Image source @ Visual China
Text | Parity, author | Blackcurrant, editor | Zhao
Migrant workers in old Beijing have one more way to eat breakfast on their way to work.
In early January 2022, as the new Jingdong convenience stores and Lawson convenience stores in some subway stations in Beijing officially entered the trial operation stage, migrant workers who traveled to Beijing could feel more pyrotechnic gas when they shuttled through the subway.
Although it is not possible to sell hot drinks, buns and other fresh food products in subway convenience stores like Wuhan, some young people can not directly cry regrets, but after many days, it is still exciting to bid farewell to the subway desert again.
The exquisite copywriting on the Internet gives the answer that young people are so fascinated by convenience stores on their way to work: "There is a convenience store deep in the clouds, selling pink tenderness. Then, there should also be a convenience store in the city, the place is not big, warm enough, weaving the usual fireworks in the world."
The existence of convenience stores is not only a quick choice to solve three meals a day, but also a place to decompress between work. Here, whether it is the bustle of the day or the loneliness of the night, people can see all kinds of things 24 hours a day.
When convenience stores enter subway stations and office buildings, which are closer to young people's livelihoods, fireworks are combined with this business model that is not new for the first time.
Read this article and you'll learn about the following issues:
1. Under the rapid construction of urbanization, how strong is the fireworks in convenience stores?
2. How is the city convenience store stained with fireworks?
3. How much does it cost to "load" a convenience store with fireworks?
The fireworks in the convenience store are getting more and more vigorous
Beijing was once seen as a desert of convenience stores.
As early as 2004, affected by the 2003 Daegu subway fire in South Korea, Beijing issued the "Beijing Urban Rail Transit Safety Operation Management Measures". The subway in this cosmopolitan metropolis was once insulated from various commercial activities.
In Wuhan, subway convenience stores and even underground commercial complexes were born with the opening of almost every line. The "fireworks" on commuting roads in other cities also make young people working in Beijing extremely envious.
At the beginning of 2020, the loosening of policies made people see the hope of convenience stores re-entering the subway. First, the Ministry of Commerce and 13 other departments jointly issued the "Guiding Opinions on Accelerating the Development of Brand Chain Convenience Stores", which mentioned "focusing on promoting the construction of brand chain convenience stores and expanding the scope of implementation in a timely manner".
Subsequently, in August of the same year, the Ministry of Commerce further refined the opinions and proposed a "15-minute convenient living circle" plan. At that time, the Beijing subway had begun to figure out business models such as vending machines and fast cameras.
Of course, the most concerned is the trial operation of deligogo, Lawson and JD.com convenience stores in July 2021.
According to the Beijing Evening News, in addition to the above brands, brands such as FamilyMart and Crus Vanguard convenience stores have been determined to enter the Beijing subway this year. The store is opened at some stations on Line 5 to Line 15 of the Beijing Subway.
"Finally, there is no need to envy friends in other cities to buy breakfast when catching the subway", most office workers have great expectations for the restart of the subway business that has been "abandoned" for a long time.
Parity filming
Of course, judging from the trial operation of many stores reported by the media, the overall passenger flow is not particularly high, and there are also some gaps between some sites.
Obviously, the current scope of beijing subway convenience stores and the restrictions on selling products (sandwiches, rice balls and other products) have given the rising fireworks a certain limitation.
This situation is even more rare in new first-tier cities like Wuhan.
2016 is a crucial year for the development of convenience stores in Wuhan. During the year, Lawson expanded his business to Wuhan and other central China regions, and many of the newly opened stores also included underground convenience stores located at the Jianghan Road subway station.
Wang Bo, who works on Hong Kong Road, takes Line 6 directly from Jianghan Road Subway Station every day to Hong Kong Road, and the subway is the company, and there is no suitable breakfast restaurant for him to choose along the way.
Now, the Lawson convenience store in the Jianghan Road subway station has become his first choice. At the same time, it also makes up for the breakfast needs of most Wuhan workers.
7:40 a.m. to 9 a.m., 11:50 p.m. to 12:30 p.m., and 4:30 p.m. to 9 p.m. are the three hottest periods of rosen's subway convenience store business, and ready-to-eat products are often in short supply.
Of course, in addition to Lawson, in the Jianghan Road subway station, there are many brands such as Wuhan local brands Such as Today, "7TT" and "Loco", and convenience stores themselves also have a certain competitive relationship.
On the ground, the competition between ground convenience stores is even more intense.
In 2020, when Ma Yun, president of Lakeside University, visited Wuhan, he tasted a hot dry noodle made from a convenience store and said that it tasted very delicious.
With the expansion of localized cuisines such as hot dry noodles, Local brand convenience stores in Wuhan have the capital to compete with foreign convenience store brands. Foreign-funded convenience stores such as 7-eleven and Family Bambi, which sell fresh food products such as Oden and Rice Balls, are not popular in Wuhan. The former only opened 7 stores in Wuhan.
"Boss, come to a bowl of hot dry noodles, put a fritter, and add a cup of soy milk." This kind of picture, which used to appear only in street breakfast restaurants, is now almost unchanged in some convenience stores in Wuhan.
According to data from AutoNavi and Baidu Maps, there are 1,632 convenience stores in Wuhan, accounting for about 80% of them within the Third Ring Road. The density of convenience stores is also closely related to the surrounding commercial layout.
Located in Wuhan's Jianghan District, Oceanwide International SOHO City has at least 6 convenience stores gathered in 8 office buildings. Among them, Rosen, Youjia, and Today, which can sell localized foods such as hot dry noodles, have the largest flow of people.
Zooming in on the perspective, Tianyancha data shows that there are more than 1.05 million enterprises in the mainland with the names of "chain supermarkets, convenience stores, convenience supermarkets, convenience chains, and chain conveniences". In the past decade, the annual registration growth rate has approached 30%.
In 2021, more than 257,000 convenience store-related enterprises were added in the mainland, an increase of 7.3% over last year. This year, the total number of branded chain convenience stores in the country will reach 300,000, no less than 200 stores per million people in cities above the middle level in the country, and no less than 30% of chain convenience stores with 24-hour operation stores (including unmanned retail stores).
Image source: Sky Eye Check
With the support of policies, major types of convenience stores have achieved orderly and rapid growth. Fireworks have become an important magic weapon for convenience stores to "fight in the city".
The cold and warm of convenience stores for a hundred years
The trial operation of Beijing Metro convenience stores shows that as a convenient store operating during non-24-hour periods, peak traffic periods generally occur in the morning and evening hours. Among them, the passenger flow from 7:00 to 9:00 in the morning is about 36% of the whole day.
This time period corresponds to the moment when the fireworks are at their strongest. At the same time, it is also different from the traditional 24-hour convenience store, which is visible to the naked eye in terms of format.
If you understand the history of convenience stores, you will be curious about how this business model is related to pyrotechnics.
The original convenience store was born in the electric age. The lack of air-conditioning equipment such as home refrigerators and air conditioners has given convenience stores a "special" meaning to sell cold drinks and even basic items such as bread and milk.
In 1927, with this pattern. Southern Ice Company pioneered the predecessor of the convenience store. After nearly 20 years of experimentation and exploration, in 1946 the world's first truly convenience store was established. It is also named "7-Eleven" for its opening hours from 7 a.m. to 11 p.m.
In 1974, the number of "7-Eleven" stores reached 5176. In the same year, Toshifumi Suzuki, director of Ito-Yokado in Japan, through unremitting efforts, finally obtained the franchise right of "7-Eleven" in Japan, completing the true empowerment of convenience stores.
Until this time, even after the convenience store just entered the country, its main function is to provide goods sales services in the concept of a small supermarket, which sounds "simple and cold".
"The density of convenience stores in a city measures the degree of commercialization and modernization of a city, and if every three thousand people have a convenience store, they can achieve overall convenience, and if every two thousand people have a convenience store, it is a high degree of commercial convenience." For the importance of convenience stores to the city Chinese Huang Jiangmin, secretary of the party committee of Minmin University, once explained.
With this concept, crazy domestic brands have launched a fierce competition for opening stores with more senior foreign brands in the convenience store market.
In 2021, convenience bees plan to open more than 4,000 stores in China, and in 2023, they have put forward a great grand plan of targeting 10,000 stores.
However, even if the rally is fierce, the market is not so optimistic about the prospects of this domestic brand. In this field, the competition between 7-Eleven, FamilyMart and Rosen has already entered a white-hot situation. The latter completed the acquisition of shares in Tianhong, a department store listed company, at the end of last year. Despite the unfavorable expansion, the listed company still has a certain influence in the South China market.
At the same time, this incentive competition is also reflected in the concentration of the convenience store industry. According to statistics, in 2021, the number of the top ten convenience store stores in the Chinese market will account for 67% of the total number of stores in the country, and the top two will be dominated by the "double males" of the petroleum department, accounting for a total of 36%, and only Meiyijia can compete with it. The overall concentration is also slightly lower than that of the European and American markets.
In the second-tier echelon, the number of stores in Lawson, FamilyMart and 7-Eleven is less than 5,000, and the annual turnover is far lower than that of the head brand.
Under the background of the continued strong head effect of the top three brands, the final destination of many remaining brands has become a mountain dominating their respective regions.
Regionalization is the second largest feature of China's convenience store market. For example, the well-known convenience store brand Hongqi Chain has been distributed throughout Sichuan for a long time, relying on strong regional effects to harvest 9.05 billion yuan in operating income in 2020.
Others, such as Lawson, which started in Jiangsu, Zhejiang, and Shanghai, Tianfu in the Wuling Mountain area, and the newly emerging Beijing brand Convenience Bee, all have strong regional attributes in their expansion.
Parity tabulation
Of course, increasing competition means that no brand can stay in their "comfort zone" forever. Another acquisition by Rosen this year, sold by WOWO, was hailed as the "king of 24-hour convenience stores in Chengdu". After the completion of this transaction, in the future, Lawson is expected to break his wrist in the Sichuan market and the "Mountain King" Red Flag chain.
In the Shanghai market, which has a larger share, brands such as FamilyMart, 7-Eleven and the newly added Convenience Bee have also launched fierce confrontations.
Toshifumi Suzuki, founder of 7-Eleven, once wrote in his book: "People always habitually think that the fewer competitors in the market, the more beneficial they are, but once there is no competitor, the cause will often stagnate."
The obvious regional characteristics, coupled with the suffocating rhythm of competition, forced brands to implement a differentiation strategy to meet the diversified needs of consumers and complete self-protection in the hot convenience store market.
The ups and downs of Beijing subway convenience stores and the lively scenes in morning convenience stores in other first-tier cities have allowed many brands to see a new way out of the industry in the hustle and bustle of the city, that is, to "load" convenience stores with fireworks.
The question is, is this an easy business?
Can "loading" fireworks in convenience stores make money?
People are accustomed to using "bending down to pick up steel hammers" to describe the convenience store industry's difficulty in making a profit.
In the convenience store industry, which has experienced the development of U-shapes, it is still difficult for a single store to make a profit, not to mention how many brands after experiencing scale should achieve refined operation.
Excluding the cost factors required for large-scale scale such as supply chain, franchise fee, and membership fee, how much benefit can pyrotechnic gas bring to convenience stores in single store management, and how much additional cost does it need to pay for "loading" pyrotechnic gas in convenience stores?
Of the major costs of convenience stores, two account for the vast majority of them: rent and employee compensation.
According to the "2021 China Convenience Store Development Report", the cost of rent accounts for 6.5% of the cost structure of the main expenses accounting for 25.8%. In contrast, the rent in the larger department store supermarket is not the highest cost item, accounting for only 2.5%.
Taking the restarted Beijing subway convenience store as an example, according to relevant industry insiders, the monthly rent of the Beijing subway convenience store is 4,000 yuan to 5,000 yuan per square meter, which means that the monthly rent of a convenience store of about 20 square meters will reach 100,000 yuan.
In new first-tier cities such as Wuhan, the rent will be lower, but the monthly rent of convenience stores in first-tier locations will basically not be less than 50,000 yuan.
According to some local convenience store employees in Wuhan, their salaries are between 4,000 and 5,000 yuan per month, while the configuration of standard convenience stores is 1 store manager plus 4 to 5 store staff. The comprehensive total monthly salary is about 28,000 yuan.
Another set of profit data shows that the standard average turnover of a convenience store is about 100,000 yuan. This shows that even if the cost of water, electricity, inventory, etc. is not calculated, some convenience stores have the risk of loss.
Pyrotechnic gas is actually regarded by the brand as a sharp tool to increase revenue: taking advantage of the immediate demand at the peak of the flow of people, broadening the product dimension and increasing sales.
So how much income can "pyrotechnic gas" bring?
Jioupai visited a convenience store near the Wenchang Road subway station in Wuhan and found that it offered breakfast products such as buns, boiled eggs, oden, hot dry noodles, etc.
According to the clerk, there are 50 to 60 customers in the breakfast business on weekdays, and the average customer unit price is close to 10 yuan. The daily turnover of the breakfast business is about 500 yuan, and the monthly turnover reaches 15,000 yuan.
Hot dry noodles in convenience stores Parity shoot
After calculation, it was found that the representative of "pyrotechnic gas", breakfast, can bring 15% increase in turnover to convenience stores, and from the perspective of improvement rate, it has high development prospects.
On the other hand, while greatly increasing revenue, the innovation of breakfast has also brought about an increase in costs for convenience stores.
Take, for example, the hot-dried noodles with the highest sales volume in the breakfast business. The first is the machine for making products, through online information, the market price of small simple noodle cooking machine is about 500 yuan, and the retail price of hot dry noodles with material packages is about 5 yuan per pack.
The increase in cost pressure is clearly insignificant compared to the increase in operating income. Of course, not every convenience store has the "ability" to sell breakfast service. The franchise model means that whether it is hot dry noodles, oden or even boiled eggs, you need to pay an additional deposit to the headquarters before you can be authorized.
From this point of view, the high margin may be the biggest risk point of the breakfast business, but this still cannot hide the high profit potential of "pyrotechnic gas".
At the same time, the data also confirm this view. According to 7-eleven brand stakeholders, the gross profit margin of Oden, steamed buns and local specialty food products is as high as 60%. The gross profit margin of packaged food is only about 25%.
As a local convenience store brand in Wuhan, Song Yingchun, founder of Today Today Convenience Store, believes that "fresh food localization" is an important direction for convenience stores to develop fresh food business. According to the data, Today is the first convenience store to sell hot dry noodles in Wuhan, and the total sales of hot dry noodles in a single year once exceeded 3.8 million copies.
Of all the stores that sell hot dry noodles, fresh food SKUs account for 10%, while sales account for 30%.
City convenience store, fireworks in the world. In this era of increasing need to cater to young people, adding pyrotechnics to convenience stores, this tireless perpetual motion machine, is getting more recognition from the market.
Write at the end
"The current development model of mainland subway business can learn from the stone of other mountains", for the follow-up development of Beijing convenience stores, Lai Yang, a member of the expert committee of the China Federation of Commerce, said that the development model of some first-tier cities can be referred to, that is, to create a variety of subway business formats.
The same is true for the development of the convenience store industry itself. From the initial sale of refrigerated food, to the 24-hour convenient service of the whole category, to the fireworks born in today's differentiated demand. Convenience stores' own formats are also constantly being optimized and changed.
From the current situation, fireworks has a great chance to be accepted by more convenience store brands and truly make a decent business.
However, we still need to be vigilant that once we come into contact with the field of fresh food, the problem of food safety will be infinitely magnified. The black cat platform shows that the fresh food products of many convenience store brands have been complained about by customers to varying degrees.
While attracting the attention of customers, the fireworks in convenience stores also hide many invisible risks behind them. Brands may need to make more trade-offs between convenience and security.
The birth of "fireworks" in convenience stores is a two-way promotion of supply and demand under the fierce competition between consumer demand and convenience stores. From our research, the profit margin of these "pyrotechnic" goods is much higher than the profit margin of packaged finished products. Therefore, major convenience stores are keen to expand these product categories and counters, even if they look like a restaurant.
Naturally, it has both commercial interests and a full of warmth and humanity. A piece of fried chicken and a piece of corn in the subway in winter, what a beautiful day!
Resources:
1. "Convenience Store Beijing Subway Scramble" Spirit Beast Media
2. "Beijing subway convenience store pressed the restart button, future development can learn from the "stone of his mountain"" Securities Daily
3. "War on the Street Corner: How Did Convenience Stores Rise?" Attack Wave Finance
4. "There is "fireworks gas" on the commuting road, and the data of Tianyancha shows that in 2021, mainland convenience store enterprises will increase by 7.3% year-on-year" In the financial world
5. Prospective Economist of "Industry Depth" Insight 2021: Competition Pattern and Market Share of China's Convenience Store Industry (with Market Concentration, Enterprise Competitiveness Evaluation, etc.).