Source | Retail Business Review Against the backdrop of a moderate recovery in the consumer market, the convenience store sector is growing at a rate far exceeding the average, becoming the most dazzling growth pole in retail. First, look at the data. According to the National Bureau of Statistics, from January to April, total retail sales of consumer goods reached 16,184.5 billion yuan, up 4.7% year-on-year. By retail format, sales of convenience stores, specialty stores, supermarkets, department stores, and brand stores above the designated size increased by 9.1%, 6.4%, 5.2%, 1.7%, and 1.4% respectively. It can be seen that the convenience store format has the highest growth rate, leading all retail forms with a year-on-year growth of 9.1%. As the most detailed capillaries in the urban commercial ecosystem, convenience stores are undergoing unprecedented scale expansion and format transformation. Nowadays, consumers increasingly value experiential and developmental consumption. In this context, convenience stores, as an important channel to meet consumers' immediate needs, will also usher in new development opportunities. We observe that on the one hand, convenience stores are leaping forward in the number of chain stores, but on the other hand, they also face challenges from new formats such as homogenization and various discount stores. In this process, branded convenience stores need to build their own moat of differentiation and refined operations. Convenience Store Scale Race The Expansion Divide Between Local and Foreign Brands The scale of chain convenience stores in China is continuously growing. According to the "2024 China Convenience Store TOP100" released by the China Chain Store & Franchise Association (CCFA), as of the end of 2024, the total number of stores of TOP100 enterprises was 196,000, compared with 182,000 in 2023, a net increase of 14,000 stores, an increase of 7.7% year-on-year. Source: "2024 China Convenience Store TOP100" released by CCFA The trend of industry concentration is becoming more obvious, with 38 enterprises having more than 1,000 stores, an increase of 7 year-on-year. The increase in the number of enterprises with a thousand-store scale also proves that the convenience store format is further stabilizing and growing. The total number of stores of the top 20 enterprises was 148,128, accounting for 75.57% of the top 100 total. The top 10 enterprises occupied 63.3% of the top 100 total with a total scale of 124,066 stores. The entry threshold has also risen, increasing to 3,447 stores. This head aggregation effect marks the industry's transition from extensive expansion to a new stage of refined operations. Meiyijia, Sinopec Easy Joy, and PetroChina Kunlun Hao Ke ranked in the top three. Meiyijia ranked first among Chinese convenience stores with 37,943 stores. Tianfu (7,521 stores), Lawson (6,652 stores), and Furong Xingsheng (5,838 stores) ranked fourth, fifth, and sixth. Lawson (LAWSON) continued to be the "number one" foreign convenience store, with a net increase of 332 stores, firmly ranking fifth with 6,652 stores. Zuolin Youshe and Shenghuo Yizhan were on the list, while 7-Eleven (4,639 stores), Shizu and Zhishang (4,381 stores), and Hongqi Chain (3,447 stores) each dropped one place, ranking eighth, ninth, and tenth respectively. Local and foreign convenience stores are also competing with each other. First is the scale expansion of local giants. Taking Meiyijia as an example, it continues to expand its scale barriers through its downward strategy and franchise model. In 2024, Meiyijia ranked first with 37,943 stores, opening 4,095 stores in one year, equivalent to 11.2 new stores per day. Meiyijia's expansion speed is a benchmark for the industry, taking only 17 months to break through 35,000 stores from 30,000. Its "rural encircling the city" strategy has been remarkably effective, with new stores in Guangdong county markets accounting for over 60%. At the same time, through the "Meiyijia Youxuan" mini-program integrating community group buying, online orders accounted for 18%. Meiyijia Chairman Zhang Guoheng recently publicly stated that Meiyijia's profit growth last year was double-digit, and from January to April this year, effective stores increased by more than 1,300, with efficiency maintaining double-digit growth. This giant, with annual revenue possibly exceeding 50 billion yuan, has long anchored its future goal at "100,000 stores." Following closely are brands such as Tianfu (7,521 stores) and Furong Xingsheng (5,838 stores) that deeply cultivate regional markets, accelerating their expansion with deep insights into Chinese consumption habits. Facing the strong expansion of local brands, foreign brands such as 7-Eleven and Lawson are also accelerating their store opening pace, hoping to break through with innovative models and localization strategies. 7-Eleven showed strong growth in 2024, with a net increase of 733 stores to 4,639 stores, twice the net increase of Lawson. Benefiting from the "regional authorization + localized products" strategy, it added 453 stores in the North China market, with classic items such as oden and rice balls seeing a year-on-year sales increase of 18%. Lawson's localization has allowed it to maintain a relatively leading position, ranking fifth with 6,652 stores, with stores in the Yangtze River Delta accounting for 72% and fresh food sales accounting for over 35%. Through regional franchising to accelerate downward market penetration, and using AI to analyze regional consumption preferences, it has achieved a localization rate of over 60% for fresh food SKUs and increased the elimination rate of slow-moving products to 20%. We observe that Lawson's innovative "Lawson Xiaozhan" franchise model has become a key growth engine. In regions such as Guangdong and Fujian, the minimum franchise fee is only 40,000 yuan, and the store area requirement is reduced to over 20 square meters. In 2025, there is even a special policy of "zero franchise fee" for store conversions. In terms of product structure, Lawson Xiaozhan is basically the same as Lawson convenience stores, mainly featuring self-produced fresh food, desserts, oden, and fried skewers, also covering snacks, beverages, personal care, and daily necessities, maintaining a richness of over 2,500 SKUs. Lawson Xiaozhan's conversion strategy focuses on "asset-light, strong empowerment." Its core advantage lies in its mature supply chain system—relying on the fresh food R&D capabilities of its parent company, Japan's Lawson, it provides high-margin Japanese-style fresh food products such as bento and rice balls to converted stores, while also outputting standardized operating processes. For example, converted stores must uniformly use Lawson's POS system and ordering platform to achieve dynamic inventory management. Deeply analyzing its business model, we find that Lawson's core profit logic has shifted from traditional franchise fee income to supply chain value creation. Franchisees must purchase goods 100% through Lawson's channels, and the latter adds a 5%-8% profit margin to the supply price. This asset-light operation model effectively lowers the franchise threshold and accelerates market penetration. Although the two foreign brands have chosen different expansion paths—Lawson focuses on franchise model innovation, while 7-Eleven emphasizes scale sprint—they share a firm optimism about the incremental space in China's convenience store market. According to research data from iiMedia Consulting, over 55.1% of consumers said there are insufficient convenience stores in their area, and this demand gap is the core driving force for the industry's continued expansion. According to our insights, in the long run, the convenience store market remains a hot potato. In 2024 compared with 2023, enterprises are more optimistic, with 71.2% of convenience store sample enterprises choosing an expansion strategy. "Branding and chain operation are the main development trends of convenience stores. The momentum of brand chains is accelerating store expansion, and when the scale of chain convenience stores reaches a certain level, the advantages of density effects (especially single-store profitability) will also emerge," a chain retail consultant told us. There is still a long way to go to achieve relatively high saturation domestically. Compared with internationally mature convenience store markets, only a few cities in China have convenience store saturation below 2,500 people per store, while most cities have saturation between 3,000 and 9,000 people per store. The incremental space in the market is also obvious. Cross-Industry Players Enter Supply Chain Players' Dimensional Reduction Competition While traditional giants are in fierce competition, cross-industry newcomers such as Three Squirrels and Cotti Coffee have also begun to enter. The "One Fen Li Convenience Store" created by nut giant Three Squirrels has become a dark horse in the industry. Its core weapon is to supply self-branded products directly to stores at a price more than 40% lower, directly hitting the core profit source of convenience stores. Against the industry's typical opening cost of 400,000-500,000 yuan, Three Squirrels has halved the investment threshold. According to data released by Three Squirrels, One Fen Li Convenience Store has opened 50 stores in southern Anhui, and plans to sign more than 500 stores in 2025. The trial stores in southern Anhui have delivered impressive results: in the third month, performance soared by 124%, and queuing to pay has become the norm. "I have never thought of Three Squirrels as a brand company. Previously it looked like a brand company, and also seemed like a retail company, and now it looks like a supply chain company. All positioning is a means. We don't want boundaries. The goal is to let consumers buy good and cheap things," Zhang Liaoyuan previously said. In our view, the essence of Three Squirrels is to further transform its accumulated supply chain capabilities, with self-branded products playing a decisive role in gross margin. This model may disrupt the profit structure of traditional convenience stores. Also eyeing this business is Cotti Coffee, which has just entered the convenience store sector. Its convenience store strategy focuses on converting non-branded stores and mom-and-pop stores, reusing existing shelf models for rapid expansion. Cotti requires franchisees to uniformly purchase equipment and cabinets, with a standard 80-square-meter store requiring an investment of about 180,000 yuan. To this end, it has launched installment payment and a "three-month refundable" plan. Its profit core lies in controlling the supply chain of core categories such as coffee, milk tea, and bakery. In other words, Cotti convenience stores earn supply chain profits from equipment, raw materials, and logistics. This "coffee + convenience store" composite model attempts to find category synergy in immediate consumption scenarios. However, whether the higher initial investment and relatively single category focus can break through in the convenience store red ocean still needs market testing. It is worth noting that Cotti's first batch of pilot stores have appeared in East China, and their operational data will become an important window for observing the feasibility of this model. Format Upgrade Omnichannel and Scenario-Based Breakthrough in Homogeneous Competition While the convenience store industry expands in scale, competition and challenges are also intensifying. First is operating pressure. According to a report by Juyi Information Consulting, the annual rent for a single convenience store in first-tier cities reaches 300,000 yuan, labor costs account for over 20%, and operating costs remain high. In addition, they face customer diversion from bulk snack stores, discount stores, fresh food supermarkets, and erosion from food delivery platforms. Facing the pincer attack of new and old players, leading brands are accelerating format evolution. First, omnichannel integration has become a required course. Instant retail platforms such as Meituan and JD Daojia have become standard for convenience stores, while Douyin local life group buying has become a new engine for traffic attraction, and online orders are growing into the second curve driving stores. Data from Meituan Research Institute confirms the necessity of this trend. In 2024, instant retail order volume for convenience stores increased by over 60% year-on-year, with water drinks, fresh food, and emergency daily necessities forming the core category troika. According to the "China Instant Delivery Industry Research Report" released by iResearch, in the next five years, the scale of the instant delivery industry will double, from about 341 billion yuan in 2023 to possibly over 810 billion yuan by 2028, becoming one of the few highlight tracks with sustained double-digit annual growth. We observe that in fact, convenience stores such as Meiyijia, 7-11, and FamilyMart have already connected to instant retail and other online layouts. Instant retail will become one of the normalized models for convenience stores. Recently, the "2025 China Convenience Store Development Report" jointly released by KPMG China and CCFA showed that in 2024, nearly 40% of convenience store enterprises had opened instant retail businesses, with sales share increasing significantly by 11.4% year-on-year. The rapid development of the instant retail industry has also promoted the development of new models, such as the front-warehouse model. Currently, more and more convenience stores are "testing" the front-warehouse model. For example, Sinopec Easy Joy opened Henan's first "Easy Joy Express Purchase" online takeout store in Zhengzhou, relying on a warehouse space of over 200 square meters to offer more than 5,000 products, covering FMCG, digital appliances, and even clothing, shoes, and hats, targeting a "30-minute living circle." The author believes that connecting to instant retail platforms is not only a supplement to sales channels, but also an online extension of the convenience store's "instant satisfaction" positioning. This online-offline integration model is becoming an important defense line against the erosion of pure e-commerce platforms. Second is the ultimate deep cultivation of consumption scenarios. To increase consumer visit frequency and dwell time, convenience stores are no longer satisfied with snacks and drinks, but are transforming into "24-hour life service stations." For example, 7-Eleven is piloting a "National Canteen" in Guangdong, using a "fresh food + prepared dishes" combination to capture family dining tables. FamilyMart's "Fifth Generation Store" reconstructs space around "five meals a day," with a "hot stove" in the morning offering freshly made dim sum, a self-selection area for freshly cooked hot food at lunch and dinner, and transforming into an "EMO late-night canteen" at night, integrating drinking snacks and convenience store cocktails to create a nighttime social scene. Lawson has even increased the proportion of fresh food sales to over 40%. According to CCFA industry research reports, in 2024, over 71% of sample enterprises listed fresh food category optimization as the primary strategy for gross margin improvement. Furthermore, category boundaries are also continuously expanding. New categories such as digital accessories, beauty and personal care, light medical aesthetics, and pet supplies continue to flood shelves, raising average transaction value and consumption frequency. In our view, in the future, cross-industry cooperation between convenience stores and catering, fresh food, pharmacies, and other formats will become the norm, strengthening "store visit value" and introducing more diverse services and products. Making convenience stores a "community life center" is an inevitable trend. The competitive dimension of the convenience store industry has quietly escalated. In the complex battle with cross-industry entrants and new format diversion, only those brands that can deeply integrate supply chain resilience, scenario penetration, and digital agility can ultimately weave a king's net covering the city's capillaries. The author believes that convenience stores need to adhere to the core of "convenience" and create irreplaceable community commercial node value through the three-dimensional reconstruction of "time coverage × spatial function × category combination."