---
title: "Who Stole Convenience Store Traffic?"
description: "Convenience stores are facing a channel crisis as they expand into lower-tier markets, with declining foot traffic due to diversified shopping channels and changing consumer behavior. To cope, they must improve product iteration, increase differentiated SKUs, and develop private brands, while enhancing service quality and promotional strategies."
author: "全食在线"
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published: "2024-03-30"
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# Who Stole Convenience Store Traffic?

> Convenience stores are facing a channel crisis as they expand into lower-tier markets, with declining foot traffic due to diversified shopping channels and changing consumer behavior. To cope, they must improve product iteration, increase differentiated SKUs, and develop private brands, while enhancing service quality and promotional strategies.

While seizing lower-tier markets, convenience stores are also facing a channel crisis, undergoing a transformation driven by changes in the external environment. A procurement manager from a convenience store chain with a thousand stores asked me what was wrong with this year's ice cream market, as their stores saw a significant overall decline in ice cream sales. I told him that this year's ice cream market was affected by both weather and consumption, but ice cream products in the 3-5 yuan price range were selling very well, whereas this convenience store's ice cream was priced around 8 yuan. **But you know, the 8 yuan price range is actually mid-range in convenience store ice cream structures.** Because convenience stores are a format that values gross margins and prefers to sell high-margin products, even if a product is not a top-tier brand, as long as it has appeal to young people, it will be put on shelves. Of course, the price is not low. Due to prime locations, serving young consumers, selling essential fast-moving categories, and the endorsement of chain brands, convenience stores have experienced rapid development in the Chinese market. But in 2023, convenience stores seem to have noticed a shift in market trends.
**Who is affecting convenience store product sell-through?** According to the "2023 China Convenience Store Development Report," in 2022, the average daily revenue per convenience store store decreased slightly by 6% year-on-year, and the reason for this was a decrease in foot traffic. Where did consumers go? With the increase in diversified channels, consumers' shopping choices are being divided, and live-stream e-commerce has become an important way to capture consumer shopping. Currently, live-stream e-commerce has become a shopping channel with high participation frequency among young consumers. At the same time, the rise of new offline formats has also attracted the attention of young people. For example, the rapid expansion of tea beverage brands like Mixue Bingcheng has reduced consumers' opportunities to buy drinks at convenience stores. The rapid development of ice cream wholesale stores has also made consumers stop buying so-called "high-priced" ice cream at convenience stores. For instance, this summer, ice cream categories in Xi'an convenience stores saw their first proactive price cuts to resist the sales decline caused by promotional discounts at ice cream wholesale stores. In addition, the rapid development of snack discount stores has also affected the sales of leisure snacks in convenience stores, and snack discount stores that attract customers with low-priced big-brand beverages have also impacted the beverage category sales of convenience stores. The development of membership discount stores has also attracted some young consumers, and cost-effective small-scale stockpiling has become a popular shopping method among young people. This method also appears in convenience stores. According to data, although convenience store foot traffic declined in 2022, the average transaction value increased, indicating that consumers have engaged in small-scale stockpiling behavior. **Small-scale stockpiling refers to consumers purchasing food needed for 3-7 days, and membership discount stores are clearly more suitable for this.** At the same time, the development of O2O business based on hypermarkets and new retail formats has also led young people who are sensitive to time to give up choosing convenience stores. **Of course, the decline in service awareness of some convenience stores is also one of the reasons for the decrease in consumer visits.** It is understood that if consumers find that the temperature of beverages in a convenience store's freezer does not meet expectations in summer, they will actively avoid that store, even if it means walking a bit further. But in fact, many convenience store outlets lower the freezer temperature to reduce costs, and even turn off freezers on rainy days. Although this saves electricity on the surface, it invisibly loses consumers. Therefore, the reasons affecting convenience store sell-through can be divided into two aspects. On one hand, consumer loss is caused by service differences; on the other hand, diversified sales channels compete for young consumers. So how should convenience stores respond?
**How should convenience stores respond?** Currently, convenience stores are shifting from first-tier cities to lower-tier markets, seeking sustainable development through market segmentation and expanding their service population. But expanding alongside convenience stores are ice cream wholesale stores, hypermarkets, snack discount stores, and freshly made tea shops. Although convenience stores sell popular, high-frequency, essential products and even offer various services, they still face difficulties when squeezed by diversified channels. So how should they respond? **Improving product iteration rate** and increasing differentiated product selection might be a good approach. Of course, large-scale product iteration tests the convenience store's supply chain, procurement selection ability, and the penetration rate of digital stores. Currently, many branded chain convenience stores have also begun to eliminate products based on sales data to improve store operation efficiency. **In addition, increasing the SKU of differentiated products** to attract consumers' purchase desire. Currently, nearly 80% of products in convenience stores come from top-tier brands. Of course, many convenience stores have also begun to increase the display of regional internet-famous products. Although top-tier brands can reduce consumers' decision time and increase store transaction rates, young people who like novelty still hope to see different products in convenience stores. **Furthermore, increasing the number of private brands** has become the next development goal for convenience stores. Currently, private brands have appeared in categories such as coffee, fresh food, and baked bread, mainly under chain convenience store brands, and consumer feedback has been positive. Private brands are not only a continuation of the convenience store brand's momentum but also a way to provide differentiated products. Of course, in the next 2-3 years, ice cream wholesale stores and snack discount stores will remain competitors dividing convenience store ice cream and leisure snacks. In the process of finding differentiated products, convenience stores also need to improve service quality and use membership systems to retain consumers. Of course, consumers still like real bargains, so how to effectively formulate promotional activities is also something convenience stores need to study next. For convenience stores, excessive discount promotions are not a good thing, so it is necessary to find a marketing activity suitable for the convenience store format, using online and offline methods to attract consumers. Obviously, convenience stores are now facing not only consumers with declining demand but also new channels that can provide consumers with extreme cost-effectiveness. There are no consumers who are forever loyal to a brand.
**Final Thoughts** Rather than saying that convenience stores are currently facing pressure from diversified competition, it is better to say that convenience stores are facing a procurement selection dilemma. Excellent procurement will choose products with future trends, while ordinary procurement will choose currently best-selling products. Therefore, the procurement selection ability will directly affect the results of convenience store product sell-through. This means that in the future, the requirements for procurement in convenience stores will become higher and higher, not only needing to look at product gross profit tables but also needing to look at product development prospects. But in the long run, convenience stores still have strong development prospects in the Chinese market, but the competition they face is more intense, and supply chain, digitalization, service awareness, product structure, and product selection will become the moats of convenience store brands. It should be known that the significance of convenience stores is not just a channel for selling goods, but a treasure box that can meet all consumer needs. _PS: Click **Read Original** to view more about the 9th China FMCG Innovation Conference and the 2nd China FMCG Hard Discount Conference & the 2nd China FMCG Distributor Conference...___


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