---
title: "The Great Transformation of Convenience Stores: 'Chinese Value' in a Complex Landscape"
description: "According to Japanese convenience store research expert Nobuaki Taya, this 'small but beautiful' retail format is undergoing its second rebirth. The first transformation occurred 50 years ago in Japan, initiated by Toshifumi Suzuki, who introduced the American convenience store model and adapted it to Japanese culture. Now, as convenience stores expand in China, they are developing a unique 'Chinese value' that reflects differences in time, space, and trends, and this will determine the industry's future direction."
author: "无锈钵"
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published: "2021-11-02"
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# The Great Transformation of Convenience Stores: 'Chinese Value' in a Complex Landscape

> According to Japanese convenience store research expert Nobuaki Taya, this 'small but beautiful' retail format is undergoing its second rebirth. The first transformation occurred 50 years ago in Japan, initiated by Toshifumi Suzuki, who introduced the American convenience store model and adapted it to Japanese culture. Now, as convenience stores expand in China, they are developing a unique 'Chinese value' that reflects differences in time, space, and trends, and this will determine the industry's future direction.

Source: Finance Without Taboo (ID: caijwj) Author: Wu Xiu Bo

**In the eyes of Japanese convenience store research expert Nobuaki Taya, this 'small but beautiful' retail format is undergoing its second rebirth.**

The first transformation occurred 50 years ago, when Japan was at the beginning of a downturn for department stores. In search of a new business model, Toshifumi Suzuki, then working at Ito-Yokado supermarket, was tasked with bringing the convenience store chain model from the United States. Through a series of Japanization efforts, he created an impressive retail legend. In contrast, the second transformation triggered by convenience stores in the Chinese market—though geographically close—has clearly revealed its unique 'Chinese-style value' in the wave of expansion, driven by differences in time, space, and trends. Given the red ocean that convenience stores are currently in, understanding the 'Chinese-style value' of convenience stores is essentially interpreting the current and future competitive trends. Looking back, Suzuki, who did not blindly follow the 'American orthodoxy,' used his control and reform of the Southern Company to make Japanese-style convenience stores like 7-Eleven popular worldwide. Today, the 'Chinese value' that a new generation of Chinese managers can imbue into the imported convenience store format will directly determine the future direction of this industry.

**From 'Family Canteen' to 'Urban Space'**

To compare Japanese and Chinese convenience stores, one must consider the differences in their market environments. **The 1970s, when convenience stores flourished in Japan, was a transitional period between the era of 'mass consumption' and 'individual consumption.'** With industrialization and economic growth, Japanese residents' consumption surged. By 1960, the income-doubling plan raised Japan's per capita GDP from $258 to $3,998, and household consumption expanded from 5.5 trillion yen to 60.31 trillion yen, with a compound annual growth rate of 14.24%. Alongside this consumption boom, urbanization rates continued to rise. Japanese family sizes began to shrink, the number of working women increased, and among the 'new breed,' the proportion of singles rose. This aligned with the initial positioning of Japanese convenience stores. On one hand, unlike traditional large supermarket chains, convenience stores were seen as 'small but beautiful,' appealing to the Japanese preference for compactness and the personalized consumption needs of the new generation. On the other hand, as Taya pointed out, it was the introduction of simple meals like rice balls and oden, adapted to Japanese eating habits, that won over countless households. Additionally, frequent disasters deepened the trust between Japanese consumers and convenience stores. For example, during the 2011 Great East Japan Earthquake, it was these ubiquitous convenience stores, not the supermarkets that lost power, water, and stock, that supported the daily needs of disaster victims. According to Kazunori Murata, CEO of Seven & i Holdings, the parent company of 7-Eleven, its convenience stores in the disaster-stricken Tohoku region began reopening within four hours of the earthquake. The rapid restoration of store operations played a significant role in maintaining social stability at the time. 'Because infrastructure was completely paralyzed, stores placed their products at the entrances, and some even drove trucks directly into residential communities.'

**In summary, convenience stores in Japanese society primarily serve as 'family canteens' and other convenience facilities.** However, this unique positioning encountered 'acclimatization issues' after crossing the ocean to China. On one hand, geographically, China is a continental country far from plate boundaries, so the demand for 'emergency life facilities' like convenience stores is low. At the same time, the life pain points that convenience stores could solve in today's China have already been largely addressed by the rise of internet companies. Just 20 years ago, Toshifumi Suzuki, the 'father of convenience stores' in Japan, would write extensively about negotiating with banks to bring ATMs into stores, viewing this as a key driver of sales growth. But times have changed; this element, once considered innovative in Japan, has lost its effectiveness in the face of mobile payments. **A telling statistic: In Japan, a convenience store can be profitable with coverage of 2,000 people, while in China, even in 'young cities' like Wuhan, it needs to cover over 10,000 people. Clearly, Chinese consumers' 'dependence' on convenience stores is far less than in Japan.** From this perspective, although both Chinese and Japanese markets show trends of youthfulness, personalization, and smaller family sizes, the rise of community group buying, mobile payments, and food delivery has already caused convenience stores to miss the best opportunity to penetrate residential areas. To achieve the same success as in Japan, convenience stores need to find a new positioning distinct from the 'family canteen.' This positioning is none other than the 'third space' that Taya mentions, prepared for lonely cities. As the pioneer and definer of this model, Starbucks' 'third space' was originally intended as a resting corner independent of home and office. However, with the accelerating pace of urban work, more people are accustomed to working, doing business, and having interviews in the third space. The so-called third space has effectively become a second office. In response, tea shops like Nayuki have attempted to make changes. Yet, no matter how sunny the decoration of milk tea shops, an unchanging fact is that their business hours cannot cover the city after 8 PM. In contrast, convenience stores often operate from evening to early morning. Combined with a warm, clean environment and a product chain focused on fresh food, they are well-suited to become the 'third space' for the late-night city. **Only from this perspective, with the rapid rise of local life services, does the convenience store format have meaning and value.**

**A Format with Excellent Interface Capabilities**

Over the past few years, there have been many trends associated with convenience stores. All the hot topics in the consumer sector—e-commerce, unmanned retail, community group buying—seem to be connectable to this format. A vivid metaphor: the convenience store itself is a format with excellent interface capabilities, like a laptop that can accommodate various 'plugins.' However, despite this potential for multi-party connectivity, in practice, the 'tone' of various businesses does not entirely align with convenience stores. **The key lies in the 'urban space' positioning and consumption scenarios of convenience stores.** Only by truly understanding these can we distinguish the compatibility of the aforementioned 'plugins.' What is the consumption scenario of a normal convenience store? It is clean, fast in and out, not crowded, with orderly product displays, and a bit of 'freshness.' Ultimately, convenience stores target the younger generation, represented by the post-80s and post-90s. **Data confirms this: FamilyMart's members aged 80s and 90s account for 88.4%; at 7-Eleven, consumers aged 20 to 40 make up 88% of the customer base. Moreover, the main customer group of these convenience stores is office workers.** This fundamentally determines that convenience stores and the mass-market 'vegetable selling' business are unlikely to merge. Whether it's the vegetable shelves in supermarkets or stalls in wet markets, the 'vegetable selling' business has always been accompanied by picky customers and price comparisons. These are somewhat incompatible with the atmosphere that today's convenience stores aim to create. This may explain why many convenience stores that entered the vegetable-selling business, including 7-Eleven, Lawson, and Sinopec's Easy Joy, have failed. However, on the other hand, while fresh food may be tasteless for convenience stores, discarding it is also a pity. With excellent supply chain delivery capabilities and regional density, convenience stores naturally have advantages in entering the fresh food sector. **In the future, even if they leverage supply chain advantages to enter this track, convenience stores should focus on fresh food portions suitable for young people's 'one meal,' providing quality fresh food for convenience in the 'third space,' rather than traditional vegetable stores that compete on price and quantity.** Rooted locally, Bianlifeng regards serving people's livelihoods as the most important keyword in its current development. For example, it has created a 'double 15' model (15 minutes, 15 yuan), built a food safety matrix, and through its own supply chain and strict process control, nipped potential food safety issues in the bud. During the pandemic, Bianlifeng ensured the supply of essential goods such as masks, hot meals, and beverages, becoming a 'safe island' for consumers. On this basis, Bianlifeng's software and hardware technology serve as important tools for serving people's livelihoods, reflecting its tech DNA.

The same logic can be applied to blind boxes, cosmetics, pharmaceuticals, lottery tickets, and other business segments. How to judge the compatibility of these businesses with convenience stores? The answer still lies in the 'third space' concept.

**'Experience' and 'Sales Efficiency' Are Core Dimensions**

Although in today's China, there are already several promising 'star convenience stores' in the short term, from a long-term perspective, there are still few Chinese-style convenience stores that can truly become the 'third space' of cities. Compared with the value that Japanese society has assigned to convenience stores, where is the future of Chinese-style convenience stores? The 'experience' on the C-end and 'sales efficiency' on the B-end are perhaps two unavoidable dimensions. **First, experience is the foundation for convenience stores to survive.** In the era of the experience economy, commercial value has focused on 'meaning and relationships.' The '2021 China Convenience Store Development Report' shows that 59% of consumers believe they are not just buying products but also a service and experience. For Chinese convenience stores, building more diverse and higher-quality consumption scenarios is the first mandatory question for small stores to integrate into big cities. There are many ways to solve this, such as store displays, product categories, and membership value-added services. Among them, product selection is a direct factor affecting consumer experience. Toshifumi Suzuki, founder of 7-Eleven, believed that no matter how bad the economy is, consumers' motivation to buy products will not stop at 'cheap prices'—products with new value and better taste experiences can better promote purchase intention. For China's consumer market, where downgrading and upgrading coexist, creating personalized, cost-effective products will become the main product selection logic for the coming period. For example, Lawson's '10-yuan premium afternoon tea' or Anhui local convenience store Linji's 'five meals a day' are both personalized experiences provided to consumers from a high cost-performance perspective.

Besides experience, another keyword is 'sales efficiency.' For the convenience store industry, which has high gross margins but also high costs, sales efficiency is the core of profitability. **Statistics show that in 2020, the average sales efficiency of convenience stores was 63 yuan per square meter per day, still a significant gap compared with foreign convenience stores.** Due to limited space, only bestsellers with high gross margins and high turnover rates can increase sales efficiency and reduce inventory. Currently, private-label products with gross margins of around 50% have become one of the main ways to increase sales efficiency. Looking at the current private-label construction of retail enterprises, there are two differentiated positioning strategies: one is high quality and low price, and the other is tiered positioning. In tiered positioning, the most typical case is Jianfu Convenience Store, which spans baking, coffee, and bento boxes. Of course, private-label construction is not limited to products; it involves deep participation from design, production, to sales. This means that in the long run, building a supply chain system is also another key factor in improving sales efficiency. **Convenience stores are nurturing China's urban streets into another distinctive commercial form.** To some extent, it is the diversity of Chinese cities that has created the complex forms of Chinese convenience stores. But as a component of urban value, it is in the rich variety of convenience stores that the abstract city is more vividly displayed. In other words, what people seek in convenience stores is not just the products themselves, but also a sense of self in the vast city.

**Are you 'watching' me?**


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