---
title: "Convenience Stores on the Rise!"
description: "Are convenience stores still a good business? It can be said that the current stage is a dividend period for convenience store development. Two data points: 1. Although there are many convenience stores in China, 6 million of them are mom-and-pop shops. 2. Chain brand convenience stores are fewer than 100,000, accounting for less than 2% of the total, with very low penetration. So, are convenience stores still a good business? Which cities are better? Recently, the China Chain Store & Franchise Association released the \"2017 China Urban Convenience Store Index.\" The core data of the index includes the number of chain-branded convenience stores, the growth rate of convenience store numbers, and the proportion of 24-hour convenience stores..."
author: "参谋长"
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published: "2018-05-25"
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# Convenience Stores on the Rise!

> Are convenience stores still a good business? It can be said that the current stage is a dividend period for convenience store development. Two data points: 1. Although there are many convenience stores in China, 6 million of them are mom-and-pop shops. 2. Chain brand convenience stores are fewer than 100,000, accounting for less than 2% of the total, with very low penetration. So, are convenience stores still a good business? Which cities are better? Recently, the China Chain Store & Franchise Association released the "2017 China Urban Convenience Store Index." The core data of the index includes the number of chain-branded convenience stores, the growth rate of convenience store numbers, and the proportion of 24-hour convenience stores...

**Are convenience stores still a good business? It can be said that the current stage is a dividend period for convenience store development.**
**Look at two data points:**
1. Although there are many convenience stores in China, 6 million of them are mom-and-pop shops.
2. Chain brand convenience stores are fewer than 100,000, accounting for less than 2% of the total, with very low penetration.
So, are convenience stores still a good business? Which cities are better?
**Recently, the China Chain Store & Franchise Association released the "2017 China Urban Convenience Store Index."** The core data of the index includes the number of chain-branded convenience stores, the growth rate of convenience store numbers, the proportion of 24-hour convenience stores, and policy support; on this basis, the convenience store development index for each city was calculated. **Two important conclusions were drawn:**
Changsha, Shenzhen, Taiyuan, Dongguan, and Chengdu rank in the top 5.
In 2017, the transformation of China's retail industry continued to intensify. The convenience store industry kept injecting new concepts and technologies, coupled with capital support, and continued to develop rapidly at double-digit rates. According to the statistical results, cities with a convenience store growth rate exceeding 10% accounted for 61.1% of the surveyed cities. **Among them, Xi'an's convenience store growth rate reached 25.5%, the fastest among all cities.**
The convenience store market in first-tier cities is becoming mature, while second-tier cities show significant differences in development.
From the statistical results, the convenience store markets in first-tier cities like Shanghai, Guangzhou, and Shenzhen have become mature, approaching the development level of convenience stores in Japan, Taiwan, and other countries and regions. In the past two years, the Beijing Municipal Commerce Commission has continuously introduced a series of supportive policies to actively improve the business environment for convenience stores, and major convenience store brands have entered the Beijing market one after another, keeping Beijing's convenience store growth rate at 20.7% in 2017, the fastest among first-tier cities.
Nationwide, due to differences in population, GDP development, climate, living habits, and consumption levels, the development of second-tier convenience store markets shows an uneven phenomenon. **Among them, the western cities of Xi'an, Kunming, and Chongqing are the three fastest-growing cities, with growth rates of 25.0%, 23.8%, and 21.3%, respectively.**
**According to the "2017 China Convenience Store Development Report" jointly released by the China Chain Store & Franchise Association and Boston Consulting Group, the number of chain-branded convenience store outlets in China has approached 100,000, with sales reaching 130 billion RMB.** Moreover, the total number of stores of major brands in key regions has exceeded half of the total store count. The domestic rural market still has significant room for development.
**The market penetration of convenience stores in China is actually not high. Based on Japan's market saturation of 2,336 people per store, the market space for convenience stores in China is about 600,000 stores, with urban market space at 340,000 stores. Corresponding to the existing 90,000-plus stores, the penetration rate is less than 25%.**
China's convenience store market is now standing at a new wind vane, which can also be said to be the best dividend period. Pan Jinju, Vice President of Chunxiao Capital Investment, holds the core viewpoint:
In 2017, the term "new retail" was particularly hot, but in our view, this phenomenon is essentially due to the iteration of urban consumer groups. That is, the original core consumer group was the post-50s and post-60s, but today's urban core consumer group has become the post-80s and post-90s.
There are investment opportunities in small urban business formats. Why do we say this? The so-called convenience store SKU is about 2,000 to 3,000, mainly serving consumers within a radius of about 500 meters. Its SKU or product usage scenarios mainly meet consumers' needs for thirst, hunger, cravings, or urgent use, so it should be a general-purpose format.
**China's convenience store market is still in a relatively early stage of development, with huge room for future growth.** Data released by the China Chain Store & Franchise Association in 2017 shows that there are fewer than 100,000 chain-brand convenience stores in China, just over 90,000. In 2013, the number of stores in the entire Japanese market was nearly 50,000.
Among all the opportunities in new retail offline formats, several new phenomena have emerged. First, new consumers have new demands: they are less price-sensitive, and their need for time urgency and convenience is increasing. **Second, new consumption habits: in the future, online e-commerce will definitely be a very important monetization channel for convenience stores.** Consumers' habit of shopping online has been fully educated by the market, and new service methods and new technologies can be accepted.
**In four to five years, a wave of convenience store M&A opportunities will emerge in China.**
Of course, besides established brand chain stores, the current retail environment has changed. Led by JD.com and Tmall, Suning, Tianhong, RT-Mart, Yonghui, and others have begun to lay out offline small stores. Coupled with many local brands (Meiyijia, Bailichen, Bianlifeng, Kedi, etc.) and foreign convenience store brands (7-Eleven, FamilyMart, Lawson, etc.), the entire industry seems to be nurturing a big movement.
Why are they all laying out small stores? They want to seize the terminal first, and through system services, ultimately control the stores. This is to achieve a full set of services from terminal sales to system, supply chain, and logistics.
The combination of terminal + system + logistics can create a new retail business landscape. The future direction is that brand owners only need to cooperate directly with channel providers. With the intermediate links stripped away, independent small stores will have no room to survive.
**Take Tmall and JD.com as detailed examples:**
Tmall Small Store + Alibaba Retail Link + Cainiao Logistics
In August last year, Alibaba's Retail Link announced that the first Tmall Small Store dedicated to serving communities had officially opened in Hangzhou. Compared to before, this model store saw a 26% increase in foot traffic month-on-month, and annual gross profit will increase by more than 400,000 RMB. For a small store, what does this concept mean?
Tmall Small Store front
Cashier
Tmall counter inside the store
Backend system
Store owners can view daily sales, inventory, and other data, and even see at a glance from the backend data which similar products sell better and restock more.
JD Convenience Store + JD Zhangguibao + JD Logistics
Now let's look at JD Convenience Store. Also last year, JD Group CEO Liu Qiangdong announced the JD Million Convenience Store Plan, which will open more than 1 million JD convenience stores nationwide in the next five years, half of them in rural areas.
The current planned main categories are FMCG, while other categories such as 3C, home appliances, apparel, and home furnishings can support some display and commission-based ordering models.
JD Convenience Store
Purchasing is divided into two modes: 100% purchasing and partial purchasing. Store owners place orders on the JD Zhangguibao APP, and JD is responsible for logistics and delivery to the store. Those who purchase 100% from JD will receive more support in market activities and other aspects.
**In addition to Tmall and JD, other platform merchants such as Suning's small stores, RT-Mart's Hi-Life, Yonghui Preferred, and SF Preferred are also brewing big moves. Convenience stores are standing at a new wind vane. Have you seized the opportunity?**
Source: Retail Business Insider (lssync)
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