Why Does New High Bridge Insist on 15,000+ Stores Despite the Loose Franchise Model Being Called 'Connected but Not Locked'?

Community mom-and-pop stores are considered the retail format closest to consumers. In recent years, as online traffic costs have peaked, more internet companies are moving offline to capture the trillion-yuan offline traffic entrance through this seemingly unremarkable retail format. In 2017, with Alibaba and JD.com entering the fray, this traditional product-selling format was formally pushed to the forefront of capital. Before that, many companies had already begun to lay out retail small stores, and New High Bridge is one of them.

"I started doing convenience stores ten years ago, which are now in the spotlight," Tang Guangliang, founder of New High Bridge, told New Distribution in an interview.

Public data shows that New High Bridge was established in 2014. After nearly four years of development, it has over 10,000 franchise stores. As of now, New High Bridge operates three convenience store brands: New High Bridge, Happy Hui, and Koala Convenience. In terms of store scale, New High Bridge has become the third-largest convenience store brand after Meiyijia and Furong Xingsheng, with business spanning three provinces: Hunan, Hubei, and Guangdong, covering 12 cities including Changsha, Zhuzhou, Xiangtan, Hengyang, Huaihua, Wuhan, and Guangzhou.

Recently, New Distribution exclusively interviewed Tang Guangliang, founder of New High Bridge, hoping that its development model can provide some reference for everyone.

1 Regional Leadership, Radiating to Surrounding Areas In the internet industry where speed is paramount, development speed has become the sole indicator for many companies. Unlike some platforms that blindly pursue speed and nationwide coverage, New High Bridge has always insisted on basing itself in Hunan and then gradually expanding to surrounding regions.

"New High Bridge's development strategy is regional leadership, based in the Hunan base, and then gradually capturing the Hubei and Jiangxi markets within three years," Tang Guangliang told New Distribution. "Some B2B platforms claim to be number one nationwide, but they are nothing in various war zones. Some competitors insist that national B2B platforms will definitely defeat regional B2B platforms, but up to now, we have not felt their presence in the Hunan market at all. Many so-called national platforms just came to the Changsha market to check in, which is useless. In the next 15 years, I don't think there will be a situation where national platforms dominate regional platforms. We can invite industry peers to witness this together."

Tang Guangliang told New Distribution, "FMCG must be king in the region. At least create an original table; the source file's table is very important (Excel table). If your table is wrong, you can copy it with a USB drive... That's very stupid. If you do matching, you do nationwide; if you are very heavy direct-operated, you are king in the region; if you are single-category, you can also try nationwide; if you are multi-category and direct-operated, can you first be king in the region? There is a 'first' in 'first be king in the region,' meaning not that we won't develop nationwide in the future."

2 Insisting on Loose Franchise According to the headquarters' control over franchise stores, domestic franchise convenience stores can be divided into three categories: direct-operated, tight franchise, and loose franchise:

Direct-operated: A brand-led model where the company headquarters directly invests and operates, setting up branches or subsidiaries in various places. This model is characterized by heavy operations, slow store development, and relatively long profit cycles. Typical representatives include 7-11, FamilyMart, and Lawson.

Tight franchise: The franchisee provides store resources and bears franchise fees, rent, labor, and water/electricity costs, while the company is responsible for store quality control, store decoration, equipment provision, product provision, and personnel training, such as Meiyijia and Tianfu.

Loose franchise: Typically, the headquarters helps small stores create a unified storefront, provides certain technical support, and exports its supply chain. This model is characterized by rapid development, but stores have relatively weak loyalty to the franchise brand. Obviously, New High Bridge is a typical loose franchise model.

"New High Bridge's development model is to provide technical output to stores, " Tang Guangliang emphasized to New Distribution. In the next 3-5 years, New High Bridge will always insist on empowering stores through loose franchise. The main reasons are as follows:

1. Layout points, quickly seize network points Tight franchise involves overall store operation, store decoration, and relatively strict daily management, which determines that its development speed is not as fast as loose franchise. Through loose franchise, it can quickly lay out high-quality network points, thereby seizing point advantages.

2. Social attributes of stores From the distribution of network points, loose franchise convenience stores are mostly located around communities, with relatively stable transaction relationships and strong social attributes.

3. Profitability Compared with tight franchise, loose franchise does not involve training internal store personnel, daily operation management, and product quality control, so the investment is smaller and profitability is relatively stronger.

4. Scale effect Although the average transaction value of loose franchise is much lower than that of tight franchise, loose franchise can establish transaction relationships with as many stores as possible. Moreover, from the perspective of brand owners, covering more terminals means sufficient bargaining power with upstream brand owners.

3 Market Opportunities Changsha, as the city with the highest development of convenience stores in China, has a developed retail format and complete infrastructure that subtly influence the operation of traditional retail small stores. Stores and consumers have high awareness and acceptance of chain convenience store brands. In Tang Guangliang's view, small stores choose to join convenience stores for the following reasons:

1. Brand appeal. Traditional small stores are generally small in scale and difficult to gain consumer trust. By joining a convenience store, small stores can get certain brand endorsement.

2. Products. Small stores need a platform to achieve one-stop procurement of daily operating products.

3. Distribution efficiency. The nature of convenience stores determines that stores generally do not have enough warehousing to store products, which places higher demands on the distribution efficiency of the upstream supply chain.

4. Price. Price is a key factor affecting small stores' purchase decisions. Small stores tend to purchase on platforms with favorable prices.

5. After-sales service. After-sales service determines the repurchase rate of stores. The more complete the after-sales service, the shorter the purchase decision cycle for small store owners.

These comprehensive factors determine whether small stores choose to join convenience stores or continue with traditional retail formats. According to incomplete statistics from New Distribution, there are more than 20 convenience store brands in the Changsha area alone, which means that New High Bridge will inevitably face direct competition with other brands when expanding its stores.

Image source: China Chain Store & Franchise Association

"From the perspective of store count, although New High Bridge has basically achieved the first market share in the Changsha market, there are still many franchise brands and a large number of traditional retail small stores. Other foreign brands entering the Changsha market are just grabbing our remaining market share. Everyone's business models and brand values are still in the stage of dividing the market, and there is even an 80% market that is completely undeveloped, waiting for new brands to occupy, so there is no so-called competition."

New High Bridge is based in Hunan, radiates to surrounding areas, and continuously accelerates network layout through loose franchise, controlling goods upstream and connecting stores downstream, showing unique competitiveness in competition with other B2B platforms.

The business model of convenience stores + FMCG B2B, on the one hand, helps the platform quickly establish connections with as many small stores as possible; on the other hand, it can also form brand aggregation effects through rebranding, thereby bringing bargaining power with upstream brand owners. This development model is worth referencing and learning from for practitioners in related industries.

Recently, New Distribution will organize the ninth B-end e-commerce inspection class to visit Changsha New High Bridge. From Happy Hui to New High Bridge, and then to Koala Convenience, what are the differences in New High Bridge's multi-brand strategy? In the process of developing convenience stores, how did New High Bridge quickly become the number one brand in Hunan? Welcome everyone to sign up and learn with New Distribution.

Activity process:

8th: Check in at designated hotel in Changsha; 9th: Inspect Changsha New High Bridge; 10th: Inspect Guangzhou No.1 Life; 11th: Inspect Dongguan Caihua Trading; 12th: Return or free arrangement for sightseeing;

Welcome distributors interested in transformation to join us for understanding and on-site inspection:

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Company visit
Actual market case visit
Warehouse visit
On-site explanation / one-on-one communication
Salon training

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