Convenience stores are the "religious rituals" of the urban lifestyle.

Convenience stores, a constant light in urban life.

It is not as grounded as a couple's wife's store, nor as dazzling as a superstore. Convenience stores, as the retail industry of the city's most terminal capillaries, have always appeared to be too detached in temperament.

But at some point, convenience stores have taken on a spiritual significance that is higher than retail and commerce. 7*24 hours a day, year-round, with a steady supply of merchandise and just the right amount of space, convenience stores are like a lighthouse, providing both mental and physical replenishment for the city's busy people who are traveling on various routes.

Since 1992, when Japan's 7-ELEVEn entered the Chinese market for the first time, the convenience store industry has been growing at a high speed amidst competition from many sides. Convenience stores in the current life of people actually play what role, the development of convenience stores in the Chinese market, the status quo and what are the problems?

Existing pattern of convenience stores: three major Japanese convenience stores + regional leaders

The development of convenience stores in the Chinese market started with the entry of foreign capital, which can be said to be a completely imported product. Before that, the end of the retail industry firmly occupied the channel, is all over the streets, neighborhoods, husband and wife stores, also known as kiosks.

According to Cato Retail's 2018 data, China's market is home to nearly 7 million husband-and-wife stores and small convenience stores, and these retail formats, which are operated in the form of self-employed individuals, with basically no more than five stores, and deal in groceries, contribute 40% of shipments across all retail channels. About 30% of these husband and wife stores are located in townships and rural areas, and 46% are in third-tier cities and county-level cities.

The emergence of convenience store chains is closely related to the economic level of residents and urban public infrastructure. The industry often uses GDP (gross domestic product) to measure the development stage of convenience stores: when the per capita GDP reaches 2,000-3,000 U.S. dollars, for the introduction of convenience stores; when the per capita GDP reaches 5,000 U.S. dollars, the convenience store market enters a period of rapid growth; when the per capita GDP reaches 10,000 U.S. dollars, the industry enters a period of intense competition.

Although China's per capita GDP has reached 59,200 yuan per person in 2017 (National Bureau of Statistics data), but the development gap between the first, second and third tier cities is large, the GDP composition ratio is not the same, the current convenience store overall is still dominated by the first and second tier city market, which in turn is dominated by regionally centralized enterprises.

China's convenience store market, consisting of the three major Japanese convenience stores (7-ELEVEn, Rosen, and Family) and regional leaders, has maintained a high level of growth despite the overall slowdown in brick-and-mortar retail.

The 2019 China Convenience Store Development Report released by the China Chain Store Association mentioned that China's convenience stores realized sales of 226.4 billion yuan in 2018, with the number of stores reaching 120,000, and the industry's growth rate reached 19%.

According to the 2017 China City Convenience Store Index released by the Chain Store Association, first-tier cities such as Shanghai, Guangzhou and Shenzhen have matured in their convenience store market development, approaching the level of convenience store development in countries and regions such as Japan and Taiwan, China.

As for second-tier cities, based on the different population and GDP development of each city, coupled with factors such as climate, living habits, and differences in consumption levels, the development of the convenience store market shows a mixed phenomenon. Among them, the western regional cities of Xi'an, Kunming and Chongqing are the three cities with the fastest growth rate.

At the same time, the Index also shows that the regional characteristics of 24-hour convenience stores are still obvious. The proportion of 24-hour convenience stores in cities in the southern region is generally higher than that in the northern region. Nationwide, the average percentage of 24-hour convenience stores remains low.

Three Core Issues for Convenience Stores in China

Convenience stores, like all other brick-and-mortar retail formats in China, have three core issues: cross-regional expansion, store operations and merchandise development.

The three complement each other, want to carry out regional expansion, you need to ensure that the standardized operational capacity and commodity power output, and in China's market conditions, cross-regional expansion of stores also need to be adapted to the local conditions of the store operations and merchandise adjustments.

According to CCFA data, China's average daily sales of convenience stores in 2018 were close to RMB5,300 for a single store, an increase of about 7% from the same period last year.Although in terms of single-store operations, the profitability of China's convenience stores has seen continuous improvement in the past few years, there is still a lot of room for strengthening in terms of operational capabilities and supply chain efficiency.

With the increasingly fierce competition, the homogenization of the convenience store market has also become an inevitable problem, from store display to product categories, from single-store operations to the franchise system, more and more shadows of the class "7-ELEVEn". The overall model is highly similar to the situation, into 2019, the new topic of the convenience store market is more focused on the refinement of the overall business operation.

One of the focal points of refined operation lies in the higher precision of membership and digital system introduction for store operation and maintenance management. Under the era of smart business, convenience stores have begun to embrace new technologies, embodied in the front-end, self-service equipment, unmanned convenience orders, electronic tags and other IoT devices not only provide a new consumer perception, but also the user consumption behavior becomes data and visualization.

In the back-end, the digital supply chain system and commodity system greatly improves the efficiency of traditional import and export inventory, a more efficient system not only provides convenience stores with the flexibility corresponding to its end consumption channel, but also provides a driving force for the transformation of Yonghui, Carrefour and other hypermarkets to small businesses.

In terms of member management, digital marketing tools, small programs and other channels allow convenience stores to further close the distance between them and consumers, the collection and accumulation of data for the realization of thousands of stores provides the original demand elements, how to provide "the right goods" for "the right store" at "the right time" is the ultimate goal of the store's refined operation. How to provide the "right goods" at the "right time" for the "right store" is the ultimate goal of the store's refined operation.

If the refinement of the operation is the micro level of the convenience store, then the macro level of cross-regional expansion, is the first topic in front of the eyes of each brand chain of convenience stores.

Domestic convenience stores are generally divided into three stages in terms of cross-regional expansion:

In the earliest days, it was around the distribution capacity of the enterprise's logistics center to radiate outside the region, with the original logistics center to distribute new areas;

After reaching the break-even point in the region and then upward development, it comes to the stage of headquarter + multi-logistics center, this stage of stores and logistics centers have a clear correspondence, and can not be operated across the region;

Therefore, when the overall business moves upward again and carries on to operate across provinces or even a wider area, it will enter the third stage of the pattern of headquarters + multiple branches + stores, i.e. the multi-organization concept.

With the continuous enhancement of the supply chain and logistics capabilities of convenience store enterprises, the cross-regional expansion of the convenience store industry is showing an accelerating trend at the moment, which further intensifies the competition among chain brands and also promotes the improvement of the franchise system. According to the 2019 China Convenience Store Development Report, the proportion of convenience store franchises in China reached 46%, in which the demonstration role of the head benchmark enterprises is obvious.

Convenience stores are playing an important role in urban life

For urban populations, 24-hour convenience stores are stable supply centers, differentiated from other brick-and-mortar retailers such as husband-and-wife stores by the availability of fresh food and convenience services, allowing them to attach a certain level of catering and life-service attributes in addition to their retail role.

While retail is still the core function of convenience stores, with the diversification of store types, convenience stores are gradually evolving into a special "third space" in the city. For busy office workers, unfamiliar travelers, or night owls returning from a night of partying, the convenience store has become a special "third space" in the city.Perhaps the unending light and some popularity of a convenience store is something more precious than merchandise.

Sometimes there are seemingly false feelings that actually often determine the key conditions of things. For consumers, the smaller the place, the more a sense of intimacy into it, which is a natural reason why large retail stores do not have. It's not about the way the business is run, it's purely the physical nature of the space that brings a sense of distance. People are naturally able to establish a projection of their emotions in a small, quickly accessible space. For example, the house where you live, the courtyard where you can meditate.

Convenience stores, the smallest form of retailing, actually serve a similar function. Therefore, when the convenience store deep into the community, deeply integrated into people's daily life - the theory is that even every day will be frequent contact with the intersection of the integration, to bring people the feeling that it is no longer just a place to shop.

Convenience store companies are often also in compliance with this natural human emotional projection, the location of the store selection, open all year round without rest time, to meet the immediate and convenient goods, always immediately allow people to find the first choice of rest ......

A city with mature and densely distributed convenience stores is often the result of a causal relationship between the quality of life in the city. That is, the modernization of a city leads to more convenience stores, and more convenience stores lead to an improvement in the quality of life in the city.

This reciprocal relationship has also allowed convenience stores to have moved from being the daily first choice of urban lifestyle to carrying a religious ritual of life in people's daily lives.

It is the place where you are used to going for your daily needs and where you find the confirmation of your life every day.