---
title: "Instant Retail for Convenience Stores"
description: "China's instant retail market is growing rapidly, with supermarket instant retail year-on-year growth exceeding 30% from 2020 to 2022, and industry insiders predict a compound annual growth rate of around 50% in the coming years, with the market size expected to exceed 1 trillion yuan by the end of 2026. In this context, regional retail enterprises should focus on branding, digital supply chains, and user satisfaction to leverage the synergy of convenience stores and instant retail."
author: "齐瑞鹏"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-10-31"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/Onc3crrSwkZkbwYvff4Peg"
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---

# Instant Retail for Convenience Stores

> China's instant retail market is growing rapidly, with supermarket instant retail year-on-year growth exceeding 30% from 2020 to 2022, and industry insiders predict a compound annual growth rate of around 50% in the coming years, with the market size expected to exceed 1 trillion yuan by the end of 2026. In this context, regional retail enterprises should focus on branding, digital supply chains, and user satisfaction to leverage the synergy of convenience stores and instant retail.

How large is China's instant retail market?
According to data released by Meituan, from 2020 to 2022, the year-on-year growth rate of supermarket instant retail exceeded 30%. In the foreseeable future, the instant retail market will continue to grow at a high speed.
Industry insiders generally predict that the compound annual growth rate will be around 50% in the next few years, and the industry as a whole has strong growth momentum and huge growth space. It is expected that by the end of 2026, the market size related to the instant retail industry will exceed 1 trillion yuan!
In this context, what should regional retail enterprises do?
**Branding under Instant Retail**
China's retail transformation has gone through three stages.
**The first stage, the supermarket era, centered on "goods," providing one-stop shopping services around "goods."**
This stage was dominated by supermarkets, which stocked goods based on their own forecasts and market judgments, displaying enough and complete goods to facilitate consumers' one-stop shopping needs.
For brand owners and channel distributors, as long as they had good products, they could basically sell them without worry by entering supermarkets. However, since 2014, except for a few regional large supermarkets that still saw slight growth, most chain supermarkets have seen declining business.
**The second stage, the convenience store era & new retail era, centered on "place," using "place"-based formats to meet consumers' convenience needs.**
Entering the convenience store era, near-field formats, although with limited SKU selection, could meet the needs of consumers within a certain radius.
Convenience store products are carefully selected convenience items, supporting the high premium of the entire product through extreme service, extreme product strength, and extreme brand strength.
In the entire convenience store industry, the front-end sales gross margin can reach about 28%. However, from the current situation, convenience stores still have many scenarios that have not met user needs. If consumer demand is quantified as 100 meters, convenience stores currently only meet 60 to 80 meters.
**The third stage, the new consumption era, centered on "people," with "goods" and "place" both serving "people."**
The changes in "goods" and "place" factors, such as pricing, location, and service, are all aimed at meeting consumer needs and enhancing the consumer-centric experience.
The accelerated growth of instant retail is actually a boost for traditional offline chain enterprises, enabling them to more efficiently meet consumer demand.
Today's young people are increasingly lazy. The changes in user habits cultivated by internet companies, especially Taobao, Meituan, and JD.com, have made consumers accustomed to online shopping with home delivery.
In this context, convenience store systems should also cater to this trend and accelerate the branding of convenience stores under instant retail. By combining the efforts of platforms and regional retail chains, they should pursue refined categories and branded operations.
With the convenience store scenario as the main body, in addition to combining and splicing conventional items such as fast-moving consumer foods, emergency daily necessities, and alcoholic beverages, they also introduce hot fresh food to highlight differentiation, coffee, children's toys, pet supplies, adult products, and other trending categories, as well as 24-hour convenience stores, targeting young, fashionable, and 80%+ of office white-collar users, and quality-seeking family customers.
**Convenience Store + Instant Retail**
**Is a 1+1>2 Business**
Those familiar with the convenience store industry know that most convenience store development is through franchising. The ultimate reason is nothing more than through intensive store opening, allowing consumers to have a stronger sense of experience and deeper awareness.
Combining with instant retail is for the same reason, as it can respond to consumers more efficiently and meet their needs more effectively.
Convenience store + instant retail, I believe, is definitely greater than 1+1. Youtong has also gained some experience in the process of doing instant retail.
**First, user satisfaction.**
When shifting from product demand in the store to user demand, instant retail makes us more respectful of the retail scenario.
Most Chinese consumers have used internet shopping platforms, such as Taobao, JD.com, Meituan, etc., to varying degrees. In the internet shopping scenario, consumer reviews are very important; a single negative review may result in a loss of sales.
Similarly, doing instant retail platforms is essentially online operations, and user satisfaction is very important. Negative impacts must be minimized.
**Second, store satisfaction.**
In the development of convenience stores, most are developed through direct operation + franchising. In the process of doing instant retail, we should consider franchisees more, providing more guidance from management to operation to implementation.
**Third, digital supply chain.**
Digital supply chain is not a concept, but rather, during digital transformation, it involves refining user traceability and user demand for products. It can even be detailed to which time period in the breakfast scenario a particular steamed bun sells well.
As the chairman of Youtong has always emphasized, we must continuously refine the terminal, strengthen the backend management, and continuously meet user needs and store satisfaction, ultimately building a valuable supply chain system.
Let me share a set of data: on the left is Youtong's instant retail category sales proportion, and on the right is a Japanese brand's category sales proportion.
From a category perspective, categories remain constant and do not grow, but the entire convenience store system will increasingly pursue refined and high-margin products, including some scenario-based products.
Whether embracing platforms or doing our own instant home delivery scenarios, the goal for home delivery business is to achieve over 25%, **requiring more effort to study user experience and product experience, so that users have high repurchase rates.**
You may notice that the entire convenience chain industry has been focusing on the scenario of multiple meals a day in recent years.
The emergence of instant retail can help convenience stores amplify the scenario of multiple meals a day. By leveraging 24-hour operation and product supply advantages, they can build multiple meal scenarios to meet users' different needs at different times, forming differentiated operations.
Through the retail page, scenario banners can be placed at different times, recommending different scenario categories to users at different times. For example, breakfast time, lunch time, afternoon tea, dinner, late-night snacks, etc., the main products promoted at different times are different.
Therefore, I firmly believe that **regional chain enterprises combined with instant retail, through city-by-city development, will definitely achieve 1+1>2.**
**Summary and Reflection**
The changes in the post-pandemic retail era tell us that the advantages of convenience stores + instant retail are gradually emerging, and changes in consumption channels also place higher demands on our retail brands!
Based on past practical experience, I believe there are three important points.
**First, reduce product costs and channel costs, and expand direct procurement.** Enterprises need to survive and have higher product profits, and channels also need profits, but consumers want cost-effectiveness. This requires compressing intermediate links and shifting more products to direct brand procurement.
**Second, improve terminal turnover efficiency.** From two aspects: first, product selection, choosing products that better meet consumer needs; second, product sell-through, how to stimulate consumer purchases through combination with scenarios.
**Third, user demand, seller shift, precise supply.** Centered on user needs, shift from seller thinking to buyer thinking, achieving precise supply of products.
Finally, let me share a piece of experience: whether you are a channel distributor, a chain supermarket, or a platform operator, you must adopt a mindset of liberating cities and liberating users to do instant retail. City-by-city operations should be based on specific situations to conduct user research and create category differentiation. _[This is the keynote speech by Mr. Qi Ruipeng, Deputy General Manager of Shandong Youtong Convenience Group, at the 5th China FMCG Conference, organized into an article for readers (with some deletions and modifications)]._
_PS: Friends interested in the on-site speech content can follow the recent push of the "New Distribution" WeChat official account. We will organize and publish all guests' speeches for readers._
_Click **Read Original** to see more of the 5th China FMCG Conference and the 1st China FMCG Distributor Conference..._


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