Click 'Read Original' for details In the offline retail sector, where pressure is generally immense, small and medium-sized retail formats like convenience stores are expanding faster and showing better sales growth. Recently, Meiyijia, China's largest convenience store chain, released its sales data for last year: 2016 sales exceeded 10 billion yuan!
China's Largest Convenience Store Chain – Meiyijia's 2016 Revenue Reaches 10 Billion Which is the largest convenience store system in China? 7-11? Where? Beijing, Shanghai, Guangzhou, Shenzhen? None of these. It's called Meiyijia, and it's in Dongguan. Public data shows that Dongguan Sugar & Wine Group Meiyijia Convenience Store Co., Ltd. (hereinafter referred to as Meiyijia) has nearly 1,000 more stores than the combined total of Shanghai Nonggongshang Convenience Group (which owns Haode and Kedi) and 7-11 (mainland China), making it the largest convenience store system in China. The company currently has 9,300 stores, having added more than 1,700 stores last year, making it the largest convenience store system in China. In 2016, sales exceeded 10 billion yuan, with overall business growth of 26%. Additionally, the company is working closely with Alibaba, with 2 million parcels picked up at Meiyijia stores each month, solving the last-mile delivery problem.
How Much Do You Know About Domestic Convenience Stores? Currently, domestic convenience store retailers are divided into two types, focusing on different segments and products. One type is national high-end brands, such as FamilyMart and 7-11, while the other is regional mass-market brands, such as Meiyijia and Tianfu. These two types adopt different expansion and retail strategies.
| National High-end Brands | Regional Mass-market Brands |
|---|---|
| Examples: FamilyMart, 7-11 | Examples: Meiyijia, Tianfu |
| Geographic distribution: Commercial centers | Residential areas |
| Location features: Stores concentrated in first- and second-tier cities | Residential areas |
| Target consumers: Urban white-collar workers | Mass consumers |
| Store area: 80–120 square meters | About 50 square meters |
| Products: 1. About 2,000 SKUs per store 2. >95% packaged food and beverages (by sales) 3. >40% ready-to-eat and short-shelf-life products 4. Gradually introducing private labels | 1. 1,000–2,000 SKUs per store 2. More personal care products 3. Limited ready-to-eat food, but gradually increasing |
7-11 and FamilyMart adopt a "high-threshold" model, requiring higher franchise fees and deposits, and strictly enforcing uniform standards in store decoration, stocking, pricing, display, and promotions. Their stores are concentrated in first- and second-tier cities, targeting white-collar consumers near urban centers, commercial areas, or subway stations, with a focus on food and beverages, including increasingly popular ready-to-eat products.
Meanwhile, regional mass-market brands like Meiyijia and Tianfu adopt a relatively lighter franchise model. The investment required for franchisees to open a store is significantly lower than for national brands, and stores are relatively smaller and concentrated in residential areas. They focus more on personal and household care products. The two types of convenience stores have many differences, but both have achieved success.
Top Eight Convenience Store Chains by Store Count
1. Meiyijia The company currently has 9,300 stores, having added more than 1,700 stores last year, making it the largest convenience store system in China. In 2016, sales exceeded 10 billion yuan, with overall business growth of 26%. Additionally, the company is working closely with Alibaba, with 2 million parcels picked up at Meiyijia stores each month, solving the last-mile delivery problem.
2. FamilyMart As a representative of national high-end convenience store brands, FamilyMart mainly covers first-tier cities such as Shanghai, Guangzhou, and Shenzhen. As of October 2014, the total number of FamilyMart stores nationwide exceeded 1,200, and by 2015, the number reached 1,500, entering a period of rapid development.
3. 7-11 As the world's largest convenience store chain, as of the end of February 2016, 7-11 had opened 58,904 stores in 17 countries and regions worldwide. In mainland China, like FamilyMart, 7-11 is mainly distributed in first-tier cities such as Guangzhou, Beijing, Shenzhen, and Shanghai, with over 1,300 stores in 2015.
4. Tianfu Tianfu is one of the top ten convenience store chains in China, ranking fourth in the national convenience store chain rankings for two consecutive years in 2014 and 2015. Currently, it is mainly distributed in Guangdong and Changsha, Hunan, with 2,800 stores in 2015 and nearly 3,000 stores developed in 2016.
5. Tangjiu Xi'an Tangjiu is mainly distributed in the Taiyuan area, with 2,000 stores in 2016, achieving annual sales of 2 billion yuan and employing over 20,000 people.
6. Kuai Ke Kuai Ke convenience stores, as one of the retail formats of Lianhua Supermarket, had 1,650 stores in 2015, mainly distributed in Shanghai.
7. Shizu As of the end of 2014, Shizu had 1,500 chain stores, widely distributed in Hangzhou, Ningbo, Wenzhou, Taizhou, Shaoxing, Lishui, Jinhua, Nanjing, and other places.
8. Haode Haode and Kuai Ke have the same distribution area, mainly in Shanghai, with 1,500 stores, just behind Kuai Ke.
Among the top eight convenience store chains, only FamilyMart and 7-11 have achieved coverage in first-tier cities nationwide; the others mainly have advantages locally or in specific regions. Among them, Meiyijia and FamilyMart are growing the fastest, with annual growth rates between 15% and 20%. They continue to expand new stores and win market share from competitors like Kuai Ke and Haode.
Meiyijia's Success: Deep Regional Market Penetration to Build the Brand However, despite good market performance, northern readers may not be familiar with Meiyijia. Because for nearly ten years, Meiyijia has been deeply cultivating the southern region, without the extensive cross-regional national layout of FamilyMart, 7-11, or C-Store. From its founding in 1997 to 2014, Meiyijia focused on communities in the Pearl River Delta, with 1,300 convenience stores in Shenzhen residential communities alone, meaning one Meiyijia store for every 7,000 people on average, close to the overall density of 7-11 in Japan. After 2014, Meiyijia began to enter neighboring provincial markets including Hunan, Fujian, Jiangxi, and Hubei. Until 2016, of Meiyijia's 9,300 stores, more than 8,000 were in Guangdong.
In the deep regional model, Meiyijia densely lays out stores in urban communities, and "ensuring the profitability of each community store is the key to Meiyijia's success." In terms of dense layout, Meiyijia "opens a store as long as the community has enough people," for example, in 2001, Meiyijia densely expanded in Dongguan, opening stores in all administrative areas.
In helping each franchise store profit, Meiyijia's approach is not novel, but as its general manager Zhang Guoheng said, "Meiyijia does not seek speed, but focuses on solid profitability guidance for each store." Specifically, Meiyijia uses unified distribution, partial direct procurement, regular promotions, and value-added services. In distribution, Meiyijia has built its own ambient and cold chain distribution centers in the deep regional areas, with ambient goods delivered every two days and frozen/chilled goods delivered daily. The direct procurement rate is 40%, which can lower supply prices. It regularly helps stores with promotions to reduce inventory. Additionally, Meiyijia covers more than 600 brand resources and over 4,000 products, providing daily necessities such as fresh food, daily necessities, grain and oil, personal care and cosmetics, and frozen/chilled products, as well as more than 20 life services including financial services, top-up payments, parcel collection and delivery, and convenient payments. These resources provide value-added services to consumers, thereby achieving store profitability.
Compared with Meiyijia's deep regional market strategy, Tianfu convenience stores and Bubugao chain retail stores are similar in direction. Tianfu convenience stores focus on the southern market, with a strategy close to Meiyijia's, maintaining a growth rate of 500 stores in recent years. Bubugao chain retail stores focus on the southwest market, avoiding retail markets outside the southwest. Amid the wave of physical store closures, Bubugao retail stores added 48 stores in the southwest last year and plan to add 50 new physical stores this year.
Of course, deep regional market penetration should be a chain thinking that trades time for space. In terms of Meiyijia's layout, it has been deeply cultivating the Pearl River Delta for nearly ten years and is now also entering neighboring provincial markets. In terms of Bubugao chain retail stores, the official statement does not rule out entering the southeastern market in the future. However, before a chain retail store reaches a certain scale and brand, it may be worth considering this deep regional model, rather than only the nationwide extensive layout model.
compiled from Food Business, He Peikuan 36kr -END-