For big-brand convenience stores, sinking seems to be the optimal solution.
According to a report issued by the China Chain Store & Franchise Association, the convenience store market in Shanghai, Guangzhou, and Shenzhen has matured as early as 2017, close to Japan, except for Beijing in the first-tier cities. And the level of developed countries. The scarcity of store resources, coupled with the continued high rents and labor costs, are pushing up the operating pressure of convenience stores in first-tier cities.
Correspondingly, young consumers in second-tier cities and below accounted for 25%, but consumption growth contributed 60%, and low-tier cities with 70% of the population showed a long tail effect of sinking the market, which seems to be A more seductive blue ocean. In fact, the sinking of big-name convenience stores such as Lawson and 711 has been continuing.
But sinking is not easy. It is not only necessary to deal with the differences in consumer demand, but also encounters “blocking” from the dominant regional leader. For example, after the family entered Shanghai in early 2004, they successfully entered Suzhou, Wuxi, Hangzhou and other cities, but they were unable to conquer Nanjing because of the local brand “Suguo” in Nanjing.
Shanxi is also an area where 711 and the whole family can hardly “get involved” because there are two local convenience stores “Tang Jiu” and “Gold Tiger”. Although they are unknown in the first-tier and southern cities, they are well-known locally. In the past few years, the two have competed with each other and upgraded in full competition. Shengsheng has built Taiyuan, a second-tier city, into a “first-tier city” in the convenience store industry, making it difficult for foreign brands to easily set foot.
The magical Shanxi convenience store
In the “China Urban Convenience Store Development Index” rankings released by the China Chain Store & Franchise Association in 2019, Taiyuan first topped the list. The following year, Taiyuan’s urban convenience store index ranked second, surpassing the southern cities of Dongguan, Changsha and the first-tier cities of Beijing. Taiyuan has also become the only northern city that has entered the Top 5 for two consecutive years.
The convenience stores in the north are jokingly called three “half” businesses by netizens: the “half-year business” caused by the long winter and severe cold, the “half road business” brought about by the wide and inconvenient roads, and the consumption at night Underdevelopment leads to only “half-day business”.
Under the combined effect of various factors, the convenience store industry presents a pattern of strong in the south and weak in the north. According to the “China Convenience Store Development Report 2020” data, in the first-tier cities, Beijing has 2,250 convenience stores and a single store covers a population of 8,889, while Shenzhen has 7,524 convenience stores and a single store covers a population of 1,731. Disparity.
In the second-tier city of Taiyuan, the number of convenience stores has reached 2,650. What’s even more amazing is that in this average 1,586 peopleIn northern cities with a convenience store, you can’t find Lawson, 711, Tangjiu and Jinhu, two local convenience store brands that can be seen everywhere. The number of stores accounts for about 80% of the total number of convenience stores in the city. Add up to even more than the total number of bus stations in Taiyuan (according to the latest data, there are 1,941 bus stations in Taiyuan).
In Taiyuan, where “Three Steps One Tang Jiu, Five Steps One Golden Tiger”, the relationship between Tang Jiu and Jin Hu is quite similar to McDonald’s and KFC. Both have similarities in models, but also have their own differences. Focus.
Tang Jiu’s business content tends to be high-end and fast-food. In addition to more than 1,300 local stores in Taiyuan, since 2010, Tang Jiu has entered Xi’an, the capital city of the northern province, and has opened more than 200 stores so far.
Golden Tiger adopts a multi-brand management method and expands its stores to the whole province of Shanxi. As of 2020, Golden Tiger has developed to 1,200 stores, and about 900 stores are in Taiyuan.
In addition to Tang Jiu and Jinhu, there is also a Shenli Convenience Store in Shanxi. It uses food and daily necessities as its carriers, and has deep coverage around Shanxi Jincheng and takes root in a more sinking market.
Whether it is to continue sinking or copying to neighboring areas, local brands that have become a climate and foreign brands that focus on the sinking market for business opportunities may not avoid the day when they will meet on a narrow road. At present, the Shanxi market, which is firmly occupied by local brands, is rich in aquatic plants, but outsiders have to take a detour.
Who made the Shanxi Convenience Store?
Shanxi has become an excellent sample for observing the convenience store industry in the sinking market.
The difference here is not made overnight, but the result of multiple factors such as history, policy, and business competition environment.
As early as 1998, Tang Jiu opened his first store and introduced the convenience store format to Shanxi. At this time, it was only two years since Lawson opened its first store in Shanghai. In 2001, Golden Tiger opened, and the PK of the two local brands began.
According to different business districts, convenience stores can be divided into three types: traffic type, business type and community type. In Taiyuan, where population mobility and economic development are not as good as the first-line, community-based convenience stores have become the mainstream. In the hearts of the locals, Tang Jiu and Jinhu at the gate of the community seem to have become standard equipment.
Since the two community stores are usually close together, customers vote with their feetThe cost is very low, especially in the alternative food and daily necessities, the competition is particularly fierce, which has also prompted the two convenience stores to closely follow the life rhythm and consumption habits of Taiyuan people, and continue to introduce new products and services.
For example, Tang Jiu established his own “Bread Factory” and “Fresh Food Factory” in 2011 and 2019, respectively. Golden Tiger has also integrated the two brands of Early Morning Fast Food and Today Baking into convenience stores.
In addition to purchasing daily necessities such as three meals a day, snacks, fruits and vegetables, meat, eggs, and milk, Shanxi people are also used to paying gas and cable TV fees at convenience stores, printing faxes, sending and receiving couriers, sharing leases, etc., and even Even third-party services such as household appliance cleaning and valet dog walking can also be found in convenience stores.
“As long as customers have demand, we will do it without affecting the overall shopping experience of store customers.” Tang Jiu Senior Marketing Manager Zhang Li said.
High-density coverage, down-to-earth products and all-round services have made local convenience stores firmly established in the hearts of local residents.
From another perspective, Shanxi is a large resource-based economy. It has always been the “China’s strongest” energy supply base to support national construction, but the adjustment of industrial structure and economic transformation have always been within the government’s plan. The rise of Shanxi convenience stores is inseparable from the local government’s policy orientation to support the tertiary industry.
In October 2020, the “Implementation Opinions on Promoting the Development of Brand Chain Convenience Stores” was issued in Shanxi Province, which further supports the network layout, business scope, intelligent management, and brand chain of Shanxi Province convenience stores at the policy level. It also mentioned that it supports the integration of brand chain convenience stores and catering, pharmacies, bookstores, etc., and encourages them to open water supply, gas supply, power supply, medical care, and education services.
This means that Shanxi’s local brand chain convenience stores have the potential to develop into capillaries in second, third, and fourth-tier cities, linking and binding with government public services and multiple business formats, becoming part of the city’s body, and further deepening the local brands moat.
In addition to the above-mentioned explicit factors, there is another hidden factor that is easily overlooked in the rise of local convenience stores in Shanxi-the emphasis on digital operation. Shanxi, a region that is not among the top in terms of population and economy, has supported the density of the top three convenience stores in the country, which also benefits from the use of digitalization. Digitization can effectively stimulate more and more frequent consumption of users, thereby helping convenience stores to fully tap user value.
Take the community-based convenience store with the highest proportion in Shanxi Province as an example. It is characterized by the most stable customer base. Through online and offline linkage promotion, coupon issuance, and verification, local convenience stores can not only effectively pull in new stores, but also Establish a seamless and continuous connection with consumers, thereby increasing the repurchase rate.
At this stage, local convenience stores in Shanxi have chosen the method of “borrowing power” by cooperating with large platforms to carry out digital marketing. Especially after the epidemic, online through channels such as Alipay appletMarketing activities have almost become a routine action.
In the March big promotion report of Alipay, which Tang Jiuyi participated in, a set of data was released: over 300,000 coupons were issued a day, covering 1/10 of the population in Taiyuan City, and the number of visits to Alipay Mini Programs skyrocketed by 1160%. . Among them, only one single product of Baisuishan mineral water sold more than 60,000 bottles.
Public data shows that on Double 12 in 2020, Tang Jiu issued 340,000 coupons in the Alipay applet, and the write-off rate reached 65%;
Golden Tiger has issued more than 450,000 coupons in the Alipay applet, of which the “RMB 33 minus 10 yuan” coupon verification rate was as high as 81%. 30,000 members were added on the same day, and the transaction volume doubled.
Shenli Convenience issued 993,100 coupons online on Alipay, with a write-off rate of 62%. In Jincheng, a fourth-tier city with a resident population of only 500,000, it is equivalent to everyone receiving two coupons. Throughout the double twelfth period, average daily sales rose 6 times, and 150,000 new members were added a week.
community-type convenience stores are also the most suitable for creating private domain traffic, so the effect of online marketing is not only present. While relying on large platforms to attract traffic, local convenience stores are also importing traffic into the “user pool” to pave the way for subsequent marketing actions, member value-added services, and personalized recommendations.
“We launched the CRM system this year. We use a small program to allow customers to register because it is more convenient.” Zhang Li revealed, “This will help us master user portraits in the later stage and achieve precise marketing, combined with Alipay’s Marketing tools reach consumers, and it is possible to achieve a thousand faces in the future.”
There are strong enemies inside and tigers outside. How to break?
Convenience stores are an industry commonly known as “bending over to pick steel bars”, which is profitable and painstaking. In the past 20 years of struggle, Tang Jiu and Jinhu chase after me in terms of location, category, and service. They have tried their best to reduce costs and increase efficiency. They have achieved themselves as well as achievements.each other.
Today, Taiyuan has developed into a more mature market. Although the scale of stores has room for expansion, it is also limited. If the two major local leaders want to continue to develop, they must hold on to their base camp and step out of the base camp.
As far as Taiyuan is concerned, Tang Jiu and Jinhumen stores are close to each other, and their radiation ranges are highly overlapped. The competition is fierce. Although no major foreign brands have entered, innovative e-commerce convenience stores represented by Suning Xiaodian and JD Convenience are rapidly emerging as the second echelon.
Suning Xiaodian takes the community as the main battlefield, providing diversified value-added services, online and offline linkage; JD Convenience Store adopts an intelligent store management system and is connected with JD Convenience GO Mini Program. Whether it is the battle for hegemony or the marketing model and service content of new convenience stores, local convenience stores are urging to accelerate their digital transformation.
What’s more, “going out” means facing more powerful enemies.
In the past 10 years, the growth rate of China’s convenience stores has been as high as 235%. Even after the test of the epidemic, the convenience store industry can quickly recover. In August 2020, the Ministry of Commerce issued the “Notice on Carrying out the Three-Year Action for Branding and Chaining Convenience Stores”, proposing that by 2022, the total number of branded chain convenience stores across the country will reach 300,000, and the cumulative sales will increase by over 50% , There are no less than 200 stores per million people in the middle and above cities across the country.
Under the policy east wind, the rapid growth of convenience stores will continue. At the same time, the goal of e-commerce giants to open offline convenience stores every year is also based on “10,000” as the unit of measurement.
A consensus is that digitalization is the only way for traditional convenience stores to improve their management level and operational efficiency, and to respond to competition.
Digitalization can help stores gain insight into consumer needs, quickly update iterative products, packaging and services, form integrated online and offline supply chain capabilities, differentiate store layouts, and achieve refined marketing.
Currently, whether it is a mature foreign brand, an e-commerce innovative store, or a new convenience store such as Convenience Bee, they have already taken the lead in digitalization, while traditional convenience stores are limited by factors such as history, experience, talent, and capital. To realize the leap in the digital field, “leveraging” is a better choice.
Tang Jiu, Jinhu, and Shenli felt deeply about this.
“Alipay will launch some new gameplay every year, and we will try it out. Execution is the advantage of our store. If we follow along, the final results will be good.” Zhang Zhang said.
The convenience of connecting to the Alipay mini program in 2019 has experienced the peak moment of Double 12 in 2020-in the fourth-tier town of Shanxi Jincheng, it has set an average daily sales of 3 million and added 150,000 members in a week. After the repurchase rate exceeded 80% of the performance, it also firmly carried out digital transformation.
The practice of Shanxi’s local convenience stores has also accumulated Alipay’s efforts to upgrade the digital management of convenience stores in the sinking domestic market.experience. Recently, the Alipay open platform announced at the 2021 National Convenience Store Conference that it will help more than 50,000 convenience stores to achieve digitalization in the next year, so that convenience stores in small and medium-sized cities can also have first-class digital services, and launched the “Alipay applet, IOT smart Three-piece convenience store digitization of “terminal and store management digitization”.
In addition, Alipay has also launched an incentive program for service providers to operate on behalf of the service provider, which has joined forces with nearly a thousand ecological service providers to help convenience stores carry out digital operations more smoothly.
“In the future sustainable development of the convenience store industry, the construction of digital capabilities has become the key to determining the upper limit of the convenience store brand.” This is one of the conclusions raised by the 2021 National Convenience Store Conference. In this digital competition, convenience stores in small and medium-sized cities are also ushering in opportunities to catch up. Especially with the saturation of first-tier cities and the surge in various costs, as well as the increase in consumption power of low-tier cities, digitalization provides them with An opportunity for overtaking in a corner gives them the ability to resist strong enemies inside and meet the tigers outside.
Just like Tang Jiu, Jinhu, and Shenli, as they continue to combine traditional advantages with digitalization, they will gradually establish a new model of local convenience stores in their exploration.