Introduction: Convenience stores have become one of the few retail formats in physical retail to maintain growth over the past three years.

Author: Chu Wuliuxiang Source: Lingshou ID: lingshouke

Over the past three years, which retail formats have seen significant store growth? It is likely convenience stores, discount stores, and membership stores. In particular, convenience stores have become one of the few retail formats in physical retail to maintain growth over the past three years.

We reviewed the "China Convenience Store TOP100" rankings published by CCFA (China Chain Store & Franchise Association) from 2020 to 2022 and found that the total number of stores of the top 10 convenience store companies in 2022 increased by 22,135 compared to the top 10 in 2021. The total number of stores of the top 10 convenience store companies in 2022 was 109,485, compared to 103,237 in 2021 and 87,350 in 2020. Among these, the growth from 2020 to 2021 was the largest, with an increase of 15,887 stores.

During these three years, the biggest change in the convenience store top 100 ranking was that Sinopec's Easy Joy, which had held the top spot for many years, was replaced by Meiyijia, a private convenience store company that became the king of convenience stores in China.

On April 17, 2023, CCFA released the "2022 China Convenience Store TOP100," with Meiyijia ranking first with 30,008 stores, followed by Easy Joy with 28,006 stores. The third to fifth ranked convenience store companies were Kunlun Hao Ke, Tianfu Convenience, and Lawson, with total stores of 20,600, 6,970, and 5,641, respectively.

It is worth noting that Lawson, with 5,641 stores, surpassed 7-ELEVEN's 3,319 stores to become the king of foreign convenience stores.

From the perspective of the number of stores in the top ten, the overall trend is growth, but some have declined. Meiyijia saw the largest increase with 3,840 new stores, followed by Lawson with 1,175 new stores, ranking second overall and first among foreign brands. Kunlun Hao Ke, Tianfu, Shizu, 7-ELEVEN, Furong Xingsheng, and others saw three-digit growth in store numbers. In contrast, Easy Joy, Hongqi Chain, and FamilyMart saw declines in store numbers, with decreases of 243, 41, and 236 stores, respectively, compared to 2021.

Over these three years, the development of domestic convenience stores has shown the following major trends:

First, convenience stores continue to grow, with both market size and density on the rise. In 2021, the total number of stores of TOP100 convenience store companies exceeded 160,000, a year-on-year increase of 16.1%; among them, 71% of companies saw positive growth in store numbers, while 23% saw a decrease. In addition, 27 convenience store companies had more than 1,000 stores, and 22 companies had 500-1,000 stores.

Second, convenience stores are gradually "going down" (expanding to lower-tier cities). In addition to expanding in first-tier cities, the wave of convenience store openings has also rapidly flowed into second-, third-, and even fourth- and fifth-tier cities, especially chain brand convenience stores.

Third, the trend towards intelligence and catering is obvious. In particular, convenience stores with chain brands are continuously improving their digitalization and intelligence, and leading industry transformation with innovative strategies.

Similarly, these trends are also reflected in the development of foreign convenience stores in China. Over the past three years, the biggest change for foreign convenience stores has been the acceleration of "going down." In the past, the three major foreign convenience stores, including Lawson, FamilyMart, and 7-ELEVEN, basically only developed in first- and second-tier cities since entering China. However, since 2020, this situation has changed.

Taking Lawson as an example, its stores have been continuously expanding in lower-tier markets. In March 2022, Zhongshang Lawson opened its first five stores in Huainan, a fourth-tier city. The situation for FamilyMart and 7-ELEVEN is similar; previously, 7-ELEVEN entered Dezhou, Shandong for the first time, and FamilyMart appeared in multiple third-tier cities in Zhejiang.

The logic behind foreign convenience stores going down is not complicated: First, convenience stores in first- and second-tier cities are gradually becoming saturated, and competition is becoming increasingly fierce; second, third- and fourth-tier cities are increasingly accepting the convenience store format, with a broader market and less intense competition.

As of the end of 2016, Lawson had only about 1,000 stores in China, but by September 2021, its total store count exceeded 4,000. In five years, Lawson's store count tripled. Of course, this is also closely related to Lawson's exceptionally flexible franchise model. In addition to the self-operated model, there are also regional authorization, master franchise, and multiple franchise models. The master franchise model is the main one, where in areas not covered by Lawson's supply chain, regional authorization or multiple franchises are chosen, and the fresh food supply chains used by the latter two must be renovated according to Lawson's headquarters requirements. This has also enabled Lawson to rise abruptly among the three major foreign convenience stores.

In the convenience store top 100 list released by CCFA in April this year, Lawson, with 5,641 stores, became the king of foreign convenience stores in 2022, and it is also the foreign convenience store with the fastest store growth in the past three years. Lawson has been soaring in both its ranking in the top 100 and its store count. In 2020 and 2021, Lawson ranked sixth in the convenience store top 100, but its total store count increased from 2,702 to 4,466. By 2022, Lawson's store count reached 5,641, ranking fifth in the convenience store top 100.

In contrast, China FamilyMart, which once ranked first among foreign convenience stores, has fallen to last place among the three major foreign convenience stores. Over the three years from 2020 to 2022, China FamilyMart's ranking in the convenience store top 100 dropped from fifth place in 2020 (first among foreign brands) to eighth place in 2023, and tenth place in 2022 (third among foreign brands). The total number of China FamilyMart stores also decreased from 2,856 in 2020 to 2,666 in 2022, which is more than 2,900 fewer than Lawson's 5,641 stores; even compared to 7-ELEVEN's 3,319 stores in 2022 (second among foreign brands), it is more than 650 fewer.

In addition to the franchise model, Lawson's rapid expansion is also closely related to its first profitability in 2020. Indeed, it was also from 2020 that Lawson's store count grew more rapidly. However, among the three major foreign convenience stores, China FamilyMart was the first to achieve profitability, with its Shanghai stores achieving full profitability in 2008 and headquarters profitability in 2012.

Not only foreign convenience stores, but also domestic chain convenience store brands have been "going down." In every province, there are local chain convenience store brands occupying a place. In September 2022, CCFA released the "2022 China Urban Convenience Store Development Index," with Xiamen, Taiyuan, and Dongguan ranking in the top three. It is also worth noting that Xiamen has been ranked first in the China Urban Convenience Store Development Index for three consecutive years.

Taking Xiamen, Taiyuan, and Dongguan as examples, Xiamen has Jianfu, Taiyuan has Tangjiu and Jinhu, and Dongguan has Meiyijia and Tianfu. In the 2021 China Convenience Store TOP100 list, Meiyijia and Tianfu ranked second and fourth, respectively, Jianfu ranked twelfth, and Tangjiu and Jinhu ranked fourteenth and nineteenth, respectively. In the 2022 China Convenience Store TOP100 list, Meiyijia ranked first, Tianfu ranked fourth, Jianfu still ranked twentieth, and Tangjiu and Jinhu ranked thirteenth and fourteenth, respectively.

In 2022, Tangjiu and Jinhu continued to go down, and in the entire Shanxi Province, their stores are no longer limited to Taiyuan City, but have also expanded to other seven cities such as Datong and Shuozhou, and more than 30 county-level markets. Today, based in Wuhan, Hubei, has expanded into 37 cities in four provinces: Hunan, Henan, Guangxi, and Hainan. In June 2021, Today opened six stores simultaneously in Hainan, targeting Haikou, a third-tier city in Hainan Province. In the same month, Today entered the Anhui market. At the end of January 2022, Today entered Xiantao, a county-level city directly under Hubei Province, opening its first store and continuing to expand into county-level markets.

The one that has gone the farthest in its expansion path is Meiyijia, which started in Dongguan, Guangdong, and now has five major development regions: Guangdong, Central China, East China, North China, and Southwest China. In Hunan alone, Meiyijia has entered multiple third- and fourth-tier city markets such as Hengyang, Loudi, Xiangtan, Yiyang, Yueyang, and Zhuzhou. This also means that regional players, on the basis of covering second-tier cities, are also expanding into third- and fourth-tier cities and county-level markets, attempting to go down, down, and further down.

From its first store in 1997 to now, Meiyijia has more than 31,000 stores. Currently, on the Meiyijia platform, more than 30,000 business partners and 10,000 partners are working hard for convenient living, serving over 200 million consumers per month on average, and serving more than 20 provinces and cities, 220 cities, and 4,000 townships across the country, becoming the king of convenience stores that goes deep into China's most down-market areas.

In addition, besides Jianfu in Fujian, there are also Wanjia, Liuyi, Huining, Yitai, Wenxian, Xinnanfeng, and other convenience store brands; Anhui has Yidu and Linji; Jiangxi has Ledoujia; Hunan has Xingsheng Youxuan and Xinjiayi; Zhejiang has Shizu; Chengdu has Hongqi Chain; Shenzhen has Yizhan; Shaanxi has Meitian; Hebei has 365. These are all brands in the 2022 Convenience Store TOP100.

From the development of convenience stores in the past three years, convenience store brands that can occupy a place in a certain region have all found their own way to survive.

In the future, the convenience store industry will see the strong become stronger; foreign convenience stores will expand more rapidly, continuously acquiring and opening new regional franchises, while local regional leading convenience store companies will develop rapidly; some companies that entered the convenience store track from other industries and developed rapidly in the early stage will begin to slow down, and the weak will gradually be eliminated. The future development of convenience stores will still be full of challenges and competition, but survival is the most important thing, and the development model that suits oneself is the best.

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