Market research: Convenience stores in first tier cities

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Convenience stores are small corner shops that provide groceries, toiletries, and satisfy emergency demands. The concept originates from America, where it splits into two kinds: the traditional convenience store and the Gas station shop.

As supermarkets are expanding and emigrating from cities to suburbs, convenience are becoming more popular; especially in developing Asian countries such as China, Japan, and South Korea. They accommodate the lifestyle in busy cities and provide service 24 hours, seven days a week. Convenience stores occupy areas between 50 to 200 square meters. Location, frequency, and their selection of durable goods are what give them a competitive advantage in relation to their ever-expanding supermarket counterparts.

7-11

7-11, for example, started off as an American enterprise but was acquired by Japan in 2005. It now has outlets in major countries such as America, China, Singapore, Malaysia to name a few.

It entered the Chinese market in 1992 and has since established 120 stores in Shenzhen (深圳), 106 in Beijing (北京), and expects to operate an additional 300 bazaars in Shanghai (上海) by 2014. The company’s popularity was prominent as early as 2007 with 430 stores in South China.

Chinese and Japanese chains

Despite recent tension between China and Japan, 7-11 chains remain profitable in comparison to its Chinese rival Haolinju(好邻居). Haolinju(好邻居) , a Chinese domestic convenience store chain from Beijing(北京), entered the maker in 1997, and is the market leader in Beijing. By 2011, there were 300 outlets in Beijing and recently, the company is expanding into Shanghai (上海) and Chengdu (成都).

Jingkelong(京客隆) similarly to Haolinju, is an indigenous corner shop chain. Their main focuses include retailing and wholesaling of goods. It has been listed on the Growth Enterprise Market of the Hong Kong Stock Exchange since 2006. Until recently, the company serves Beijing and part of the Hebei Province. In 2008, it ranked 32nd on the list of China’s top 100 enterprises. It now provides 159 convenience store outlets, 71 comprehensive supermarkets, and 10 hypermarkets. In the first half of 2012, the company experiences a profit of RMB 77.63m and is in the process of setting up an online business.

Lawson Inc. is a Japanese franchise chain that established business in China in 1996. Although it mainly accommodates Shanghai, there are some outlets in both Chongqing (重庆) and Dalian (大连). Currently, the company exhibits 390 outlets throughout China, but its goal remains to open 10,000 new stores by 2020. Domestic convenience store brands from Eastern China include Lianhuakuaike(联华快客) and Kedi(可的).

Daxue Consultant China

Sources:

Picture Source:  Tjxumu

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