Growth slows in convenience store industry: report
Convenience store development in China slowed down in the past year as competition intensified, a latest industry study shows.
But promising signs also emerged, with new operating methods such as self-service checkout and contact-less delivery having played a major role during the pandemic, according to a joint report by the Department of Circulation Industry Development at the Ministry of Commerce, the China Chain Store & Franchise Association and KPMG.
China now has altogether 132,000 such stores in the domestic market, adding 9 percent from a year ago, with revenue advancing 13 percent from a year ago to 255.6 billion yuan (US$36.9 billion) as growth slowed from around 20 percent in 2017 and 2018.
Average daily sales per store stood at 5,297 yuan, edging up 4 percent from a year ago as competition intensified.
The survey also showed that labor costs and rent are the biggest challenges for operators.
About 70 percent of respondents say that public utility fees and labor costs have put pressure on their daily operations.
They have also pointed to shortfalls in the tax environment and social security schemes which have posed operational pressure.
Deputy Secretary-General of the China Chain Store & Franchise Association Wang Hongtao noted that despite regional policies and support for the development of convenience stores, there's still space for improvement to offer more convenience to conduct businesses.
Unit operation efficiency is still lagging behind those in developed nations.
Leading players have focused on products with higher margins such as hot food and beverages while smaller peers have not yet caught up.
As many as 41 percent of respondents expect there's still potential for market development, and industry outlook is more positive than hypermarket chains and department stores.
"Rent and labor costs are creating operating pressure for convenience store owners and coronavirus restrictions have dented foot traffic at physical stores," the study points out.
Nearly three-quarters of convenience stores have set up customer management systems and two thirds have adopted social marketing tools.
