---
title: "Convenience Stores 'Sink Further': He Who Wins the Central Plains Wins the World?"
description: "An investor focused on the retail sector noted that while retailers once favored first-tier cities and coastal areas, true competitiveness now lies in winning the Central Plains, especially the four populous provinces of Shandong, Shanxi, Henan, and Hebei. The reasons are simple: these provinces have huge consumption potential and a geographical advantage connecting north and south. The key is to continuously 'sink' and deeply penetrate these markets."
author: "东方"
publisher: "New Distribution"
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published: "2023-07-12"
language: "en"
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# Convenience Stores 'Sink Further': He Who Wins the Central Plains Wins the World?

> An investor focused on the retail sector noted that while retailers once favored first-tier cities and coastal areas, true competitiveness now lies in winning the Central Plains, especially the four populous provinces of Shandong, Shanxi, Henan, and Hebei. The reasons are simple: these provinces have huge consumption potential and a geographical advantage connecting north and south. The key is to continuously 'sink' and deeply penetrate these markets.

"Originally, everyone in retail preferred Beijing, Shanghai, Guangzhou, and Shenzhen, and coastal cities. But now, the real competitiveness is that he who wins the Central Plains wins the world, especially the Central Plains as a populous province—the four provinces of Shandong, Shanxi, Henan, and Hebei," said an investor focusing on the retail sector.
The reasons are simple: first, the four Central Plains provinces are populous provinces with huge consumption potential; second, the geographical advantage of the four Central Plains provinces connects the north and south. The south has a relatively developed economy, high resident income, and weak seasonality throughout the year, which is very suitable for the development of convenience store formats; the north has four distinct seasons, consumers have lower incomes, and are strongly affected by seasonality. After occupying the four Central Plains provinces, one can go south or north. But the more critical point is to continuously "sink" and make the market of the four Central Plains provinces deeper and more thorough. Among the four provinces, each has local convenience store brands that occupy a place, and most are developing well. For the convenience store format, "winning the Central Plains" makes it easier to win the world.
Looking at the vast map of convenience store distribution in China, it is clear that various convenience store brands are continuously "sinking." Even the three major Japanese convenience store giants Lawson, FamilyMart, and 7-Eleven, while continuing to occupy first- and second-tier cities, are also extending to "sinking" markets. At the same time, more and more local convenience stores with local characteristics are beginning to radiate outward besides occupying local cities. In every province, there are local chain convenience store brands occupying a place. Fujian has Jianfu, Wanjia, Liuyi, and Huining; 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 Meiyitian; Shanxi has Tangjiu and Jinfu; Hebei has 365, etc. In recent years, convenience stores have gradually sunk to third-, fourth-, and fifth-tier cities. Among the cities ranking high in national convenience store rankings, local leading enterprises have contributed a lot, and domestic local convenience store brands are also ushering in a big explosion.
Shanxi Province, one of the four Central Plains provinces, once made it to the hot search because its convenience store density is not inferior to first-tier cities, even triggering discussions in the industry about the "Shanxi phenomenon" of supermarkets. From the perspective of the number of convenience store enterprise stores, Shanxi Province has two convenience store enterprises in the 2022 China Convenience Store TOP20, namely Tangjiu with 2,200 stores and Jinfu with 2,025 stores. Jincheng Shenli Convenience Store ranked 74th in the top 100 with 281 stores. In addition, according to the "2022 China Urban Convenience Store Index" released by the China Chain Store & Franchise Association, the top 10 cities in the national convenience store ranking are Xiamen, Taiyuan, Dongguan, Changsha, Guangzhou, Shenzhen, Beijing, Shanghai, Chengdu, and Zhongshan. Among them, Taiyuan ranked second. From the perspective of city distribution, Taiyuan has the largest number of convenience stores in Shanxi Province, nearly 12,000, which is 2.7 times the number in Jinzhong City, far ahead of other cities. Jinzhong and Lvliang ranked second and third with 4,354 and 3,992 stores respectively. Among the 11 cities in the province, Jincheng has the fewest convenience stores, only 1,621.
According to local people, Taiyuan convenience stores have the following two characteristics: First, they are very "close." As long as you want to buy something, you can definitely see "Tangjiu Convenience" when you look up, and within 100 meters there is also a "Jinfu Convenience"; second, Taiyuan convenience stores are very "complete." They can customize birthday cakes, sell lottery tickets, provide free self-service printing, parcel storage, dog walking services, repair electrical appliances, heat meals, lend umbrellas, pay water, electricity, and gas fees, and even help consumers knead dough, deliver goods to the elderly, teach elderly women to use electronic coupons, and have toilets in the store. It is understood that Tangjiu and Jinfu stores are not only extremely dense in Taiyuan, but also have sunk to 7 other cities in Shanxi Province and more than 30 county-level markets. From the perspective of Shanxi Province itself, it is not a province with a very high GDP. The cities and towns where Tangjiu and Jinfu expand are not as strong in consumption as Beijing, Shanghai, Guangzhou, Shenzhen, and Hangzhou. It can be said that the two enterprises have sunk to a market that is demanding for convenience stores nationwide, and their depth is similar to Meiyijia, sinking to the county level. But overall, except for Taiyuan, the atmosphere in other cities in Shanxi Province is not so strong. In 2021, there were more than 40,000 convenience store-related enterprises in Shanxi, with individual industrial and commercial households reaching 39,000, accounting for 96%. Among the 40,000 enterprises, only 43 had registered capital of more than 1 million yuan. For example, after basically completing penetration of the Taiyuan market, Jinfu sank to more than 30 county-level markets, and currently each city has about 30-50 stores, in sharp contrast to the thousands of stores in Taiyuan.
The rapid development of convenience stores in Shanxi Province is inseparable from the support policies of the local government. Among them, in 2021, the Shanxi Provincial Department of Commerce issued the "Notice on Collecting 2021 Commercial Circulation Development Projects," which provides subsidies for headquarters enterprises that develop brand convenience stores in counties through direct operation or franchise in 2019 and 2020. For each convenience store expanded, after certification, a subsidy of no more than 30% of the equipment purchase amount will be given, with a single store subsidy not exceeding 30,000 yuan. This "county" includes all towns and villages in the province, areas outside the main urban area of Taiyuan, and areas outside the main urban area of other prefecture-level city governments.
After first-tier cities with high rent, high labor, and high water and electricity are filled, convenience stores begin to sink, targeting people returning to their hometowns to start businesses and small-town youth, hoping to grasp the new round of domestic demand consumption upgrade. Going down, going to counties, is Shanxi's latest plan.
Looking at the other three provinces of the four provinces, in the 2022 convenience store TOP100, Shandong has 9 enterprises, namely Qingdao Kehao with 702 stores, Qingdao Youke with 646 stores, Weifang Zhongbai Convenience with 625 stores, Youtong with 513 stores, Xinxing with 475 stores, Chengzi Convenience with 262 stores, Qingdao Liqun Convenience with 211 stores, Maike Convenience with 178 stores, and Quanfuyuan with 162 stores; Hebei Province has 4 enterprises, namely 365 with 1,873 stores, Shike Convenience with 633 stores, Tiantian Convenience with 489 stores, and Fumeiduo with 165 stores; Henan Province has 3 enterprises, namely Wenfeng with 668 stores, Yuelai Yuexi with 612 stores, and Yishiduo with 273 stores. Among them, Qingdao, as a new first-tier city, has the most local brands, and the number of stores of Youke, Kehao, Youtong, and Liqun has also been increasing in recent years. Compared with 2022, in 2021, Youke Convenience had more than 500 stores in Qingdao, ranking first in market share; Kehao Convenience had a total of 435 stores in Qingdao; Youtong had more than 300 stores in Qingdao; Liqun Convenience had 205 stores. Although on September 6, 2021, Japan's Aeon's Mini Island convenience store announced that it would close all convenience stores in Qingdao by October 15 and dissolve Qingdao Mini Island, retaining only the Liaoning region (mainly concentrated in Dalian) in China. But entering 2021, Shandong convenience stores still entered a stage of rapid expansion and development. In 2021, Bianlifeng, which opened stores very quickly, also raced to expand in Qingdao. From the perspective of the entire retail market scale of Shandong Province, it presents the characteristics of "strong in the east and weak in the west." It is understood that the convenience store and large supermarket formats in Shandong Province have large room for improvement, and operating efficiency needs to be improved. Taking six chain retail formats—convenience stores, discount stores, supermarkets, large supermarkets, warehouse membership stores, and department stores—as the entry point for observing the development of the retail industry, the convenience store and large supermarket formats (above 3,000 square meters) are relatively lacking, with sales proportions 4.7% and 22.8% lower than the national average, respectively. In addition, retail formats in Shandong Province generally show low sales per square meter. The sales per square meter of convenience stores, supermarkets, and large supermarkets are 5.4%, 8.2%, and 35.9% lower than the national level, respectively, leaving large room for optimization. The convenience store leaders in Shandong Province are numerous and relatively fragmented, making it difficult to fully exert scale effects and improve operating efficiency. From another perspective, there is a certain need for integration.
Looking at Hebei Province, the local convenience store enterprise 365 decreased by 46 stores compared with 2021, ranking 17th in the "Convenience Store TOP100." It is understood that after 25 years of development, 365 Convenience has laid out in Beijing, Tianjin, Shijiazhuang, Tangshan, and other regions, and also has brands such as 365 Life Supermarket and Good Fellow 365 Rural E-commerce Service Station. Facing the continuous moves of big-name convenience stores entering Hebei in the past two years, for example, in Shijiazhuang alone, after Lawson entered in August 2021, in July 2022, the first four stores of 7-Eleven in Shijiazhuang officially opened; in November 2021, Bianlifeng also entered Shijiazhuang, and its directly-operated stores in Shijiazhuang have reached 20; currently, Lawson has layouts in Chengde, Zhangjiakou, Qinhuangdao, Cangzhou, and other cities in Hebei Province, and is also intensively selecting sites for stores in Handan and Xingtai. In order to survive, 365 Convenience has also begun to make frequent adjustments, appropriately increasing the supply of family-oriented consumer goods such as rice, flour, oil, and large packages and whole boxes, and extending business hours to 24 hours when appropriate.
For Henan Province, although in June 2020, the Henan Provincial Department of Commerce and other 13 departments jointly issued the "Implementation Opinions on Accelerating the Development of Brand Chain Convenience Stores," which mentioned that Henan Province will use about 3 years to accelerate the development of brand chain convenience stores. However, many people are still complaining that convenience stores in Zhengzhou, the capital of Henan Province, are not convenient enough. For example, they fail to operate 24 hours, or the experience is not very good, and prices are relatively high. However, the convenience store industry has entered a period of integrated development, and the Central Plains region will gradually usher in the development of "private brands, diversified channels, and digital operations." In recent years, the convenience store industry has entered a period of rapid development in the Central Plains region, and brand competition is also intensifying.
According to the "2020 China Convenience Store Development Report" of the China Chain Store & Franchise Association, in 2020, the sales growth rate of small supermarkets, large supermarkets, and department stores fell from 9% in 2019 to 1%, with growth almost stagnant, but the sales growth rate of convenience stores in that year was still 11%. Since then, it has maintained a relatively high growth rate. From 2019 to 2021, the sales growth rates of convenience stores were 12%, 31%, 23%, and 19%, respectively. New convenience store brands are emerging one after another, racing to expand. Taking Hebei Province as an example, in 2021, Sanxiao Shihui entered Hebei; in the same year, Yikuai Yiman opened its first store in the High-tech Zone; Hualian Group added a new convenience store brand Hualian Xianchao. In 2021, the first Xunmao Smart Convenience Store in Hebei opened, in 2021 Chengzi Convenience Store opened, and in 2022 Bianlifeng entered... Plus Tmall Xiaodian, JD Convenience Store, Sinopec Yijie, and PetroChina Kunlun Haoke brands, the convenience store market competition is fierce. It is precisely because of this that the entire convenience store market is also facing pressure from intensified competition and declining growth rates. According to the "2021 China Convenience Store Development Report," the first-tier city market is relatively saturated, and second- and third-tier cities have become new positions for convenience store enterprise market expansion with sustained economic growth and cultivation of consumption habits. In recent years, whether it is the three major Japanese brands or local brands, they have all walked out of their own bases and sunk to third- and fourth-tier cities, opening up new regional territories, becoming the development trend of the entire industry. So, from the perspective of Shandong Province, how much market space is there for Qingdao and Jinan, which have many convenience store brands? According to the "China Urban Convenience Store Development Index" of the China Chain Store & Franchise Association in 2022, from the survey results, most cities' convenience stores achieved varying degrees of year-on-year growth. In addition, the development differences among cities are gradually expanding. The development trend of convenience stores also continues to sink to fourth- and fifth-tier city markets. Among them, the growth rate of convenience stores in Xiamen reached 10.34%, the highest among all cities, followed by Jinan and Guiyang. In addition to the growth of local brands, the rapid sinking of big brands, and more and more enterprises beginning to seek gold in lower-tier cities, this will inevitably change the industry landscape. For the convenience store format, under the spring breeze of urbanization and rural revitalization, the sinking market has good development opportunities. Of course, the sinking market is also full of temptations and challenges. In this regard, industry insiders believe that we should deeply cultivate the sinking market and achieve scale expansion. Through acquisitions, regional franchising, and other methods, head brands are expanding in the sinking market, and some small and medium brands with local advantages in provincial markets and single-city markets have subsequently become regional franchisees of big brands. Pei Liang, president of the China Chain Store & Franchise Association, believes that the convenience store industry will form a development pattern of mutual promotion of online and offline operations, and home delivery business, group buying business, live streaming business, etc. will be important components of online business. To this end, convenience store enterprises should seek more core driving forces, explore building "central kitchens," and achieve higher management capabilities for private brands and categories; at the same time, improve digital operation capabilities, on the one hand, achieve precise marketing of private domain traffic through the front end, and on the other hand, improve product selection quality and operation level based on back-end data, driven by consumer demand; in addition, they should also improve the organizational capability of teams and talents to achieve high-quality and sustainable development of the industry. In the long run, whether in first- and second-tier markets or sinking markets, with the support of new technologies and new ideas, the development of convenience stores should still adapt to the ever-changing needs of consumers and ultimately return to the essence of "convenience." The CCFA survey results show that the key development directions of convenience store enterprises in 2022 mainly include the following aspects: continuing to open stores, building product strength, supply chain construction, and digital upgrading. No business can be easily done. The sinking market, which seems to be a blue ocean, is not as smooth as it appears on the surface. There will be many difficulties, such as supply chain issues and the difficulty of breaking through the problem of mom-and-pop stores, all waiting for chain convenience stores on the road to sinking. Think back to when JD Convenience Store planned 1 million offline convenience stores, which has not been realized to this day.
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