Click image for more details Convenience Stores: How to Make Nighttime Consumption More Convenient? Buying shampoo, grabbing a quick meal, or picking up newspapers and magazines... Convenience stores offering 24-hour service at the entrance of residential communities are a common sight on city streets and a convenient choice for nighttime shoppers. However, issues such as insufficient numbers and unreasonable layouts affect the ability of convenience stores to meet people's nighttime consumption needs. How can convenience stores accelerate network expansion, expand service functions, and enhance our nightlife?
Rapid Development, but with Significant "North-South Differences" The round-the-clock service provided by 24-hour convenience stores aligns with people's nighttime consumption needs. However, there is an imbalance in the development of convenience stores across different cities in the north and south. "Every night, I have a bowl of cart noodles at the 7-Eleven near my community, and it really helps relieve the day's fatigue," says Liu Xiaoxiao, who works at an internet company in Guangzhou. For her, working overtime is a common occurrence, often not leaving the office until 9 or 10 PM. With a tight schedule and no time for dinner, and not wanting to go far to find a restaurant, the convenience store at her community gate becomes her best option. "Having a hot bowl of noodles not only fills me up but also gives me a chance to chat with the staff." Liu says that in her three-plus years living in Guangzhou, she generally finds it convenient to shop at night. Even at midnight, it's relatively easy to buy daily necessities like toothpaste and facial cleanser. For example, in her current residential complex, there are four gates, and each gate has at least one 24-hour convenience store with a fairly rich variety of products. △ A convenience store in Shanghai supplies late-night snacks to residents. "24-hour convenience stores are an important channel for modern urban consumption, especially nighttime consumption," says Wang Hongtao, deputy secretary-general of the China Chain Store & Franchise Association. According to the design concept, convenience stores mainly meet the immediate consumption needs of residents within 1.5 kilometers. In other words, when people have daily needs, they can walk to the nearest convenience store in at most ten-plus minutes. Data shows that in 2017, the number of convenience store outlets in China exceeded 100,000, with a growth rate of 13%, and sales reached 190.5 billion yuan, with a growth rate of 23%. Behind the booming development of convenience stores is a shift in people's consumption lifestyles. Whether it's working overtime or leisure and entertainment, the night is no longer the end of the day but a continuation of activity, extending the time for life and consumption. The round-the-clock service provided by 24-hour convenience stores precisely meets people's nighttime consumption needs. However, there is an imbalance in the development of convenience stores across different cities in the north and south. The "China Urban Convenience Store Development Index" released by the China Chain Store & Franchise Association shows that convenience stores in first-tier cities like Shanghai, Guangzhou, and Shenzhen are close to the development level of convenience stores in Japan. In 2017, the saturation of convenience stores in Shanghai was 3,278, meaning one store per 3,278 people; in Guangzhou, it was 3,076. In contrast, Beijing's saturation was only 9,620, and Tianjin's was 15,221, showing a significant gap from consumer demand. "There's a convenience store downstairs from my home, but it closes around 9 PM. Sometimes when I work late and want to buy some late-night snacks like food or milk, I miss the chance," says Zhang Tao, an accountant at a company in Tianjin. Most residents in his community are office workers who don't get home early, so there is a considerable demand for convenience stores. But the store at the community gate closes early, making nighttime shopping inconvenient. "The development of convenience stores in China shows north-south differences, mainly related to climate, living habits, and consumption levels. In southern cities, the commercial atmosphere remains strong even at 11 PM, but nighttime consumption in northern cities is relatively 'colder,'" says Wang Hongtao. Especially in winter in the north, due to the very low outdoor temperatures, people are reluctant to go out after returning home, which to some extent affects the development of convenience stores. Many Challenges, and Supportive Policies Need to Catch Up Convenience stores may not need to be large, but they must offer a full range of life services and be located in good positions. Costs such as labor, rent, and utilities have always been common issues constraining the development of the convenience store industry. This requires policy support. "The core advantage of convenience stores lies in being convenient and timely, meeting people's last-kilometer needs; otherwise, it's hard to talk about 'convenience,'" says Zhang Tao. When traveling abroad, he noticed that convenience stores in some countries are mostly "small but complete," offering a wide range of daily necessities, as well as services like cash withdrawal, printing, and bill payment. In contrast, domestic convenience stores have overly single functions, far from meeting people's life needs. Wu Haibin, head of FamilyMart's North China market, says that "small, complete, and close" are the typical differences between convenience stores and other retail formats. Convenience stores may not be large, but they must offer a full range of life services. At the same time, convenience stores are usually located in areas with high foot traffic, such as street corners, office buildings, and residential communities, to be closer to consumers and provide true convenience. Costs such as labor, rent, and utilities have always been common challenges constraining the development of the convenience store industry. A report released by the China Chain Store & Franchise Association shows that in 2017, operating costs for convenience stores in China rose rapidly, with store resources becoming increasingly scarce and rent costs rising by 18%; labor costs increased by 12% due to higher staff turnover; and utility costs rose by 6.9%. "The continuous rise in production factor costs such as rent, labor, and utilities, coupled with the impact of rapid e-commerce development, brings considerable challenges to the convenience store industry," says Wu Haibin. The original intention of 24-hour convenience stores is to better serve consumers, but because they operate 24 hours, labor and utility costs are unavoidable issues in the development process, requiring some support from government departments. To reduce the burden on convenience stores, make them more spatially accessible to consumers, and more convenient in function, in October this year, the Beijing Municipal Commerce Commission and the Beijing Municipal Development and Reform Commission jointly issued "Several Measures to Further Promote the Development of Convenience Stores," clearly proposing 19 measures in 6 aspects to promote the construction of convenience store networks. The "Measures" propose reserving convenience store space according to the standard of 10-20 square meters per 1,000 people in residential projects, opening up space resources owned by public service units, introducing branded chain convenience stores into schools, gymnasiums, hospitals, subway stations, and other units, and optimizing the layout of convenience service outlets. At the same time, convenience stores are encouraged to add multiple convenience services, and business licenses are reformed, such as allowing convenience stores to retail non-prescription drugs. Rent subsidies are provided for convenience stores that carry services like vegetable retail, breakfast, and sewing supplies. "The supportive policies introduced by Beijing have truly taken into account the difficulties faced by convenience store operations. Site selection and expansion have always been a challenge for business operations. Opening up public spaces such as schools, hospitals, and subway stations is an opportunity for the entire industry," says Wu Haibin. "In recent years, Beijing's supportive policies have been catching up, and the development environment for convenience stores has improved significantly. Enterprises need to seize the opportunity and build on this momentum." Cost Reduction and Efficiency Improvement: Online Tools Are Essential Through the APP, online and offline and logistics connections are achieved, extending the service hours and scenarios of convenience stores and improving service efficiency. "With online and offline synchronization, and the APP and physical stores running in parallel, shopping at Bianlifeng has become more and more convenient," says Zhu Ziqiu, an employee at an internet company in Zhongguancun, Haidian District, Beijing. Recently, she downloaded the Bianlifeng convenience store APP on her phone. The APP allows for self-service shopping in stores: just select "scan to shop" on the APP, scan the product barcode with your phone, pay online, and then scan the successful payment receipt to pick up your items and leave. Consumers in Hangzhou, Zhejiang, purchase items and self-checkout at an unmanned convenience store at night. The Bianlifeng APP does more than that: using the APP for online shopping, you can choose home delivery or in-store pickup. "From the development of our stores, the number of nighttime customers has been growing continuously over the past year or two, which gives us confidence in the potential of the nighttime consumption market," says An Shiyong, public relations manager at Bianlifeng. "Bianlifeng has achieved online-offline and logistics connectivity through the APP. This new retail model extends the service hours and scenarios of convenience stores, effectively improving nighttime service efficiency and better meeting consumers' nighttime needs." An Shiyong says that the self-checkout model based on the mobile APP not only saves consumers time waiting in line but also greatly improves store operational efficiency and reduces the cost of nighttime operations. "I believe that with the improvement of residents' income levels and the diversification of life and work styles, nighttime consumption has increasing room for development." Currently, not only Bianlifeng but many convenience stores are actively exploring digital transformation, committed to reducing costs and improving operational efficiency. For example, 7-Eleven has built a data-centric supply chain information system for data exchange and integration, greatly improving distribution efficiency. FamilyMart has launched customer loyalty management, fan club, and customer lifetime value management systems, using a digital closed loop to continuously optimize marketing plans based on visit frequency and average transaction value. Lawson has introduced self-payment services to enhance consumer convenience. JD.com has launched unmanned convenience stores where you can shop by scanning your face. "Consumer demand is constantly upgrading, and urban residents' requirements for product and service quality are also increasing," says Wang Hongtao. As a format that keeps pace with consumption upgrades, the convenience store market is gradually maturing. The application of smart devices in the new retail era also provides new opportunities and conditions for the development of convenience stores, and the future development space for convenience stores is very broad. Eight Major Characteristics of Convenience Store Development in China (Extended Reading) Convenience stores have been developing in China for over 16 years. In 1992, 7-Eleven entered Shenzhen, giving birth to the first convenience store in the country. In 1996, Shanghai Kedi Convenience Store, a wholly-owned subsidiary of Nonggongshang Supermarket (Group) Co., Ltd., opened in Shanghai; in the same year, Japan's listed company Lawson Co., Ltd. and Shanghai Hualian (Group) Co., Ltd. jointly established Shanghai Hualian Lawson Co., Ltd., opening the first chain convenience store in Changning District, Shanghai. In 2004, FamilyMart entered Shanghai, and 7-Eleven entered Beijing, marking the rapid development phase of convenience stores. Recently, the China Chain Store & Franchise Association and Boston Consulting Group conducted a survey on the development of convenience stores in 36 cities across the country and released the "2017 China Convenience Store Development Report," which identifies eight major characteristics of current convenience store development in China:
Rapid growth. The convenience store industry is growing at an annual rate of 13%, with a market size exceeding 130 billion yuan. Both the number of stores and same-store sales are growing.
Large market space. First- and second-tier cities are growth hotspots. At the same time, regional patterns are evident, and a national layout has not yet emerged.
Large room for profit improvement. Although per-store sales and profit levels have improved over the years, there is still a significant gap compared to leading international companies.
Rising operating costs. Rent and labor costs both showed upward trends in 2016.
Product structure needs improvement. The proportion of fresh and semi-processed foods is low, and the proportion of private-label brands is low.
Franchise mechanisms are not well-developed. The proportion of franchising is low, with 30% of companies not yet engaging in franchising, and franchise management is relatively loose.
Digitalization is in its infancy. Half of the companies have introduced online shopping, with online shopping accounting for about 11%; mobile payment technology is widespread, but usage rates are low.
Membership systems need strengthening. 55% of companies have established membership systems, but member maintenance and mining consumption potential need to be enhanced.
The report believes that in the future, the development of convenience stores in China will more closely align with the lifestyles of target customer groups, segmenting products, store groups, or sub-formats; in terms of product mix, they will closely focus on private-label brands, fresh food, and semi-finished products to establish product differentiation; at the same time, they will fully utilize digital technology, self-build and cooperate to improve the application of new technologies, create an omni-channel model, and better meet consumer needs. Source: People's Daily