Source | Lingshou How effective has the renovation been? Two years ago, Lawson China formally proposed its "convenience store +" strategy. Now, two years on, the results of this strategy seem less than obvious. One of the most important initiatives under the "convenience store +" strategy is store renovation, piloting a "supermarketization" transformation. As early as the 2023 convenience store conference, Miyake Nobuhiro, president of Lawson (China) Investment Co., Ltd., stated: "We plan to renovate 10% of our stores nationwide over three years, expanding the area from the standard 80-100 square meters to 150-200 square meters." Specifically, Lawson's "supermarketization" enhanced store renovations focus on the following dimensions:

  • Area expansion: Standard stores expand from 80-100 sqm to 150-200 sqm.
  • Category expansion: In-store SKUs increase from 2,500 to 3,500-4,000.
  • Traffic flow redesign: After supermarket-style renovation, stores add fresh food areas, dine-in zones, and convenience service areas.
  • Equipment upgrades: Introduction of smart shelves, self-checkout, and other digital equipment. Take the Shanghai Jinhua Road store, which reopened in April 2023 after renovation. The investment was 1.5 million yuan, 2.5 times that of an ordinary store. Compared to before, the store area expanded from 85 sqm to 180 sqm, SKUs increased from 2,500 to 3,800, and fresh food and dine-in areas were added, each occupying 15% of the space. The fresh food, daily necessities, and convenience service areas were expanded, equipped with smart shelves and self-checkout. Two years later, the effectiveness of Lawson's "supermarketization" can perhaps be gauged from the operational data of pilot stores. According to operational data from Lawson's East China region (Q3 2023), daily sales before renovation were 5,800 yuan, rising to 8,200 yuan after; average transaction value increased from 16.5 yuan to 22.3 yuan; and fresh food sales share rose from 45% to 51%. The data looks optimistic, but hidden concerns are emerging. Due to the larger area, labor costs, utility expenses, and product shrinkage have increased significantly. According to KPMG's "2023 China Retail Cost Analysis Report," Lawson's "supermarketized" stores see notably higher operating costs: rent as a share of costs rises from 12% to 15%-18%; labor costs increase from 8% to 11%-13%; and water and electricity energy costs grow by 40%-50%. In this regard, an industry insider told the author that compared to true community supermarkets, Lawson's "supermarketization" has clear shortcomings in product structure. For example, fresh food categories in supermarketized stores account for only 10%-15% of SKUs, while community supermarkets typically exceed 30%. Additionally, products lack high-frequency, essential large-pack family sizes, making differentiation difficult. Similarly, in second-tier cities, Lawson's "supermarketization" attempts have also faced challenges. The Wuhan Optics Valley Tiandi Lawson store completed renovation in January 2023 with an investment of about 1.2 million yuan, but its performance has been disappointing. A staff member revealed: "Nearby residents are more accustomed to buying fresh food at large supermarkets; our fresh food area has become a decoration." He said the store handles a large volume of soon-to-expire products daily, with a fresh food shrinkage rate as high as 15% (industry average is 9%). On one hand, high investment in renovation leads to higher fresh food shrinkage; on the other, "supermarketization" places higher demands on the supply chain. A source from Lawson's supply chain admitted: "Fresh food delivery frequency needs to increase from once a day to twice a day, raising logistics costs by 30%. Some third- and fourth-tier cities cannot support fresh food delivery, leading to incomplete product assortments." An industry insider commented: "Expanding store area requires a complete restructuring of the supply chain system; it's not simply adding floor space and calling it 'supermarketization.' So, from the post-renovation operating status, it's clear that Lawson's supply chain capabilities have not fully kept pace with the transformation." Behind the Transformation Looking closely, Lawson's supermarketization transformation is a strategic adjustment under multiple pressures. From an industry perspective, according to the "2025 China Convenience Store Development Report" jointly released by the China Chain Store & Franchise Association (CCFA) and KPMG, the average daily sales per store in China's convenience store industry in 2024 was 4,634 yuan, a 1.4% decline from 2023, continuing the slight downward trend of recent years. This data reflects core challenges such as declining foot traffic and average transaction values amid rapid expansion. Lawson's pilot "supermarketization" is also an attempt under industry pressure. First, the competitive environment has changed dramatically. Bain & Company's "2023 China Retail Report" shows that the three Japanese giants (7-Eleven, FamilyMart, Lawson) saw their market share in first-tier cities drop from 62% in 2018 to 48% in 2023. Meanwhile, domestic brand Meiyijia surpassed 30,000 stores in 2023, establishing absolute dominance in lower-tier cities. According to the "2025 China Convenience Store Development Report," Meiyijia leveraged its down-market strategy and franchise model to continuously expand its scale barrier, ranking first with 37,943 stores, opening 4,095 stores in one year—an average of 11.2 new stores per day. Its "rural surrounding the city" strategy has been notably effective, with new stores in Guangdong county markets alone accounting for over 60%. Through the "Meiyijia Youxuan" mini-program integrating community group buying, online orders rose to 18%. Following closely are regional brands like Tianfu (7,521 stores) and Furong Xingsheng (5,838 stores), which are accelerating expansion with deep insights into Chinese consumer habits. More severely, the rise of membership warehouse stores has directly siphoned off convenience stores' high-end customers. According to Kantar Worldpanel data, 31% of Sam's Club and Costco members have reduced their shopping frequency at convenience stores, with these consumers cutting their annual spending at convenience stores by an average of 2,400 yuan. Second, consumer demand is diversifying. For example, consumer demand for convenience stores is shifting from "convenience" to "convenience + quality + experience." According to a consumer survey commissioned by Lawson from Nielsen, 68% of consumers want fresher food at convenience stores, 55% expect a more spacious and comfortable shopping environment, and 42% abandon purchases due to insufficient product variety, especially in first-tier cities. An industry insider noted that Lawson's "supermarketization" is essentially an evolution forced by upgraded consumer demand, a trend particularly evident in first-tier cities. Additionally, despite Lawson's heavy investment in digitalization, results have fallen short. According to Lawson China's 2023 digital operations report, online orders accounted for only 7.8%, lower than Bianlifeng's 25%; monthly active member growth fell from 15% in 2021 to 4% in 2023; and self-checkout equipment usage was below 30%. The setback in digital transformation forced Lawson to seek breakthroughs through offline store upgrades, which was another key factor driving the "supermarketization" initiative. Facing the Test Currently, Lawson's "supermarketization" transformation faces three major tests: first, whether it can maintain reasonable sales per square meter while expanding area; second, whether it can establish an efficient supply chain system suited to "supermarketization"; and third, whether it can change consumers' entrenched perceptions and truly become part of community life. The convenience store industry is shifting from scale competition to quality competition. Whether Lawson can break through via "supermarketization" will depend on its ability to solve these issues. In this regard, Zhang Lijuan, deputy director of the Shanghai Institute of Circulation Economics, believes that convenience store "supermarketization" requires balancing three aspects: the balance between area expansion and sales per square meter, the balance between category increase and turnover rate, and the balance between service expansion and costs. Currently, Lawson faces challenges on all three fronts. For example, regarding Lawson's supply chain, despite various attempts, its core competitiveness still lies in fresh food supply. According to industry research data, fresh food accounts for 40%-50% of sales, with annual output exceeding 250 million yuan. However, it must be said that the advantages of its fresh food-driven model are facing multiple challenges. Although Lawson has launched hit products like the Ice Skin Mooncake, regional taste differences require continuous R&D investment, whereas local brands excel at localized product selection. Furthermore, the fresh food supply chain must confront shrinkage pressure. High gross margins in fresh food often come with high shrinkage rates; a slight imbalance in supply and demand can lead to inventory buildup, which is also a challenge for Lawson. An industry insider told the author that beyond expanding store area to find market space, how Lawson can achieve breakthroughs through innovation is a topic worth deep study. The insider said that to break through, one must first understand the current pain points and challenges of the convenience store industry:
  1. Continuously rising cost pressures: For example, rent and labor costs grow at 8%-10% annually; high-margin categories like fresh food require high cold-chain logistics, driving up supply chain costs.
  2. Severe industry homogenization: According to industry research, product structure similarity exceeds 70%, and price wars lead to declining profit margins, with industry average net profit margins around 3%-5%.
  3. Regional development imbalance: First-tier markets are saturated, with severe cannibalization from new stores, while lower-tier markets still need consumer habit cultivation.
  4. High investment in digital transformation: Smart systems require high upfront investment, which small and medium brands cannot afford. Additionally, data security and privacy protection face challenges. "For Lawson, how to focus on product innovation is the key to breaking through," the insider told the author. He cited examples: In 2013, after 7-Eleven broke through American-style coffee extraction technology, it created a miracle of selling 450 million cups in just one year. Subsequently, other chain convenience stores followed the trend, investing in coffee machines and selling freshly ground coffee, rapidly expanding the convenience store coffee market to a massive scale of 1.3 billion cups annually. About five years later, 7-Eleven launched its newly developed fried chicken, which satisfied hunger and paired well with alcohol, attracting a large number of young people, and even some elderly joined the buying crowd. "The most important point in creating such sales miracles is product innovation, which can drive the sustainable development of the entire retail industry," the insider further explained. Overall, although the industry is still accelerating expansion, especially with local brands rewriting the game rules, for Lawson, the real crisis is not the single-store losses from "supermarketization" or other strategic attempts, but the gradual loss of differentiated value in the scale race. When consumers discover that "what you can buy at Lawson is cheaper at Meiyijia; what you can buy at Meiyijia is smarter at Bianlifeng," this Japanese brand will face unprecedented identity anxiety. Perhaps this year will also be the critical window to determine whether Lawson can hold its ground in the Chinese market. 🔺Scan for ticket inquiries🔺