The article 'Reshaping Value: The Era of Convenience Stores Is Coming' discusses future development trends of the convenience store channel, valuation models in the capital market, and strategic deployment for transforming from 'channel distributors' to 'local life service providers'. It particularly mentions the view that 'convenience stores should rely on high-frequency customer contact and rigid demand to acquire users, then gradually introduce various local life services. Ultimately, they may leverage extremely low promotion and marginal costs to squeeze out existing business formats and become the most influential retail service industry.'
As a practitioner in the commodity circulation industry, the author intends to propose the topic of 'self-improvement of convenience stores'. As general brand suppliers, as well as distributors and agents in the same industry, what insights can we gain from this article? Let's take a brief look.
First, a digression. Around the mid-to-late 1990s, when the KA retail format first entered China, there were many discussions and viewpoints in the industry such as 'the impact of KA on traditional distributors' and 'distributors will be replaced by hypermarkets'. Nearly 20 years have passed, and the actual situation is that modern and traditional channels coexist. Many distributors have upgraded from the earliest 'porters' to 'negotiators' who can skillfully do business with various KAs. This is to show that no matter how the external environment changes—including the much-publicized Alibaba 1688 project—as long as practitioners maintain an attitude of 'keeping pace with the times' and the ability to continuously learn, they will surely find ways to cope.
Returning to the topic of convenience stores. If the development trend of convenience stores as described in the article is realized, it actually provides product suppliers with an excellent offline platform to communicate with consumers—
More opportunities to be 'seen'. Convenience stores have limited floor space, and many are street-front shops. Therefore, brand image promotion within convenience stores will achieve high exposure. Especially, with the convenience store's own efforts to attract high-frequency foot traffic, consumers in a certain area will be more exposed to product advertising and image promotion.
24-hour uninterrupted business opportunities. We can make a not-so-scientific division: divide convenience store consumers into 'daytime shoppers' and 'nighttime shoppers'. Generally, we default to focusing only on 'daytime shoppers'. In fact, product suppliers can develop targeted promotional plans based on the 24-hour operation of convenience stores, pay more attention to 'nighttime shoppers', enhance brand loyalty among this group, and increase sales during the 'off-peak' nighttime period.
Are there more possibilities for service cooperation? The blueprint for the future development of convenience stores depicted in 'Reshaping' can be understood in two aspects: first, the increase in the density of convenience store outlets; second, its own transformation and upgrading from 'distributor' to 'local life service provider'. These two points increase the frequency of consumers visiting stores from a quantitative perspective and strengthen consumer loyalty from a qualitative perspective. As upstream product suppliers and agents, in the 'local life services' provided by convenience stores, are there more opportunities for cross-industry joint promotions? On one hand, this can provide more opportunities to reach consumers; on the other hand, joint promotions can help share some costs within the store, and also increase bargaining chips for future business cooperation. I don't know if there are precedents for such cooperation in areas with developed convenience store systems; but with the self-upgrading of convenience stores and a consumer-centric approach, multi-faceted cooperation between convenience stores and suppliers has some room for imagination.
Riding the O2O wave. In fact, many convenience stores have already begun their own O2O attempts. The basic model is: with the store as a unit and the surrounding community as the basic service scope, each store installs devices such as 'online service platforms'. Through this platform, customers can browse all products within the supermarket's supply chain, place orders, and pick them up the next day at the store near their home. As a supplement, customers can also join WeChat groups of community stores to learn about the most timely store products and promotional information. All of these provide more possibilities for suppliers to increase interaction with consumers.
So what impact will the booming development of convenience stores have on the existing channel ecosystem? Although the density and level of convenience stores in mainland China cannot reach Taiwan's level of 'one convenience store per 2,000 people' in the short term, in Shanghai, where modern channels are highly developed, the development level of convenience stores can serve as a reference: the biggest impact, in my opinion, lies in continuously eroding the living space of traditional circulation terminals, tobacco and liquor stores, and mom-and-pop shops.
In fact, as mentioned at the beginning of this article, similar remarks were made when KA first emerged. However, due to certain 'drawbacks' of KA, such as low distribution density and relatively inconvenient shopping, its convenience for some consumer goods with high immediate demand (tobacco, alcohol, beverages, snacks) is not obvious, so the impact on traditional circulation retail terminals that mainly rely on such products is relatively limited. But convenience stores combine the advantages of both KA and traditional terminals while maximizing the avoidance of their disadvantages: higher distribution density, relatively rich product variety, convenient and fast shopping process, elegant shopping environment... Especially with the upgraded 'local life services' project, once it increases consumer loyalty and attracts more consumers to the store, it will be a significant blow to traditional terminals in the surrounding area.
For this reason, once convenience stores develop, they may affect distributors' business to a certain extent. Looking at it from two aspects: first, it may affect the cooperation between distributors and manufacturers: because manufacturers may tend to choose direct operation for modern channels, bypassing distributors. Second, it affects traditional retail terminals, thereby affecting traditional circulation channels. And traditional circulation channels are the main force for meeting sales targets. The final result may be like the current situation in Shanghai: traditional channels shrink entirely, and modern channels become the absolute main force.
In fact, the above scenario may not actually happen, and even if it does, it will take a long time, especially influenced by the background of urban economic development. However, 'strategically despise it, tactically value it': distributors should strengthen their store management capabilities, enhance their control over different channel types, improve category management capabilities, and strengthen market service capabilities... No matter how trends change, distributors can keep up with the times and remain invincible.
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