China is experiencing a convenience-store Expansion
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China is experiencing a convenience-store boom.
Nearly 12,000 new convenience stores were opened on the mainland last year, according to the China Urban Convenience Store Index, an increase of 18 percent.
The index, released by the China Chain Store and Franchise Association, showed that new convenience stores took up 62 percent of all new openings in the territory. Around two-thirds of these were opened under a franchise arrangement.
Typically, franchised convenience stores in China show a return on investment at the two-year mark.
While first-tier cities are thought to have reached saturation point in terms of convenience-store market penetration, the field remains open for second and third-tier cities.
“There is a big potential for more regional players to deepen their market penetration,” said secretary general of the China Chain Store & Franchise Association Peipei Liang, adding that hypermarket operators are now turning to smaller-scale and community stores for a new growth point.
Association figures show that the top 100 chain stores reached sales of CNY240 billion (US$34.9 billion), and an increase of 7.7 percent on the previous year’s results. These players also benefited from a 55.5 percent increase in online revenue.
Questions & Answers
Q.What percentage of new store openings in China last year were convenience stores?
What percentage of new store openings in China last year were convenience stores?
Convenience stores accounted for 62 percent of all new store openings in China last year. This figure is based on data from the China Urban Convenience Store Index.
Q.Which types of Chinese cities are still considered to have potential for convenience store expansion?
Which types of Chinese cities are still considered to have potential for convenience store expansion?
Second and third-tier cities in China are identified as areas with remaining potential for convenience store market penetration. First-tier cities are believed to have reached saturation point.
Q.How long does it typically take for a franchised convenience store in China to show a return on investment?
How long does it typically take for a franchised convenience store in China to show a return on investment?
Franchised convenience stores in China typically achieve a return on investment at the two-year mark. This suggests a relatively quick payback period for franchisees.
Q.How much did the top 100 chain stores in China generate in sales last year, and how much did this increase by?
How much did the top 100 chain stores in China generate in sales last year, and how much did this increase by?
The top 100 chain stores in China achieved sales of CNY240 billion last year. This represented a 7.7 percent increase compared to the results from the previous year.