---
title: "Convenience Stores Face Increasingly Difficult Times: Struggling to Find a Second Growth Curve"
description: "Performance is dismal, so companies can only stay 'low-key.' 'Opening and closing stores simultaneously has become the norm in the industry, and people are no longer shy about closing stores,' said Mr. Wang, a Beijing convenience store chain operator. 'In 2022, the industry was still aggressively competing for lower-tier markets, with foreign brands like Lawson and 7-Eleven, as well as many local brands, accelerating store openings. But in 2023, everyone's actions have been relatively low-key. On one hand, performance is poor, so they can't be high-profile; on the other hand, operators are more focused on cost reduction and efficiency, saving expenses. Under the norm of opening and closing stores simultaneously, everyone can only stay 'low-key.'"
author: "晴山"
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published: "2024-01-15"
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# Convenience Stores Face Increasingly Difficult Times: Struggling to Find a Second Growth Curve

> Performance is dismal, so companies can only stay 'low-key.' 'Opening and closing stores simultaneously has become the norm in the industry, and people are no longer shy about closing stores,' said Mr. Wang, a Beijing convenience store chain operator. 'In 2022, the industry was still aggressively competing for lower-tier markets, with foreign brands like Lawson and 7-Eleven, as well as many local brands, accelerating store openings. But in 2023, everyone's actions have been relatively low-key. On one hand, performance is poor, so they can't be high-profile; on the other hand, operators are more focused on cost reduction and efficiency, saving expenses. Under the norm of opening and closing stores simultaneously, everyone can only stay 'low-key.'

**Performance is dismal, so companies can only stay 'low-key'**
"Opening and closing stores simultaneously has become the norm in the industry, and people are no longer shy about closing stores," said Mr. Wang, a Beijing convenience store chain operator.
"In 2022, the industry was still aggressively competing for lower-tier markets, with foreign brands like Lawson and 7-Eleven, as well as many local brands, accelerating store openings. But in 2023, everyone's actions have been relatively low-key. On one hand, performance is poor, so they can't be high-profile; on the other hand, operators are more focused on cost reduction and efficiency, saving expenses. Under the norm of opening and closing stores simultaneously, everyone can only stay 'low-key,'" Mr. Wang said.
In the Beijing market, Bianlifeng, which has attracted much industry attention, has also been a hot topic multiple times.
First, in the second half of this year, it shifted from direct operation to franchising. Since its first five stores opened simultaneously in Beijing on February 14, 2017, Bianlifeng has maintained rapid expansion. According to the "2022 China Convenience Store TOP 100" list released by the China Chain Store & Franchise Association (CCFA), Bianlifeng had 2,005 stores in 2022, ranking 15th on the list. All of these stores were directly operated.
Second, in 2022, affected by multiple factors, Bianlifeng proposed a "hibernation plan." Public reports show that starting in April 2022, Bianlifeng closed 800 stores nationwide, with a higher number of closures in Jiangsu, Zhejiang, Shanghai, and Qingdao. By April 2023, the number of closed stores had reached 1,000.
Third, Bianlifeng's milk tea project "Bumianhai" has also stalled. In 2022, the Bumianhai equipment in many Beijing Bianlifeng stores was covered with dust cloths, and there has been no sign of restarting in many stores to date.
It is worth mentioning that recently, many residents in Nanjing, Jiangsu, reported that Bianlifeng stores, once ubiquitous on streets and alleys, have closed one after another. "I thought it was just a temporary closure, but a week passed and they still haven't reopened."
According to Jiangsu Economic News, not only in Nanjing, but also in major cities across the country, Bianlifeng has experienced a "wave of store closures." Currently, the number of stores nationwide has decreased by more than a quarter.
In response, Mr. Wang said that Bianlifeng's franchise fees are relatively high. Opening a franchise store requires a one-time payment of 50,000 yuan for a five-year franchise fee, a 100,000 yuan deposit, plus pre-opening costs including rent, decoration, and equipment, totaling nearly 700,000 yuan. This makes it difficult for franchisees to maintain the motivation to continue operating. Now, nearly three months after Bianlifeng officially opened franchising, the situation is not optimistic. Franchise stores account for only 35% of the total in Beijing, the highest proportion, and Bianlifeng has fallen into a "franchise dilemma."
"Not only Bianlifeng, but this year has been impacted by various shocks, and everyone in the industry is having a hard time. On one hand, brands like Bianlifeng and Jingxi Convenience Store are significantly shrinking; on the other hand, brands like Lawson, 7-Eleven, and FamilyMart are aggressively entering third- and fourth-tier cities, continuing to expand into lower-tier markets," Mr. Wang said.

**So "grinding" that opening a store is worse than working a job**
"Starting in the first half of 2022, in addition to our convenience store main business, we also began to pay attention to discount stores and invested in several community discount store brands in third- and fourth-tier cities," Mr. Wang said. His invested discount store brands are still growing.
In the past few years, with the support of capital, China's convenience store industry has experienced rapid expansion. According to the "2023 China Convenience Store Development Report" jointly released by CCFA and KPMG, the total number of convenience stores in China increased from 132,000 in 2019 to 300,000 in 2022.
The industry is still developing rapidly, but individual franchisees are not doing well. With intensified competition, both average sales per store and average population covered per store have declined to some extent.
Moreover, the aggressive arrival of various discount stores has taught a lesson to convenience stores with higher prices. A convenience store operator said that a bottle of Nongfu Spring water sells for 2 yuan in her store, while a discount store sells it for 1.1 yuan. The nearby supermarket originally sold it for 1.5 yuan but later reduced the price to 1.3 yuan. Products that should have sold well have gradually become unsellable.
More and more franchisees are expressing on social networks that the risk of losses is increasing, and opening a store is worse than working a job.
"I took over this store in 2022. At the time, I thought that since this convenience store brand is a leading brand, I wouldn't have to worry too much as a franchisee, so I entered the industry," a netizen in Guangdong said on social media, not expecting that operating a convenience store would be so "grinding."
"I invested manpower, materials, and money, but got no actual returns. For example, franchisees cannot choose the products sold in their stores, and the goods allocated by the company are not necessarily the best-selling products in the store; they have to passively accept them. In addition, although there are many customers during promotions and sales keep rising, the cost of promotions is actually borne by the store owner. It's like we are doing activities just to build the brand's reputation," the netizen said helplessly. After calculating monthly costs including employee wages, rent, utilities, etc., they lose several thousand yuan each month.
For some individual operators, life is even harder.
"Since the opening of a snack discount store on the street this year, the daytime business of my convenience store has plummeted. From 7 a.m. to 10 p.m., I can only sell a few hundred yuan worth of goods. Only after the snack store closes at 10 p.m. do I get some sales," said a convenience store owner in Dachuan District, Dazhou City, Sichuan Province.
Wang Lei, who has been operating a convenience store in Guiyang for more than 7 years, said that this month's sales still struggle to exceed 1,000 yuan, and the sparse customer flow makes him see no hope at all.
In this regard, industry insiders say that from the overall market perspective, despite poor performance, the convenience store industry is still in a period of rapid expansion, and the direction of rapid expansion is shifting from first-tier cities to second- and third-tier cities, or even more down-market areas.
During this period, various brand companies are also constantly seeking a second growth curve.

**Seeking a second growth curve**
In 2023, convenience store companies are seeking a second growth curve mainly in the following directions:
First, expanding into coffee and beverages.
On December 8, the WeChat official account of Beijing-Tianjin-Hebei Lawson showed that its first coffee house, LAWSON COFFEE, opened in Shijiazhuang on December 8.
It is understood that the store is located in Qiaoxi District, Shijiazhuang, and is positioned as a comprehensive coffee house integrating coffee, tea drinks, and snacks.
From the menu, Lawson Coffee includes seven categories including milk coffee, tea drinks, and American coffee, with a total of 21 products. During the opening promotion period, prices range from 6.6 to 17 yuan.
It is worth noting that the Beijing-Tianjin-Hebei Lawson that announced the opening is directly managed by Lawson (Beijing) Co., Ltd. This is the first time in the convenience store industry that Lawson Coffee House appears as an independent brand and independent store.
In this regard, industry insiders say that although Lawson has a certain foundation to enter the coffee track, which seems natural, with Luckin reaching 10,000 stores and the number of chain coffee shops approaching 40,000, it is difficult to break the current pattern in the coffee track.
Second, setting up pre-made dish sections and increasing the number of pre-made dish products on shelves.
In June 2023, FamilyMart put pre-made dishes on shelves in its Shanghai stores, attracting external attention.
A FamilyMart store in Shanghai set up a set of double-door, 7-tier refrigerated cabinets specifically for pre-made dishes. The cabinets displayed pre-made dishes such as Thai curry chicken, black pepper beef noodles, three-shrimp mixed noodles, and sirloin steak. Most of these pre-made dishes come from external suppliers, including food giants like CP Foods and Tyson Foods, as well as catering brands and time-honored brands.
FamilyMart is still cautious about pre-made dishes. From product selection, pricing, consumption scenarios, and customer groups, FamilyMart's pre-made dish business mainly targets young people who don't have time to cook, launching products suitable for kitchen appliance consumption scenarios and following a cost-effective route.
In fact, chain brands such as Lawson and Bianlifeng have already entered the pre-made dish track. According to public reports, Lawson has launched multiple pre-made dishes, including frozen dishes and frozen staple foods. Bianlifeng has also entered the pre-made dish market, launching several pre-made dishes with local characteristics this year, such as Di San Xian, braised meatballs, and Shanghai-style braised pork chop.
Third, upgrading the humanized and warm "third space" for retail.
For example, Linji Convenience Store, which started in Anhui, has made great efforts to create a "city third space" in its stores.
Specifically, each store has an average of 12 leisure tables and chairs, providing customers with 24-hour free leisure, charging, and internet access, as well as value-added services such as hot water and microwaves. They also set up humanized free scales and dressing mirrors in the store, providing target customers with a space to rest and relax outside of home and work.

**What direction will the convenience store track develop towards?**
Lan Shili, the former richest man in Hubei, will next do three businesses: soda, vending machines, and convenience stores.
At the end of 2023, Lan Shili, who has returned to the "stage," seems to have completely shed the shackles of prison life and is once again challenging his former glory.
On August 23, at a press conference in Beijing, Lan Shili said that after Wuhan Xiushanghuo and Wuhan No.2 Factory Soda, his business map would continue to expand. The next step would be to launch Juhe Super Convenience Store, and if all goes well, he would open more than 500 stores within a year.
According to Lan Shili, the so-called Juhe Super Convenience Store brings together more than ten business formats around people's lives, such as convenience stores, coffee shops, milk tea shops, real estate agencies, nanny services, travel agencies, and lawyer services, into one store, and then provides more convenient services through the internet, covering a three-kilometer radius.
Currently, two stores have been opened in Shenzhen, with plans to open 100 in Shenzhen this year, and then transform the more than 420 Quanshi convenience stores acquired in Wuhan into Juhe Super Convenience Stores.
In his vision, a convenience store is not a simple convenience store, but rather "a true combination of the internet and physical entities" under internet thinking. To this end, Lan Shili also designed and created an APP that aggregates functions such as ride-hailing, buying plane and train tickets, buying movie tickets, and food delivery, truly connecting the online-to-offline loop through convenience stores.
"When customers come to the convenience store to buy things, I give them cashback and discounts, and let them download the APP. Through the APP, they can enjoy other services, pulling offline customers online and online customers offline. Including lawyer services, I pull lawyers from office buildings into convenience stores so that customers can find lawyers more easily. This is a model I figured out in the detention center."
But in fact, Lan Shili himself admitted that this is a convenience store that many people cannot understand.
In this regard, industry insiders say that the convenience store track has been continuously impacted and "beaten" this year. The future direction of development is worth further discussion:
Operators should start from four aspects: cost, efficiency, service experience, and business model, with the core still being transaction costs;
In the current experience economy era, the service experience consumers receive is very important. It can be continuously optimized through in-store layout design, trajectory guidance, and internal digital presentation to better meet consumer needs.
Looking back at the development of convenience stores in China, it has a history of nearly 30 years, but it was only in the last 10 years that the domestic convenience store industry gradually entered the fast lane.
According to data from the China Chain Store & Franchise Association, in 2013, the number of chain brand convenience stores was 62,147, and by 2022, the number of chain brand convenience stores had reached nearly 300,000.
However, overall, whether in terms of market size, industry scale, or proportion of total retail sales of consumer goods, the convenience store industry is still a relatively small industry.
As Pei Liang, former president of the China Chain Store & Franchise Association, said, "Looking ahead to the next decade, convenience stores, as an important format of offline retail, have huge development space and also great room for improvement. But the operation of convenience stores is a marathon, and the key is persistence, as well as the right methods."


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