**Quanshi, always by your side Beijing's convenience store brand most resembling 7-Eleven, Quanshi, has not escaped a second sale. The three-way split of Quanshi is largely settled:
Lawson Convenience 'takes over' 94 stores in East China and Chongqing; Jianfu Convenience 'takes over' 106 stores in Chengdu; Haolinju Convenience 'takes over' over 400 stores in Beijing. **-01-**The Full Story of Quanshi's 'Sale' (Image source: CCTV2 Finance, Huang Hanjie, Deputy General Manager of Beijing Shanhai Lantu) Through multiple channels, 'Retail Circle' has learned that Quanshi convenience stores are currently basically 'taken over' by Lawson, Jianfu, and Haolinju respectively. The cooperation methods publicly announced by the three are mostly centered on terms like 'trusteeship', 'franchise', and 'takeover', rather than 'acquisition'. On May 11, 2020, Beijing Quanshi Convenience Store's official public account issued a 'Notice of Business Suspension', followed by consecutive announcements changing 'end of operations' to 'adjustments', and multiple Beijing stores' '60% off clearance' sparked various speculations in the industry. This marked the beginning of Quanshi's second 'sale'. On May 16, 2020, Chengdu Quanshi Convenience Store's official public account published an article titled 'Jianfu x Shanhai Lantu, joining forces to jointly develop the Sichuan convenience service market', entrusting all 106 Chengdu Quanshi stores to Jianfu Convenience for operation and management. Shanhai Lantu was jointly funded by Cai Xueyan, Chen Huona, and Chen Chang, who are also founding shareholders of Xiamen Yinlu Group. After Yinlu's joint venture with Nestlé, they successively invested in Fujian Jianfu, Changsha Shanshan Convenience, etc. 'Retail Circle' believes that the 'handover' of Quanshi Chengdu stores to Jianfu Convenience may have been predetermined. On May 20, 2020, according to Jiemian News, Quanshi's Beijing stores, which were originally planned to end operations on May 20, found a successor—Haolinju. The source revealed that Haolinju has taken over Quanshi and is currently in a cooperative relationship with Quanshi. The Quanshi brand is still retained, with product and store management temporarily handled by Haolinju. Questions about future development, whether the Quanshi brand can ultimately be retained, and the future of Quanshi franchisees cannot be accurately answered at this time. On February 22, 2019, Lawson took over 94 stores in Quanshi's East China (Jiangsu, Zhejiang, Shanghai) and Chongqing regions. Except for a few stores that were not finalized, the rest of Quanshi convenience stores have been taken over by Lawson, including stores, equipment, products, and some employees who voluntarily joined. Quanshi convenience store Chengdu stores were taken over by Jianfu, and Haolinju assists in managing Quanshi Beijing stores. 2020 2019 Quanshi convenience store Chongqing and East China stores changed hands to Lawson; Beijing, Tianjin, and Chengdu stores changed hands to Shanhai Lantu. Parent company Fuhua was affected by the P2P crash, leading to a capital chain rupture. Quanshi's operations were affected. 2018 2017 '100 Cities, 1 Million Terminals' plan: 100 cities, 1 million terminals. Quanshi Convenience was established in Beijing. 2011 'Retail Circle' learned that Quanshi Convenience was established in 2011, with major shareholder Beijing Fuhua Zhuoyue Commercial Management Co., Ltd. In its early days, it benchmarked against 7-Eleven in Beijing and was called by the industry as the convenience store most resembling 7-Eleven in the Beijing region. It went through three rounds of financing during its development. At the end of 2017, the '100 Cities, 1 Million' plan brought Quanshi to its peak development, investing 10 billion yuan over five years to cover '100 cities, 1 million terminals'. In February 2018, Quanshi acquired Sichuan Dog Supermarket Chain Co., Ltd. (GOGO Convenience) to rapidly expand into the Southwest market. According to public data, as of July 2018, Quanshi had expanded to 10 cities including Beijing, Nanjing, Tianjin, Changsha, Chengdu, Chongqing, Hangzhou, Suzhou, Wuhan, and Langfang, with nearly 800 stores, including over 400 in Beijing alone. In November 2018, it was revealed that Quanshi's parent company, Beijing Fuhua Zhuoyue Commercial Management Co., Ltd., was affected by the P2P crash, leading to problems in Quanshi's capital chain. Quanshi's operations were also implicated, and a split plan surfaced, with Beijing, Tianjin, and Chengdu going to Shanhai Lantu, and East China and Chongqing going to Lawson Convenience. Now Shanhai Lantu has 'transferred' Quanshi to Jianfu and Haolinju. Thus, Quanshi Convenience ends its entrepreneurial journey with a 'three-way split'. For Quanshi, this may be a relatively good outcome, at least returning to the convenience store business. **-02-**Behind the Three-Way Split of Quanshi by Lawson, Jianfu, and Haolinju Left: Cai Xueyan, Chairman of Shanhai Lantu; Right: Zhang Li, Chairman of Jianfu Convenience (Signing ceremony for Jianfu's partnership with Chengdu Shanhai Lantu to jointly develop the Sichuan convenience store market) 'Retail Circle' has previously written about 'local convenience store brands dominating regions, foreign convenience store brands replicating and expanding nationwide'. For this 'takeover' of Quanshi by Lawson, Jianfu, and Haolinju, it may just be a partial reshuffle under the competitive landscape of the convenience store ecosystem. Nationwide, as opening costs rise under homogeneous competition, regional integration may become the main trend in the coming years. According to the 2018 China Convenience Store Top 100 list released by the China Chain Store & Franchise Association, Lawson China ranked 9th, Jianfu ranked 13th, Haolinju ranked 43rd, and Quanshi ranked 46th. At that time, Quanshi and Haolinju were comparable in scale. As the most active foreign convenience store chains in regional expansion, Lawson and 7-Eleven have accelerated their nationwide replication pace, whether through aggressive acquisitions or regional alliances, with new store openings entering an unprecedented expansion state. Local brands mainly dominate regions, with slower expansion to other regions. Constrained by supply chain reconstruction, talent system building, and resistance from local players, regional convenience store giants rarely expand to other regions. Tangjiu successfully expanded from Taiyuan to Xi'an, Every Day successfully expanded from Xi'an to Zhengzhou, Tianfu successfully expanded from Guangdong to various cities in Hunan, and Shizu successfully expanded from Zhejiang to Jiangsu. However, few local convenience store brands have expanded to more than five provinces or cities nationwide. According to the '2019 China Convenience Store Development Report', in 2018, China's convenience stores achieved sales of 226.4 billion yuan (based on the 2018 China Convenience Store TOP100 data), with industry growth of 19%. The number of stores reached 122,000, a 14% increase year-on-year, showing the vigorous development momentum of the convenience store format. According to the '2018 China Convenience Store TOP100 List' released by the China Chain Store & Franchise Association, Sinopec Easy Joy (27,259 stores), PetroChina Kunlun Haoke (19,700 stores), and Meiyijia (15,559 stores) ranked in the top three. Suning Xiaodian (4,508 stores) ranked fourth, China FamilyMart (2,571 stores), Lawson China (1,973 stores), and 7-Eleven Mainland China (1,882 stores) ranked 7th, 9th, and 10th respectively. **Ranking | Company | Brand | Number of Stores (2018) 1| Sinopec| Easy Joy| 27259 2| PetroChina| Kunlun Haoke| 19700 3| Dongguan Sugar & Wine Group| Meiyijia| 15559 4| Suning| Suning Xiaodian| 4508 5| Guangdong Tianfu Commercial| Tianfu| 4212 6| Chengdu Hongqi| Hongqi| 2817 7| China FamilyMart| FamilyMart| 2571 8| Zhejiang Renben| Shizu/Zhishang| 2141 9| Lawson China| Lawson| 1973 10| 7-Eleven Mainland China| 7-Eleven| 1882 11| Hebei 365| 365| 1850 12| Shanxi Taiyuan Tangjiu| Tangjiu| 1500 13| Xiamen Jianfu| Jianfu| 1455 14| Shanghai Lianhua| Lianhua Quick| 1322 15| Xi'an Every Day| Every Day| 1219 Data source: CCFA Table: Retail Circle Among the top 100 convenience store chains, 20 have more than 1,000 stores, and 34 have more than 500 stores. Additionally, 30% of companies have between 100 and 200 stores. Overall, convenience store enterprises are still in a start-up stage, with generally small scales. **-03-**The Epidemic Is Only a Catalyst: Homogeneous Competition and Rising Costs Will Intensify the Shakeout If the epidemic is only a catalyst, then homogeneous competition and rising costs are the fundamental reasons for the convenience store shakeout. At the start of 2020, the COVID-19 pandemic dealt a heavy blow to the offline retail industry. According to China's Q1 economic data released by the National Bureau of Statistics this year, from January to March, total retail sales of consumer goods were 7,858 billion yuan, a nominal year-on-year decrease of 19.0%. Among them, by consumption type, commodity retail sales reached 7,255.3 billion yuan, down 15.8% year-on-year; catering revenue was 602.6 billion yuan, down 44.3%. According to the '2019 China Convenience Store Prosperity Index Report' released by the China Chain Store & Franchise Association, in 2018, 46% of stores experienced varying degrees of rent increases, posing a significant threat to sustainable store operations. In terms of store labor costs, in 2018, 56.3% of stores saw slight increases in labor costs, and 17.1% saw significant increases, and rising labor costs will further squeeze profit margins and increase operational pressure on stores. From a cost perspective, rent and labor costs largely determine a convenience store's basic cost structure and become the main factors determining the break-even point. However, with rising property prices and intensified competition, as well as the scarcity of professional talent, these two costs are currently showing an upward trend overall. From a competitive perspective, the three major foreign convenience store chains—7-Eleven, Lawson, and FamilyMart—are clearly accelerating their nationwide replication and expansion. In particular, 7-Eleven and Lawson have entered most of China's new first-tier and first-tier cities. This puts significant competitive pressure on regional players. The convenience store format has long matured, and the era where a 'facelift' renovation could conquer the market is over. Category management, supply chain management, talent pipeline management, intelligent empowerment, fresh food supply chain construction, and regional expansion coordination capabilities have become core competencies in modern convenience store management. Under the epidemic, the advantages of fresh-food-enhanced, community-enhanced, and online-enhanced convenience stores have been fully demonstrated. The 'community group buying' model, using convenience stores as front warehouses and self-pickup stations, has become popular. Convenience stores with fresh food enhancements have also seen better returns. Therefore, under the pressure of 'cost pressures and homogeneous competition', how convenience stores will transform and upgrade may still be a long road ahead. Source: Retail Circle (ID: retailmaster) Author: Shang Zhongyong Tips will be paid 400-2000 yuan once adopted