brands, the air is already filled with the smell of gunpowder. The battle for the Xiamen convenience store market is far from over; it is just beginning.

Source: Lingshou (ID: lingshouke)

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