Quanshi Convenience Stores: Massive Sell-offs and Closures! Is the Convenience Store a Good Business? Has the Pandemic Changed the Rules of Survival?

Quanshi Convenience Store is a chain convenience store brand that operates '24 hours a day, 365 days a year.' In the past two days, it issued a 'closure notice' that drew widespread attention, stating that its Beijing stores would end operations on May 20, 2020. However, the official account quickly deleted the post and changed 'end operations' to 'operational adjustments' the next day. CCTV Finance reporters also visited some Quanshi stores in Beijing during these two days. What is the situation? **-01-**Reporter Visits Quanshi Stores: Direct-operated Stores Clear Inventory △CCTV Finance 'First Time' program video On May 13, CCTV Finance reporters arrived at a Quanshi store in Dongcheng District, Beijing, and saw that the store was already closed. The glass door still had a notice saying it was disinfected on May 10, indicating that the store was still operating at least before May 10. In addition, reporters saw no explanation for the closure. During the visits, reporters found that before May 20, many Quanshi stores in Beijing had already closed, and some stores had rental information posted again. A landlord of a Beijing Quanshi store said that Quanshi would move out on the 21st, and the rent had been settled. In some stores still operating, reporters saw that many shelves had been cleared of goods, and staff were counting cigarette products. Although there was no explicit notice of closure in the store, staff told reporters that the store would close on the 21st, and current products were on discount promotion.

Beijing Quanshi store employee: Discounts, red wine at 40% off, these at 60% off. Reporter: You're closing down? Beijing Quanshi store employee: Yes. Many staff said the closure was 'sudden.' A Beijing Quanshi employee said that the store manager and manager only learned about the closure later and were not notified in time. However, unlike the direct-operated stores' clearance sales, reporters found that Quanshi franchise stores were still operating normally. It is understood that the closure on the 21st mainly involves 160 direct-operated stores in Beijing, while the future of 40 franchise stores remains unclear. A Beijing Quanshi employee told reporters that they are a franchise store, not discounting, and not closing. The dispute is not yet resolved, and the store name is still Quanshi, but after the dispute is resolved, it's uncertain. **-02-**Shanhai Lantu: Seeking New Partners △CCTV Finance 'First Time' program video According to public data, Quanshi Convenience Store was established 9 years ago. In 2017, it had 350 stores in Beijing, ranking first in market share.

In November 2018, Quanshi's original operator, Beijing Fuhua Zhuoyue Commercial Management Co., Ltd., faced financial problems, and Quanshi faced a 'survival crisis.'

In June 2019, Beijing Shanhai Lantu Commercial Co., Ltd. acquired all assets of Quanshi, and currently has 500 stores in Beijing, Tianjin, and other places, with 2,500 employees. Why is Quanshi facing a survival crisis again just one year after Shanhai Lantu took over? On Quanshi's official website, there is a news article about the company's annual meeting, which includes the following: 'In 2019, the company's sales recovered and grew rapidly, with significant improvement in average daily sales per store, gradual decline in waste rate, and steady increase in gross margin. In 2020, the company will focus on maintaining rapid growth in daily sales and profits per store, and carry out work in multiple dimensions and aspects.' Now, less than four months after that news was released, Quanshi suddenly announced 'operational adjustments.' After several twists and turns, CCTV Finance reporters contacted the relevant person in charge of Shanhai Lantu. Huang Hanjie, Deputy General Manager of Beijing Shanhai Lantu Commercial Co., Ltd.: It is mainly due to market competition pressure and the impact of this pandemic. The previously released notice of temporary store closures may have caused misunderstandings, leading people to think the company was ending operations, so we revised it to a clearer statement: it is a strategic adjustment in operation and management. Huang Hanjie said that the company is currently seeking new partners with the help of government departments and industry associations, and employee wages will be paid normally. They have already contacted many well-known brands in the industry and have clear cooperation intentions. They are making every effort to reduce the time of operational adjustments to ensure a smooth transition. Reporters checked Tianyancha and found that Beijing Shanhai Lantu Commercial Co., Ltd. was established in December 2018. According to industry insiders, Shanhai Lantu took over Quanshi with the hope of creating a 'convenience store + alcohol' business model, but its own professionalism in the convenience store retail industry is insufficient, and Shanhai Lantu's industry visibility has not been fully established. The current crisis at Quanshi is caused by multiple factors. Wang Hongtao, Deputy Secretary-General of the China Chain Store & Franchise Association: On the one hand, Quanshi has some historical issues, and the current Shanhai Lantu took over in 2019; on the other hand, competition in the Beijing market is indeed fierce. Quanshi's locations are in good areas, so rents are relatively high, which is a cost issue. Combined with the impact of the pandemic, I think it's a triple factor overlay that led to the current result. **-03-**Pandemic Gradually Stabilizes, Convenience Store Industry Recovers △CCTV Finance 'First Time' program video In 1992, the world-renowned convenience store brand 7-Eleven entered the Chinese market for the first time. Inspired by foreign convenience stores, local Chinese convenience store brands also rose rapidly. Currently, many brands such as 7-Eleven, FamilyMart, and Bianlifeng are flourishing in the domestic market, while at the same time, some convenience store brands have closed due to various problems. Under the impact of the pandemic, how has the convenience store industry been affected? In the future, how should the convenience store industry develop? According to statistics from the China Chain Store & Franchise Association, due to the pandemic, in the first quarter of this year, the overall sales of the convenience store industry fell by 10%-15% year-on-year, but since April, sales have steadily recovered. After this pandemic, many companies have new thoughts on convenience store operations. Industry insiders say that although the convenience store industry has developed in China for nearly 30 years, compared with Japan and other countries, China's convenience store market still has a lot of room. According to industry reports, in 2018, the number of convenience store outlets in China reached 120,000, which is still a significant gap compared with Japan's scale of one convenience store per 3,000 people. Shinji Uchida, Chairman and General Manager of 7-Eleven China: Looking at the entire Chinese market, it is far from saturation. 7-Eleven has only entered 13 provinces and municipalities in China so far, and the next plan is to continue expanding. Although the market space is large, experts also say that the convenience store industry seems simple, but it actually has high thresholds, requiring both capital and patience. After the pandemic, the convenience store industry should not just return to the past, but should upgrade comprehensively in terms of cash flow management capabilities, digital capabilities, and other aspects. Wang Hongtao, Deputy Secretary-General of the China Chain Store & Franchise Association, said that the competitive pressure on costs and other aspects is relatively high now, and everyone is competing in internal strength. For convenience stores, the core capabilities—product strength, operational capability, and the crucial supply chain capability—are all very important. Zhu Danpeng, a food industry analyst in China, said that China's convenience stores have entered a node of highly homogeneous operating models. How to innovate and upgrade poses higher requirements for them. Source: CCTV Finance (ID: cctvyscj), Supervisor: Luo Qun, Editor: Zhang Yifei Tips will be paid 400-2000 yuan if the tip is adopted.