---
title: "Lawson 'Adjusts' Mom-and-Pop Stores"
description: "Lawson is targeting mom-and-pop stores with its new 'Lawson Xiaozhan' format in Sichuan, Chongqing, and Guangdong, offering lower franchise thresholds and full gross profit retention to attract small retailers. This move aims to accelerate expansion into lower-tier markets, but faces challenges from policy restrictions, supply chain integration, and operational control."
author: "十里"
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published: "2025-04-06"
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# Lawson 'Adjusts' Mom-and-Pop Stores

> Lawson is targeting mom-and-pop stores with its new 'Lawson Xiaozhan' format in Sichuan, Chongqing, and Guangdong, offering lower franchise thresholds and full gross profit retention to attract small retailers. This move aims to accelerate expansion into lower-tier markets, but faces challenges from policy restrictions, supply chain integration, and operational control.

**Source**丨Lingshou**ID**丨lingshouke
**Author**丨Shili
**Lawson Eyes Mom-and-Pop Stores**
Amid the wave of convenience stores joining the "adjustment" trend, Lawson is targeting the most capillary ends—absorbing mom-and-pop stores.
Recent media reports indicate that Lawson has launched a new store format called "Lawson Xiaozhan" in the Sichuan-Chongqing region and Guangdong, using it to rebrand small mom-and-pop shops and accelerate expansion into lower-tier markets.
Currently, Lawson China has not publicly responded to this strategy. Through Lawson China's official website, the author found that the franchise policy for "Lawson Xiaozhan" has been publicly released in Guangdong and Fujian. Compared with traditional Lawson standard stores, "Lawson Xiaozhan" significantly lowers the franchise threshold.
For example, the store area only needs to be 20 to 50 square meters, with a minimum franchise fee of 40,000 yuan, including franchise fee, deposit, and ambiance renovation fee. Additionally, all product gross profit will go to the franchisee.
In contrast, the franchise threshold for Lawson standard stores is higher, with fees divided into two tiers of 350,000 yuan and 650,000 yuan depending on the model, requiring a store area of 50 to 150 square meters and a contract period of at least 5 years.
From this comparison, it is clear that "Lawson Xiaozhan" is a low-cost franchise option tailored to attract small store operators.
In terms of product structure, "Lawson Xiaozhan" is basically consistent with Lawson convenience stores, covering self-produced fresh food, desserts, oden, fried skewers, as well as snacks, beverages, personal care products, and daily necessities, with over 2,500 SKUs.
Additionally, to encourage mom-and-pop stores and small retail shops to join, "Lawson Xiaozhan" has launched a series of support policies. For example, according to the official website for Lawson's Guangdong-Fujian region, if franchisees change their store signage to the Lawson brand before the end of 2025, the franchise fee can be waived; if the change is completed before June 2025, the ambiance renovation fee can also be fully subsidized.
It is worth noting that "Lawson Xiaozhan" also supports a "store-in-store model," where franchisees can convert part of their existing store space into a Lawson Xiaozhan, coexisting with other business formats.
From a profit model perspective, franchisees of Lawson standard stores need to remit 5%-30% of gross profit to Lawson headquarters, while "Lawson Xiaozhan" allows franchisees to retain all product gross profit. This difference clearly enhances its appeal to small retailers.
The implication of this distribution is that, apart from some upfront renovation and equipment costs, Lawson headquarters essentially earns from the product supply chain fees in the Xiaozhan format, rather than profit sharing. From the gross margin of product sales, "Lawson Xiaozhan" maintains approximately 31%-33%.
In fact, "Lawson Xiaozhan" is not a brand-new format. As early as 2021, netizens mentioned seeing this store type on social platforms. On Dianping, multiple store listings for "Lawson Xiaozhan" can be found, with most stores having been open for over a year.
According to public reports, the total number of "Lawson Xiaozhan" stores nationwide has reached 200, with about 125 in the Sichuan-Chongqing region and about 65 in Guangdong.
A convenience store investor told the author that after mom-and-pop stores join Lawson Xiaozhan, the number of customers, visit frequency, and sales revenue will increase due to brand effects.
Typically, a convenience store's gross profit is around 20%. In recent years, due to the poor overall environment, prices have been repeatedly reduced, further compressing profit margins. In this context, by joining Lawson Xiaozhan, stores can introduce high-margin fresh food products, thereby optimizing the profit structure. The introduction of fresh food not only improves profit levels but also effectively increases the store's operating income and net profit.
**Reasons**
The launch of Lawson Xiaozhan has sparked much discussion, one key point being that Lawson can achieve a breakthrough in cigarette sales through mom-and-pop stores.
Due to policy restrictions, Lawson cannot directly sell cigarettes in some cities. However, mom-and-pop stores generally hold tobacco licenses. Through the rebranding model, Lawson can use these licenses to bypass policy barriers.
The aforementioned convenience store investor told the author that the gross profit of tobacco is inherently low, especially in the current economic downturn where high-end cigarettes are not selling well, causing tobacco gross margins to decline. However, the high sales volume attribute of cigarettes is an opportunity that cannot be ignored. Even under the current weak consumption environment, cigarette sales can still provide Lawson with stable cash flow support, providing financial security for expansion.
In addition, Lawson values the "influence" of mom-and-pop stores, especially in lower-tier markets.
For a long time, Lawson has been at a disadvantage in competition in first- and second-tier cities. As one of the Japanese-funded convenience store chains, Lawson has long focused on first- and second-tier cities, expanding slowly with provincial capitals as the core. But in first-tier cities, Lawson's market share and store count have always lagged behind competitors. Facing a saturated high-end market, Lawson has had to turn to lower-tier markets for new growth points.
Since 2020, Lawson's new stores have gradually shifted toward third- and fourth-tier cities, achieving significant results.
Data shows that during the pandemic, Lawson's store performance in East China achieved a 30% month-on-month growth, with growth in third- and fourth-tier cities far exceeding that in first- and second-tier cities. For example, sales growth in Shanghai stores was only 10%-20%, while Zhangjiagang in Suzhou saw a growth rate as high as 80%. These figures indicate that lower-tier markets are becoming Lawson's core growth driver.
According to its plan, the number of stores nationwide will exceed 10,000 by 2025.
By rebranding mom-and-pop stores, Lawson not only reduces expansion costs but also gains localization advantages. The existing customer flow and geographic location of mom-and-pop stores allow Lawson to quickly enter core market areas, shortening the cultivation period. Compared to opening new stores, this model significantly lowers the per-store investment threshold while enhancing brand penetration efficiency.
Furthermore, Lawson's intention is also to strengthen cost control by optimizing the supply chain. The Xiaozhan model relies on centralized procurement and regional warehousing systems to reduce inventory costs and improve logistics efficiency.
The aforementioned convenience store investor told the author that due to policy restrictions, Lawson Xiaozhan will not adopt overly aggressive expansion strategies. The model of joining Japanese convenience stores has certain contradictions with national policies and guidelines, and in the long run, this approach may be difficult to sustain.
He further pointed out that Lawson's opening of franchises is not just a market strategy, but also an important step to strengthen its Chinese supply chain by integrating mom-and-pop store resources. Mom-and-pop stores, as traditional small retail formats, typically rely on local suppliers, with dispersed and relatively flexible networks.
However, once these mom-and-pop stores are rebranded as Lawson Xiaozhan, they will be incorporated into Lawson's supply chain system, potentially causing local suppliers to face a sharp decline in revenue and even triggering unemployment issues.
From Lawson's perspective, this integration is undoubtedly an efficient concentration of resources. By incorporating mom-and-pop stores into its system, Lawson can not only optimize its supply chain management but also increase employment and income, while strengthening its marketing power and control in the Chinese market. However, this expansion method has also raised concerns. As the investor said, "This is very scary."
The potential impact of this model significantly conflicts with the government's advocated direction for convenience store development. China emphasizes the "branding, chain operation, and professionalization" of the convenience store industry, which is more aimed at supporting local enterprises, protecting local supply chains and employment opportunities, and not necessarily supporting the full penetration of foreign brands. In the future, China's convenience store industry may lean more toward a self-production and self-sales model to balance market competition and the economic ecosystem.
For this reason, the current franchise model of Lawson Xiaozhan is only being piloted in a few cities and has not been widely promoted nationwide. It is foreseeable that this expansion strategy will be constrained by both policy and market forces, making it difficult to achieve full rollout in the short term.
**Challenges**
Like all franchise businesses, the franchise model of Lawson Xiaozhan appears to lower the threshold on the surface, but many hidden restrictions are eroding the operational freedom of mom-and-pop stores.
First, brand convenience stores have many restrictions on product procurement, which is completely controlled by headquarters, with purchase prices 5%-10% higher than external sourcing channels, directly increasing operating costs.
At the same time, franchisees almost lose the right to choose products, and stores cannot adjust their product structure based on actual demand. The "one-size-fits-all" distribution method may maintain brand consistency, but for franchisees, the possibility of flexibly responding to the market may be completely blocked.
Higher purchase prices mean higher pricing. A potential franchisee revealed that after joining Lawson Xiaozhan, retail prices cannot be changed, but retail prices are about 15% higher than ordinary convenience stores.
In price-sensitive county towns, high pricing will become the biggest obstacle to driving consumers away. Even if brand convenience stores have advantages in the supply chain, especially high-margin categories like fresh food and hot food that can increase sales, the loss of customer traffic due to high prices may make it difficult for mom-and-pop stores to truly enjoy the benefits of the brand.
Additionally, the operational standards of brand stores are very high. Besides daily product management, franchisees must also implement various headquarters rules and regulations, such as quality inspections, fresh food preparation, waste inventory, and sanitation cleaning. These tedious tasks not only increase the burden but also bring a sense of helplessness, as if "making wedding clothes for others."
At the same time, the resulting quality control issues will also be an unavoidable weakness. Previously, Lawson has been exposed by the media multiple times for food quality issues, including substandard food storage and expired cooked food sales.
As a more down-market franchise format, whether Lawson Xiaozhan can maintain food safety and quality in a more complex market environment remains a huge question mark. Additionally, regarding the loyalty of mom-and-pop store owners, if other brands offer lower franchise prices or more flexible supply channels, how Lawson prevents these owners from changing signs or privately bypassing headquarters procurement is clearly a difficult problem.
The aforementioned franchisee said: "When the three years are up, if you renew the contract, you have to renovate again, which is another renovation fee. As for equipment, even if you don't use it, you still have to have it." That is, after the three-year cooperation period ends, if renewed, the store will also bear renovation costs, and even equipment must be equipped according to headquarters standards.
However, expansion is not without hidden concerns. In the process of moving into lower-tier markets, Lawson has chosen the large franchise model. While this model can quickly increase the number of stores, it also brings risks such as insufficient supply chain coverage and difficulty in ensuring quality control.
Especially in third- and fourth-tier cities and remote areas, the brand's supply chain capabilities often cannot fully cover, leading to difficulties in unifying management standards. If aggressive expansion strategies cannot match stable operational capabilities, they may instead weaken brand value.
Looking at Lawson's expansion path, from early regional authorization and regional large franchise models to achieve scale breakthroughs, to later building competitive barriers through "manufacturing retail," and now exploring lower-tier markets with "Lawson Xiaozhan," each step reflects its continuous attempts to adapt to localization needs.
However, the core competitiveness of convenience stores lies not only in the expansion of numbers, but also in brand stability and the depth of localized operations. Therefore, Lawson's next move in China must find a balance between expansion speed and management quality to truly consolidate its market position.


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