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Text | Sting Institute, author | Small full
The convenience store, known as the city's late-night soul-calling lamp, also panicked because of the accelerated inner roll.
In addition to the 24-hour shopping needs of the industry, convenience stores across the country are racking their brains to find ways to get out of the circle. Convenience stores in Shanxi began to provide services such as sending and receiving couriers, cleaning home appliances, and even "Japanese noodles"; in addition to selling vegetables, convenience stores in Shandong also sold a variety of rice noodle products and onions, ginger and garlic seasonings; convenience stores in Guangdong directly incarnated as "morning tea shops", with a variety of traditional Cantonese refreshments.
While local convenience stores are trying to expand their business scope and enhance their competitiveness, the chain convenience store track has also revealed new industry changes. In June last year Chinese mainland Lin Jianhong, CEO of the whole family, left his job, and the Sting Research Institute learned from the insiders of the whole family that the whole family may continue to lose money in 2021. Lawson, whose number of stores has surpassed the whole family, announced in the second half of last year that it would cancel the entry fee and account opening fee, and at the end of the year, it acquired Tianhong Weiwo convenience store for 310 million yuan to enter South China.
In addition, convenience bees are accelerating the layout of the North China, East China and South China markets, and introducing the beverage station "Sleepless Sea Sober Hi" in the form of a store-in-shop. At the same time, a number of temporary discount stores have also appeared across the country, trying to open up a new convenience store market with subdivided demand.
In the battlefield of urban living space, convenience stores are ushering in a new round of scuffle.
01 Convenience stores have been in China for 30 years, and their development is still uneven
In 1946, the world's first true convenience store, "7-Eleven (7-11)", was born in the United States. In the early 1970s, Japan introduced this standardized convenience store model and began to spread from Japan to the world with a unique commercial retail format. In 1992, 7-Eleven landed in Shenzhen and opened the prelude to the convenience store in the Chinese market, which has been exactly 30 years.
According to the report of the China Chain Store & Franchise Association, the top three brands in the number of convenience store stores in China in 2021 will exceed 20,000. But to the surprise of most people, these three brands are not the most common Lawson, FamilyMart and 7-ELEVEn in first-tier cities, but the "petroleum-based" convenience store brands EasyJet (27,600), Kunlun Hospitality (20,212), and the local convenience store king Meiyijia (22,394), and even the fourth place is tianfu from Guangdong.
What also surprises many people is that the far leading density of stores is not a super-first-tier city such as Beijing, Shanghai and Guangzhou. According to the "2021 China City Convenience Store Index" released by the China Chain Store & Franchise Association, Dongguan ranks first in the country with a density of 2,073 people per store, followed by Changsha, Taiyuan and Zhongshan. Even Shanghai, where you can find 3 convenience stores near a subway entrance, can only rank tenth with a density of 3856 people per store.
In addition, the development of convenience stores also presents the problem of north-south differences and market dispersion.
While convenience stores are rapidly sinking and expanding in southern cities, the growth of convenience stores in northern cities has been relatively slow, and northern cities such as Hohhot, Changchun, Dalian, and Harbin have even experienced negative growth in 2021. Although Beijing ranked third with a growth rate of 5.78%, the density of 9199 people/store also made the growth extremely limited. The hat of Beijing's "convenience store desert" has still not been taken off, which is also difficult to believe the fact that convenience stores have been in China for 30 years.
02 The "outcast" of capital
Around 2017, the convenience store industry was also a track that attracted the attention of capital. According to incomplete statistics, in the first quarter of 2017 and 2019 alone, there were more than 70 financing incidents, with a total financing scale of 10 billion yuan. During this period, local convenience store brands such as Today, Neighbor, See Fu, 131, and Every Day stood out, and convenience bees and good neighbors continued to receive capital blessings.
The influx of capital has completely triggered the barbaric growth of the convenience store industry. According to the data, from 2015 to 2018, the number of convenience store stores in the mainland increased from 91,000 to 122,000, of which the growth rate of China's brand convenience store industry in 2017 reached 23% year-on-year, and the market size has exceeded 190 billion yuan.
At that time, the reason why Capital was optimistic about the convenience store track was nothing more than two aspects. One is that the new retail concept proposed by Ma Yun in October 2016 quickly became popular, attracting a number of Internet e-commerce industry giants to participate in the offline layout war. Another reason is that convenience stores themselves have a high degree of standardization and chain characteristics, making them have a mature business system that rapidly expands and achieves large-scale operation.
However, compared with the mature operating system of Japanese convenience store brands, local convenience store brands that are fueled by capital seedlings still have an increased gap in the actual operation and management links. After more than 70 years of development, 7-ELEVEn has precipitated a franchise manual of more than 700 pages covering almost all aspects of the operation, while the local convenience store brand at this time, due to insufficient supply chain capabilities, weak management and operational capabilities, is still in the exploration stage of studying how to reduce costs and increase efficiency, and has not been able to enter the franchise mode. The "2018 China Convenience Store Report" disclosed that nearly 40% of domestic companies have not yet opened to join, while the franchise stores of Japanese convenience store brands Rosen, Family And 7-ELEVEn account for 95%, 97% and 98% respectively.
The lifeblood of local convenience stores that are wrapped up in capital is also firmly in the hands of capital. While many local convenience store brands are driven by capital to expand rapidly, they still have not solved the problem of profitability, and when the investor's funds are broken, these convenience store brands have become the "abandoned children" of capital.
In August 2018, the neighbor convenience store closed 168 stores overnight due to the complete rupture of the financial capital chain of the investor Shanlin. In September, the investor Chunxiao Capital was involved in illegal fundraising, and the founder of 131 Convenience Store disappeared and was later detained. In November of the same year, Beijing's largest local full-time convenience store was also rumored to be in the process of asset inventory and seeking to sell, and after three months of full-time closure of about 90 stores, accounting for 20% of the total number of stores.
03 The new pattern of convenience stores, how to catch young people?
The short-lived boom brought about by capital is not without benefits, at least for the convenience store industry to start thinking about how to make the business bigger. During the epidemic, the vacancy of many offline stores and the decline in rents have allowed convenience stores such as Lawson to see great opportunities to expand against the trend.
Rosen closed its underperforming stores while accelerating its expansion. By October 2020, Lawson had surpassed 3,000 stores in China, surpassing FamilyMart to become the first of the three major Japanese convenience store brands. Lawson's earnings report shows that its business in China achieved full-year profitability for the first time in 2020. Rosen also took this opportunity to announce that it plans to triple the number of stores in the Chinese market by 2025, with a target of 10,000 stores.
The expansion target from 3,000 stores to 10,000 stores obviously cannot be met by the market in first-tier cities alone, so convenience stores have begun to sink to second- and third-tier cities.
In 2021, Lawson began to settle in many prefecture-level cities such as Tangshan in Hebei, Wuhu in Anhui and Nantong in Jiangsu, and the convenience bee successively opened its first stores in Foshan, Jiangsu, Lianyungang and other places, and Tangjiu convenience stores also entered the Zhengzhou market. The collective sinking of the entire convenience store industry has directly driven the growth of convenience stores in second- and third-tier cities, and the "2021 China City Convenience Store Index" shows that the growth rate of Xiamen, Jinan, Xi'an and other cities in 2021 will exceed 5%.
In addition to large-scale expansion, convenience stores are also trying to improve revenue capabilities with refined operations. Judging from the feedback of the market, the main service objects of convenience stores are mainly young people. Therefore, many chain convenience stores have begun to "Luckinization", using digital means such as Apps or Mini Programs to enhance user retention, activation and conversion. However, the simple use of Internet thinking and means to guide operations has not allowed convenience stores to gain significant gains.
Just as the Internet giants have tried to challenge the traditional convenience store model with takeaway delivery and unmanned shelves, and even used front-end warehouses and O2O to achieve 15-minute delivery to completely open up the last 500 meters of the "lazy economy". The core value of convenience stores is not in the product itself, but it has become an inseparable and important scene in the daily life of young people.
In the home scene, young consumers may meet consumer demand through online shopping and takeaway. However, when it comes to work and life scenarios that must go out, from three meals a day, afternoon tea to the "blood return time" after late night overtime, 24-hour convenience stores are the most convenient scene for young users to meet consumer needs. In terms of the richness of SKUs, convenience stores may not be as good as large supermarkets and e-commerce platforms, and they are not as good as couples stores in terms of price, but it provides a reliable choice for young people in real life.
In addition, convenience stores are also a rare offline high-frequency consumption scene in real life. Therefore, how to use the differentiated product and service experience to keep consumers behind has also become an important direction for convenience stores to compete for strength.
Convenience stores provide ready-to-eat meals such as breakfast, fast food box lunches, chicken skewers, and oden, which are convenient and delicious products to rob users of three meals a day. Self-service coffee machines and drink bars, which have almost become standard in convenience stores, have further intensified competition in product categories and service experiences. On this basis, convenience stores in different regions have also launched personalized products or services.
For example, in addition to meeting the 24-hour shopping needs, convenience stores in Taiyuan can also customize birthday cakes, buy lottery tickets, pay gas bills and cable TV fees, and some convenience stores in Wuhan also have hot and dry noodles made on the spot. In addition, the "seasonal limited" and "limited rush" launched by convenience stores every once in a while, or explosive products jointly branded with well-known IP, are also attracting young consumers to punch in the store with the attitude of Internet celebrities.
In simple terms, convenience stores have found significant advantages that distinguish them from supermarkets and couples stores between convenience and quality, and give young consumers a consumption space that is free and ready to meet their needs and often have expectations. This also provides enough imagination space for the profitability of convenience stores.
Wei Zhe, former CEO of Alibaba (B2B), once proposed the idea of a convenience store with a monthly sales of 2 million: a convenience store with 2,000 members, as long as each member's monthly consumption reaches 1,000 yuan, can achieve 2 million sales. If calculated according to the calculation of 30 days a month, only a single member's daily consumption of more than 33.33 yuan can achieve the goal, and the remaining problem is how to have enough members and guide members to maintain long-term consumption.
From the current point of view, the continuous expansion of the range of products and services and the creation of Internet celebrity explosions have been able to basically solve the problem of members arriving at the store, but whether this practice can be effective for a long time and achieve a balance between revenue and cost is still unknown. It is worth mentioning that while traditional convenience stores are accelerating their internal rolling, some young consumers are still attracted by other new convenience store formats.
A typical example is that the main big-name Internet celebrity products and low-discount temporary discount stores have successfully attracted some young people. According to the "2020 China Temporary Food Industry Market Analysis and Consumer Research Report" released by Ai Media Consulting, 47.8% of the people aged 26-35 in the temporary food consumer group. And more than 40% of respondents said they were willing to buy and recommend temporary food to those around them.
With the help of capital, temporary discount stores have also begun to pursue scale. At present, it has completed 4 rounds of financing and has more than 150 stores in the country, and the baby elephant life, prosperity market, and food Huibang in the second echelon also have more than ten stores. On the one hand, the rise of temporary discount stores has compressed the living space of offline retail formats, and has also had a diversion effect on the users of convenience stores, which will also pose a certain threat to convenience stores in the long run.
It should be noted that the status of convenience stores as a real-life consumption space for young people has not yet been replaced by any new format. The future convenience stores will continue to sink into the circle of life centered on the young people, and provide localized convenience services guided by real needs, becoming an important scene to fill the gap between young people in addition to work and life.
In the face of the new pattern of the industry and new opponents, can traditional convenience stores win this scuffle? The answer lies at the feet of consumers.