Market research: Convenience stores market in China

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Beijing (北京) has unveiled new policies to encourage the establishment of neighborhood convenience stores in an effort to ensure that there is at least one mini-supermarket or convenience store in every neighborhood. According to the policies issued on Wednesday by the Commerce Commission in cooperation with the Beijing Finance Bureau, Beijing is encouraging the establishment of chain-supermarkets (about one within every 500 sq m) and convenience stores (one within every 100 sq m) in residential neighborhoods. Enterprises will be given 50,000 yuan (US$6,097 US dollars) in subsidized loans for each convenience store or supermarket successfully set up in residential neighborhoods.

For each store set up in cooperation with other businesses, the enterprises will be given 25,000 yuan (3,048 US dollars) in subsidized loans. Businesses providing logistic support for the shops in question will also be eligible for subsidized loans.

Japan’s convenience stores plan for substantial expansion in China

Japanese convenience stores plan to expand aggressively in China, where they see vast new markets being created by rapid urbanization. But they face the challenges of a retail culture of poor service and shoppers who value price over convenience. The market promises to be lucrative for the host of companies – domestic and foreign – that are looking to expand into China, with sales expected to reach RMB 63.6 billion (USD$10 billion) in 2015, up from RMB 36.1 billion in 2010, according to Euromonitor.

Foreign operators – dominated by Seven-Eleven Japan, FamilyMart and Lawson – both also of Japan – currently hold only 14 percent of the market. However, that share is expected to grow, as Japanese and Taiwanese brands build a new convenience store culture in China, where the homegrown stores are largely known for poor service and mediocre product range. Lawson, the second-largest Japanese convenience store operator, aims to increase its presence in China to 10,000 stores within five years. Currently it has only 300 stores, mainly in Shanghai (上海). Seven-Eleven, the largest convenience store group in Japan, is expanding on the 1,719 stores it already has in China, although it will not disclose targets. Ministop, a much smaller group, which has only 22 Chinese stores, aims to have 5,000 by 2020. Although China has long had corner stores, Japanese-style combini are becoming increasingly popular, since they offer ready meals, which are not available at the traditional Chinese corner store.

Wal-Mart also opens its convenience market in China

The world’s top retailer has launched a pilot program to open convenience stores in China, seeking to boost its presence in one of the world’s fastest growing retail markets. Wal-Mart, better known for its mega stores and hypermarkets, opened three convenience stores in December in the South China city of Shenzhen under the program in a low-key initiative. Wal-Mart will observe market acceptance and customer preferences for the stores, named “Smart Choice” or Hui Xuan in Chinese, before deciding on future development plans. China’s $824 billion retail sector is one of the world’s fastest growing and convenience stores will likely see higher sales as this sector develops.

Daxue Consulting China Market Research

Sources:

Picture Source: 7Eleven

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