---
title: "The \"Old vs. New\" Battle in Convenience Stores!"
description: "Alibaba's Tmall Xiaodian, JD's JD Convenience Store, and Suning Xiaodian's ambitious plan to open 20,000 stores are disrupting the traditional convenience store sector. Local chains like Meiyijia and Tianfu are accelerating, while Japanese chains like 7-Eleven and Lawson are also expanding downward. The real path for China's convenience stores is a dual-driven model of new retail and operational excellence."
author: "零售商业评论"
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published: "2019-07-12"
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---

# The "Old vs. New" Battle in Convenience Stores!

> Alibaba's Tmall Xiaodian, JD's JD Convenience Store, and Suning Xiaodian's ambitious plan to open 20,000 stores are disrupting the traditional convenience store sector. Local chains like Meiyijia and Tianfu are accelerating, while Japanese chains like 7-Eleven and Lawson are also expanding downward. The real path for China's convenience stores is a dual-driven model of new retail and operational excellence.

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Alibaba is deploying Tmall Xiaodian, JD.com is pushing JD Convenience Stores, and the recently prominent Suning Xiaodian has vowed to open 20,000 stores. The disruption by internet giants has caught traditional convenience store chains off guard. Local players like Meiyijia and Tianfu are accelerating their pace, while Japanese chains like 7-Eleven and Lawson are also moving down-market.

**What is the real path for domestic convenience stores?**

**The "Old vs. New" Battle**

Let's first look at a table.

> According to the "2019 China Convenience Store Development Report" released by CCFA, in 2018, China's convenience store industry achieved sales of 226.4 billion yuan, with an industry growth rate of 19%. The number of stores reached 122,000, a 14% increase year-on-year, showing the vigorous development momentum of the convenience store format.
>
> The TOP 100 list shows: Sinopec Easy Joy (27,259 stores), PetroChina Kunlun Haoke (19,700 stores), and Meiyijia (15,559 stores) ranked in the top three. Suning Xiaodian (4,508 stores) ranked fourth, China FamilyMart (2,571 stores), Lawson China (1,973 stores), and 7-Eleven Mainland China (1,882 stores) ranked 7th, 9th, and 10th respectively.

Data source: CCFA China Chain Store & Franchise Association

**Easy Joy: With the Most Convenience Stores in China, but a Difficult Hand to Play**

From the data table, Sinopec Easy Joy convenience stores have over 30,000 gas station resources, with outlets across the country. It has opened 27,000 convenience stores, making it the chain with the most outlets nationwide.

It can cover nearly 300 million motor vehicle users, providing an average of 20 million services per day.

However, despite holding such unique resources and a "good hand" by nature, it has been played poorly.

**Easy Joy convenience stores currently have an average daily sales per store of about 5,400 yuan, lower than the industry average of 6,000 yuan, and far below 7-Eleven's daily average of 20,000 yuan. Car owners purchase mostly water, beverages, and cigarettes at gas stations, accounting for over 50% of sales.**

Sales and operational performance are dismal. Even Sinopec's chairman, Fu Chengyu, once said, "With the largest refined oil retail chain terminal in China, how can you be so poor that you need to beg for food?"

In fact, we know that gas station convenience stores have relatively few SKUs and fewer buyers. Why?

The main issue is the consumption scenario. When we go to a gas station, our primary purpose is to refuel. While refueling, we might buy some water or drinks. This kind of consumption is not essential but impulsive.

However, with an average daily traffic of 20 million people, how to utilize this effectively has always been a challenge for Easy Joy.

**Suning Xiaodian: Fast Running in Online + Offline New Retail**

Suning Xiaodian is developing very rapidly.

**Entering the convenience store sector in 2017, it hit the fast lane, opening over 1,200 stores in December alone, and by 2018, the number of stores reached over 4,000.**

Suning Xiaodian has launched an O2O model of "offline convenience store + APP," with ultra-fast delivery. Orders placed via the Suning Xiaodian APP can be delivered in 8 minutes, with a promise of delivery within 3 kilometers in half an hour.

Compared to Tmall and JD's franchise models, Suning Xiaodian is a disruption in terms of model. Given its current development speed, Suning Xiaodian will soon become the number one convenience store brand in China.

The rapid layout of terminals also reflects Suning Xiaodian's advantages. Its community group buying business, Su Xiaotuan, has already recruited 20,000 team leaders nationwide.

Zhang Jindong recently stated, "Suning will focus on the development of key formats such as Suning.com Plaza and Suning Xiaodian, and will promote the scenarization and internetization of stores driven by user consumption needs." It can be seen that Suning Xiaodian has become an important part of Suning.com's new retail and a major entry point for offline traffic.

However, on the fast track, its profitability has always been a hurdle.

**According to data, the investment cost for a Suning Xiaodian store is around 1 million yuan. As of the first quarter of this year, Suning has invested over 5 billion yuan in Suning Xiaodian. In the first seven months of last year, Suning Xiaodian lost nearly 300 million yuan, with debts as high as 653 million yuan.**

Currently, Suning Xiaodian is strategically loss-making, and the traffic entry point is what Suning values most. But clearly, its model has not yet been fully validated. The new retail model is promising, but in terms of fine operations, it must learn from another company: 7-Eleven.

**7-Eleven: More Than Just a Convenience Store**

7-Eleven convenience stores are almost everywhere in the world. Whether in China or other countries, you can see this chain. For convenience stores, 7-Eleven has a magical charm.

Most 7-Eleven stores in Japan are small, but they offer over 3,000 types of daily necessities. 7-Eleven is like a gas station, not only meeting daily needs but also offering delicious food.

We know that many convenience stores are learning from 7-Eleven to add prepared foods. Prepared food is now a major development trend in convenience stores. Domestic convenience stores have daily sales per store between 6,000 and 7,000 yuan, and temperature-controlled food has become the main source of sales and profit. Prepared food sales account for 35% or even higher.

Besides delicious food, 7-Eleven offers a wide range of daily necessities, from shirts and ties to face masks and facial cleansers. Almost everything used in daily life can be bought here.

In Japan's 7-Eleven, you can also buy movie tickets, amusement park tickets, and JR and airline tickets. Japan's 7-Eleven has also partnered with banks to set up dedicated ATMs, allowing withdrawals at any time. The ATMs even have a Chinese language system, and even the receipts are printed in Chinese.

7-Eleven also provides services for the elderly, such as house cleaning, repairs, and in-store floor exercise facilities. It also handles trivial chores like unclogging drains, dealing with lost keys, disposing of large garbage, and changing light bulbs.

7-Eleven indeed has many things worth learning for domestic convenience stores. But who will own the future convenience store market in China?

> Pan Jinju said: The biggest problem with 7-Eleven is that its pace is a bit slow. In China, 7-Eleven's user perception is still stuck on in-store transactions, and the value generated by users is still the profit from purchasing in-store consumer goods. The high-frequency, deep, and younger user value behind the store network is far from being tapped.
>
> As a high-frequency and deep network node, convenience stores can serve a relatively closed population within a 500-meter radius based on the community. This service value has not yet been developed.

The chief of staff of "Retail Business Review" believes that besides the slow pace of scale expansion, 7-Eleven's bigger disadvantage is that its online capabilities are far weaker than domestic Suning Xiaodian.

**The Convenience Store "Race"**

In 2018, the transformation of China's retail industry continued to intensify. The convenience store industry kept injecting new concepts and technologies, and with the push of capital, it continued to maintain double-digit rapid growth. Data shows that from 2016 to 2018, the convenience store industry saw a total of 190 financing events.

In 2018, companies like Meiyitian, Jianfu, Today, Linji, Bianlifeng, and Haolinju all received capital injections.

According to the "2019 China Convenience Store Prosperity Index Report" released by CFAA, most convenience store companies have higher market expectations for 2019 than last year.

There is also a set of noteworthy data: **In 2018, 72.5% of stores carried out online order business; 60.5% of stores carried out home delivery business; 68.0% of stores carried out online traffic diversion business. Online + offline is to become the new leading model.**

China's branded convenience store chains have nearly 100,000 stores, with sales reaching 130 billion yuan. Moreover, the total number of stores of major brands in major regions has exceeded half of the total stores. And the domestic rural market still has huge development space.

**The market penetration rate of domestic convenience stores is actually not high. According to Japan's market saturation of 2,336 people per store, China's convenience store market space is about 600,000 stores, with urban market space of 340,000 stores. Corresponding to the current existing about 90,000 stores, the penetration rate is less than 25%.**

**"Retail Business Review" believes that China's convenience store market is standing at a new wind outlet, and it can be said that this is the best dividend period. The future competition model for convenience stores may be Suning Xiaodian + 7-Eleven, driven by both model and operations.**

Source: Retail Business Review (ID: lssync)


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