---
title: "The Battle of Beiping in Convenience Stores"
description: "I won't go to Beijing; let's first see how 7-Eleven develops, as it's the big brother. I won't go either; I'm the second child, no need to save face. I'm struggling, with slow store openings and constant ridicule; the waters are deep, only those who open stores know. Actually, this is a relief for me; the capital is not as simple as you think. I've had two fathers: my biological father was P2P, and my adoptive father lacked strength. I'm a model student with good site selection, operations, and team, but I met a disappointing dad who played with P2P. Let's talk about convenience stores, shall we? I'm shining, afraid of you, little media."
author: "王拓"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-05-28"
language: "en"
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---

# The Battle of Beiping in Convenience Stores

> I won't go to Beijing; let's first see how 7-Eleven develops, as it's the big brother. I won't go either; I'm the second child, no need to save face. I'm struggling, with slow store openings and constant ridicule; the waters are deep, only those who open stores know. Actually, this is a relief for me; the capital is not as simple as you think. I've had two fathers: my biological father was P2P, and my adoptive father lacked strength. I'm a model student with good site selection, operations, and team, but I met a disappointing dad who played with P2P. Let's talk about convenience stores, shall we? I'm shining, afraid of you, little media.

I won't go to Beijing; let's first see how 7-Eleven develops, as it's the big brother.
I won't go either; I'm the second child, no need to save face.
I'm struggling, with slow store openings and constant ridicule; the waters are deep, only those who open stores know.
Actually, this is a relief for me; the capital is not as simple as you think.
I've had two fathers: my biological father was P2P, and my adoptive father lacked strength.
I'm a model student with good site selection, operations, and team, but I met a disappointing dad who played with P2P.
Let's talk about convenience stores, shall we?
I'm shining, afraid of you, little media.

**Little Spirit Beast: Beijing, do you think you're suitable for opening convenience stores?**
**Big Beijing:** On the surface, I'm the capital of China, with 16 districts, a total area of 16,410.54 square kilometers, a permanent population of 21.536 million, an urban population of 18.65 million, an urbanization rate of 86.6%, and a floating population of 7.943 million. By your industry standards, opening 7,178 convenience stores in Beijing is no problem. As for whether it's suitable now, I can't say. 7-Eleven has been in Beijing for 16 years, opened nearly 300 stores, and closed dozens. Convenience Bee opened nearly 600 stores in 3 years with almost no closures. The collapse of Linjia Convenience, 131 Convenience, and Quanshi Convenience seems to have little to do with me. (Shrugs)
Beijing: How about it? Prosperous and grand, right? (Proud face)

**Little Spirit Beast: Why does 7-Eleven open stores so fast in Guangdong and Shanghai, but can't in your area?**
**Big Beijing:** Look, my location is great, in the north of the North China Plain, surrounded by mountains on the west, north, and northeast. But the climate... hot and rainy in summer, cold and dry in winter, with short spring and autumn. It starts cooling in October, gets cold in November, and stays cold until April next year. I know your convenience stores are open 24 hours, but due to the climate, 24-hour stores are largely wasting energy. 7-Eleven's slow expansion is because Japanese convenience stores are steady and cautious. Convenience Bee fully represents Beijing speed.
Beijing: Bustling by day, empty at night, good sleep, you can't envy that.

**Little Spirit Beast: Okay, okay, then tell me what happened to Linjia, 131, and Quanshi?**
**Big Beijing:** Linjia was indeed doing well back then. Under Wang Zi's team, it was seen as a dark horse among convenience stores, even expected to become the next FamilyMart or Lawson, earning high praise from Beijing friends. As for its closure... the reasons are complex, but the P2P business of shareholder Shanlin Finance exploded, leading to a capital chain rupture, which indeed caused almost all stores to close overnight.
National pride, Linjia
**Big Beijing: 131 Convenience** To differentiate from other brands, they chose fresh food as the main selling point, preparing 200 fresh food SKUs but only listing about 100 in stores. Their fresh food factory had a 20-person R&D team, developing 40-50 new products monthly, while supplying other convenience stores and restaurants, they kept some exclusive SKUs for 131.
Indeed, 131 Convenience also collapsed due to P2P explosion.
Unique 131
**Big Beijing:** Quanshi originally planned to close its Beijing stores on May 20, but due to public opinion, it didn't hold out and was taken over by Good Neighbor early, now in a cooperative relationship. The Quanshi brand is still retained, and there might be a chance for a comeback. Product and store management are temporarily handled by Good Neighbor. The main reason is that in November 2018, Quanshi's parent company Beijing Fuhua was exposed to the impact of P2P explosion, causing capital chain issues that couldn't keep up with expansion. Later, Shanhai Lantu took over, and besides historical "burning money" and operational issues, the COVID-19 pandemic was also devastating for Quanshi.
Flourishing Quanshi
**Big Beijing:** I've also heard that major chain convenience stores like 7-Eleven and Lawson saw cliff-like drops in Q1 performance this year, with foot traffic down 40%-50% year-on-year during the pandemic. Even now, they haven't recovered to pre-pandemic levels. In such a bleak market, even financially strong brands struggle, and capital-backed stores like Quanshi, once the capital chain breaks, can only be passive.
Beijing: The Japanese trio is also having a hard time.

**Little Spirit Beast: Besides P2P explosions, isn't it also high rent and high living costs?**
**Big Beijing:** I have something to say about their closures. In my view, buildings built by capital burning are sand castles that dissolve in water. Neighbor Zhang started with one store and now has three, each profitable, just not as nicely decorated as those three. The products are similar, just no fresh food, and they're all doing well! My average housing price is 61,000 per square meter, and commercial property averages over 100,000 per square meter. Merchants renting and employees renting dorms are a bit more expensive than other cities, but they earn more. High living costs mean high opportunities, and my expenses are also high.
Beijing: Actually, not too expensive.

**Little Spirit Beast: Do you really think convenience stores have big profits? Do employees live well?**
**Big Beijing:** I don't know about profit margins; they can't be huge for daily necessities. Seeing capital flocking in, property owners think there's big profit, and housing prices are actually driven up by their competition. From what I know, 7-Eleven's early stores didn't have very high rents, but since these three started opening stores crazily, market rents for shops have risen a lot. I haven't paid much attention to employee housing. Haven't we already demolished those poor urban villages? Their lives should have improved.
Beijing: Haven't we already demolished those uncomfortable houses???

**Little Spirit Beast: Do you think it's okay without convenience stores? What if employees can't afford rent and go back to their hometowns?**
**Big Beijing:** Convenience stores are indeed convenient; I can't do without them. I haven't been to a supermarket in over six months, visiting convenience stores daily. Honestly, we can't do without them. It seems I need to report to the parent and support convenience stores. My land prices are high, leading to high rents and living costs, and low-income earners' wages are what they are. But I can report today's conversation to the parent and see if we can exempt convenience stores from rent taxes and apply for store support policies. In the past, taxis were a city's business card; now convenience stores are the city's business card, and we can't be too shabby. We welcome those who want to do business here to thrive, but they must abide by national laws and family rules. P2P is not allowed. If there's a problem, come to me, and I'll go to the parent. There's no hurdle we can't overcome. Beijing welcomes convenience stores.
Beijing: We can't do without convenience stores anymore.

**Little Spirit Beast: According to statistics, Beijing's convenience store count is far below the average of other first-tier cities. Beijing's area is more than twice that of Shanghai, but its convenience store count is only half of Shanghai's. It's understood that the number of convenience stores per thousand people in Guangdong and Shanghai is 2.86 and 2.57 respectively, while Beijing only has 0.91, showing the gap.**
National brand convenience store development collection

**Little Spirit Beast:** 7-Eleven's site selection and store planning follow headquarters' regulations as a premise, rather than considering the market environment differences between China and Japan. 7-Eleven's standard store size is 120 square meters, and they never do irregular-shaped stores. In Japan, stores can be easily divided, so such site requirements are easy to find locally, but in China, it's the opposite. This dogmatic model of not adapting to local conditions directly makes it hard for 7-Eleven to find a large number of "standard" stores in China. They call it excellence, but in reality, it's hard to move.
7-Eleven: I want to set industry standards, I have the final say.

Convenience Bee, 131, and Quanshi rely too much on capital and lack self-sustaining ability. Once the parent stops transfusing, they can't be self-sufficient. Linjia executives previously told media that investors required them to open 20,000 stores a year. To do so, Linjia didn't fear high rents in site selection, which enabled rapid expansion but also laid the groundwork for its collapse.
Dad P2P, taking the lead.

131 Convenience announced receiving 40 million yuan in angel round financing from Chunxiao Capital. Founder Chen Dengwang said the funds would mainly be used to increase physical stores, build a big data platform, attract talent, and expand the team. At the same time, 131 announced plans for an A-round financing to continue expanding offline stores, expanding the team, and building a fresh food factory. In my view, without the A-round, it's best not to start the central kitchen, and don't underestimate land prices, assets and liabilities, equipment depreciation, or the burning speed of standardized modern central kitchens.
Orphan 131, where's my dad?

It must be said that Quanshi's delisting also serves as a wake-up call for those convenience store brands still fighting in the red ocean. As a very traditional asset-heavy industry, convenience stores have only 30 years of history in China. Most domestic professional managers haven't fully understood the ultimate layout of convenience stores, and even if they see it, they may not reach it. Besides business models, it's also about faith. Convenience became a hot windfall industry for capital starting in 2016, riding on the O2O afterglow and the new retail concept, which determined today's failure.
Confused Quanshi

**Little Spirit Beast/Thoughts:** 7-Eleven is not an imported product; it existed in ancient times, modern times, and now. In ancient villages, barter at the village head, ancient shops, and modern small stores are the predecessors of convenience stores. Today, everyone imitates, but few companies think about the philosophy and essence of retail, and few see that the ultimate goal of convenience stores is to participate in or control manufacturing, as those who control channels are kings. Only by participating in manufacturing can you strictly control quality and continuously innovate.

Americans upgraded this retail format and established basic standards. The Japanese continuously improved and added more functions to convenience stores, implementing temperature management (room temperature, chilled, frozen) plus unified logistics distribution through distribution centers, establishing single-item management through information systems, and other measures. Efficient logistics centers safeguard store inventory, and strict replacement mechanisms make single-item turnover cycles far ahead of peers. They also standardized Japanese cuisine through central kitchen production, customizing standardized foods for different regions. After 50 years of development, they continuously surprise consumers and retain customers with products and services. The three Japanese convenience store chains have 30-50 years of foundation, focusing on one thing: doing every small thing well.

In the eyes of Japanese, business is a way (shangdao), while in China it's just commerce. At that moment, Suzuki Toshifumi's classic quote echoes: There are only two convenience stores in the world: 7-Eleven and others.

For those in physical retail, don't think of the internet as e-commerce. E-commerce isn't always the opposite of physical stores; they seem to have taken customers away. But from the customer's perspective, there are times for online shopping and times for physical stores. It's just that as consumption habits mature, customers choose different channels for different product categories.

From the customer's viewpoint, if e-commerce and physical stores offer the same quality and price, it's indeed a more convenient shopping experience. So why would customers buy online?

Whether it's Macy's in the US or 7-Eleven in Japan, they've all chosen similar omnichannel strategies. Manufacturers and retailers must integrate channel functions in the omnichannel era, leveraging the strengths of various retail channels and avoiding weaknesses, forming new multi-channel retail combinations or integration models.

**Little Spirit Beast:** Every city has a dedicated light that must not go out.

Source: Retail Business Finance (ID: RetailFinace), Author: Wang Tuo


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