China Food

Why is Shenzhen an oasis of convenience stores?

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why Shenzhen is an ideal testing ground for a new generation of convenience stores?
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Booming consumer market in Shenzhen
How to become an ideal experimental field for convenience stores in the new area?
Shenzhen has always been known as “the city lying on convenience stores”.
Although it is only 40 years old, when it comes to convenience stores, Shenzhen must be mentioned. It has been the champion of “China City convenience store index” issued by China Chain Store Association for several consecutive years. By 2017, Shenzhen will have a convenience store for every 2228 people.
According to incomplete statistics, there are more than 6000 chain convenience stores in Shenzhen, which does not include a large number of husband and wife stores, etc. the fierce competition can be seen. Even so, there are still new brands entering Shenzhen one after another every year, and a number of old convenience stores are leaving.
Why do you attach so much importance to Shenzhen? It will become the most ideal experimental field for the new generation of convenience stores. We can actually look at it from three aspects
First, Shenzhen’s developed economic strength and its own strong convenience store culture.
In 2019, the total GDP of Shenzhen will reach 2692.71 billion US dollars, and the per capita GDP will exceed 29000 US dollars, ranking first in China. Shenzhen is a typical urban economy, with urbanization of nearly 100% and industrial proportion of 37%. It can provide a good supply chain foundation, and its economic strength is also very superior.
Second, the market characteristics of Shenzhen coincide with the emerging trend of convenience stores in recent years.
There is no doubt that the new trend of convenience stores in recent years is closely related to the key words of convenience, chain and new crowd.
In Shenzhen, many convenience stores without survival of the fittest still maintain the business level of the last century, and can not meet the needs of the new generation of consumers in terms of convenience.
For example, the “2019 Shenzhen night consumption Research Report” points out that the new generation of local post-95s and post-00s has gradually risen and become the main force of night consumption. In late night retail, 24-hour convenience stores account for 85%.
However, many “xiaoshangchao” have limited business hours and disorderly selection styles, which are far from the preferences of the new generation.
Moreover, there are statistics showing that by the end of 2018, the resident population in Shenzhen reached 13 million 26 thousand and 600, of which the non registered population accounted for 65% of the total population. This makes Shenzhen a real “immigrant city”, and people’s consumption habits are very diversified.
Although this is a great challenge for chain convenience stores, from another perspective, who can establish a firm foothold in Shenzhen’s convenience store market can prove its first-class adaptability and scalability under complex conditions.
 
In addition, the emerging convenience store model increasingly emphasizes providing more value for customers. For example, it can directly provide hot meals and become a lunch hall for white-collar workers; for example, it can connect online and offline, and flexibly play its role as a “stronghold” of community group buying.
In fact, such new formats and models are most suitable for exploration and practice in Shenzhen, the city with the most consumption vitality and the most representative of the habits of the new generation of consumers.
Third, as the core node connecting the special zone and Dawan District, Shenzhen will release huge space for convenience stores in terms of policy.
The development of convenience stores is also inseparable from the policy support. For example, the convenience stores in Shanghai could not sell hot food, including the whole family in Shanghai and 711.
However, the instant food heated by microwave oven is far inferior to the hot meal made and sold on the spot in terms of taste and freshness. Taking into account the needs of the public, the market regulatory authorities re allowed convenience stores to sell on-the-spot hot meals after several inspections last year, and issued the first hot food business license to the convenience bee entering Shanghai.
Shenzhen, as the leader of Dawan District in deepening reform and opening-up, believes that on the premise of ensuring safety, Shenzhen will give maximum preferential support to the data monitoring, unmanned technology application, food sales mode and other related businesses of the convenience store industry.
Shenzhen local and Japanese convenience stores,
Window period faced by new model

1. The largest stock of indigenous system, is still in the stage of extensive development
Specifically speaking of convenience stores in Shenzhen, we have to mention the “local department” composed of various small supermarkets and franchise convenience store brands.
“Local department” is the largest stock of convenience stores in Shenzhen, but in the window period of convenience store reform, these small supermarkets are hard to seize the opportunity. The reason is that they are still in the extensive development stage of convenience stores, and there are a lot of problems in product, technology and cost structure.
If we calculate the gross profit of the convenience stores in Shenzhen at an average of 329623 yuan per month, the average daily profit is RMB 690.25 per cent.
The staff expenditure is 3 * 4585 = 13755 yuan (including four gold medals). The rent is 180-200 yuan per square meter. If the business area is 50 square meters, it is almost 10000 yuan. Water and electricity, air conditioning and lighting 30 kwh per day, commercial electricity 1.05 yuan per hour, 958 yuan per month.
Final accounting: 24172.5-13755-10000-958 = – 540.5. After working hard all day and night for a month, he still had to pay back 540.5 yuan. And this has not calculated the loss of various goods, otherwise more losses.
This account, to a certain extent, can represent the current situation of local convenience stores in Shenzhen.
Many small business owners have to go out of their own stores or work as shop assistants themselves, so that they can barely make a positive income and earn almost the same as working. Most importantly, the anti risk ability of this model is too poor, and it has been most seriously affected by the epidemic this year.
2. The commodity structure of Japanese convenience stores is more healthy, but the flexibility is relatively insufficient
On the specific point, the reason why most of the local convenience stores in Shenzhen are struggling near the profit line is that their commodity structure is relatively mixed and backward.
For example, there are few SKUs, not timely replacement, a very high proportion of groceries, and there is basically no fresh food business. In essence, it is not different from the traditional snack shops and husband and wife shops.
In this regard, the Japanese convenience stores represented by 7-11 and the whole family have improved very well. Few people know that the first 7-11 of the Chinese mainland began in Shenzhen, and the “7 sons” in the local population.
Compared with the local department, the Japanese department was the first to implement the concept of “24-hour business”, and added more fresh food and private brand goods, which increased the unit price and gross profit rate to a certain extent.
For example, 7-11 in South China usually has a lot of Hong Kong style fresh food, such as curry fish eggs, chezai noodles, free pouring, etc. These SKUs usually contribute more than 60% of the turnover and 60% of the gross profit.
As the saying goes, “food is the first thing for the people”. In the south, where the food culture is deep and rich, fresh food is naturally a piece of sweet cake for convenience stores to improve their revenue. But Japanese convenience stores also have their limitations, and foreign monks don’t always read good classics.
First, its expansion speed is slow, and the decision-making chain is long and inflexible.
Taking 7-11 as an example, since its first store opened in 1992, its expansion speed in China has been known as “slow”, and even suffered from “store closing tide” in 2012.
According to statistics, in Shenzhen’s six major business districts, the total number of 7-11 convenience stores is 51, and the total number of family convenience stores is only 40. However, Rosen has not yet settled in Shenzhen. On the whole, the proportion of local foreign-funded convenience stores is only about 3.5%.
In addition to the speed of expansion, in the commodity structure adjustment and many other operational details, Japanese convenience stores will inevitably encounter the problem of long decision-making chain and lack of flexibility due to their foreign-funded status.
 
Second, the degree of localization is still not enough. Although fresh food is added to Japanese convenience stores, there is not enough investment in hot food, which can further and directly meet the consumption pattern of daily diet.
In a sense, the “Kanto cooking” as the representative of the supplementary food mode is a kind of thinking inertia of Japanese convenience stores, but there is a certain gap between this and the needs of local consumers in Shenzhen.
Third, in the application layer of new technologies such as automation and big data, it is a little slow. Japanese convenience stores are not active in such aspects as automatic cash register, APP / APP application, data-driven selection and replacement.
3. There are structural opportunities in the southern market, and community group buying and “new species” usher in a window period
It is precisely because the current store form of local and Japanese convenience stores can not fully meet the rapidly changing habits of Shenzhen consumers, so the whole Shenzhen market is ushering in a structural “window period”.
Who can seize this “window period” to seize the huge blue ocean market like an oasis? At present, there are two obvious directions: community group buying and convenience store “new species” represented by convenience bee
Let’s first look at community group buying, which may be a new way for local convenience stores to rejuvenate.
In the first half of this year, Meiyijia has more than 20000 stores, which is a very considerable number. Although some franchise stores are slightly deficient in commodity structure and efficiency, these “small supermarkets” have penetrated into every community and street like capillaries.
In the southern region, which emphasizes neighborhood friendship and acquaintances, it may be the most suitable foothold and carrier for community group buying if the online and offline access of these “small supermarket” can be realized.
In April this year, Meiyijia upgraded its “meiyijiaxuan” community group purchase business from the e-commerce department to an independent enterprise, significantly increasing investment. This also proves the mentality of the local system of thinking and seeking change. Similar to the growth path of “prosperity optimization”, there is a chance to be staged again in Guangzhou and Shenzhen markets.
“New species” represented by convenience bee
Possibility of rapid amplification in southern soils
Another worthy of saying is the new convenience store represented by convenience bee. In February this year, convenience bee South China’s first store opened in Shenzhen.
After nearly four years of establishment and overall profitability in Beijing, this new convenience store, relying on data-driven and new technology, aims at a new generation of consumers in Shenzhen, which is more modern, younger and faster.
1. Three characteristics, so that the new convenience stores naturally fit in with the southern market represented by Guangshen
Why is it possible that a “new species” like the convenience bee is more suitable for the southern market? We think there are three main reasons.
First of all, the labor cost saved through automation has more advantages in the southern market, which can operate overnight.
Because of the high temperature in the south, people tend to spend more time at night than in the north. Many convenience stores are open 24 hours a day, which implies a necessary labor cost. Even at ordinary times, convenience stores with a larger area often need to employ more than two clerks.
Convenience bee is the first to introduce the automatic self-service cash register machine, which not only speeds up the payment process of customers’ shopping, but also liberates the clerks’ tedious cashier tasks, thus reducing the dependence on labor and saving considerable labor costs.
Second, the southern region represented by Guangshen is more suitable for the data driven “thousand stores and thousands of faces”.
Different from Beijing and other regions, consumers in Guangzhou and Shenzhen are more mixed and diversified. There are three major ethnic groups in Guangdong Province: Guangfu, Hakka and Chaoshan. In addition to the large number of migrant population, it can be said that people’s consumption habits may be quite different.
This puts forward higher requirements for the selection, replenishment and SKU management of convenience stores. In traditional convenience stores, it is very difficult for store managers to take time out of heavy work to complete the screening of two or three thousand SKUs and judge the order quantity.
Even if there is a “convenient shop manager” training, it still depends on the degree of operation. Many convenience stores are slow to expand because qualified store managers are hard to find.
Through the analysis and application of big data, convenience bee models the daily work of the store in an all-round way. The location, ordering, scheduling, display and other work are all completed by the automation system. The staff can complete the work of hospitality, service, cleaning and sanitation only by executing the system instructions.
This kind of data-driven “thousand stores and thousands of aspects” in essence can better fit the relevant characteristics of Southern consumers, and also reflects the value of convenient digital management of stores.
Third, the implementation of localization is more in line with the modern consumption habits of young consumers in Shenzhen.
The first is the introduction of hot meals. Convenience bee’s entry into the Shenzhen market has brought its hot meal mode which has been verified in Beijing and Shanghai one after another – not only providing fresh food, but also directly providing high-quality and normalized hot meal supply.
There are many convenient office buildings in Shenzhen.
Then there is the sense of modernization and science and technology. The location close to the central business district; the standardized and high-quality store decoration; self-service cash register, automatic coffee machine and row after row of color changing dynamic price tags are quite different from the traditional miscellaneous and chaotic image of “small supermarket”, which is more in line with the aesthetic trend of young consumers.
Finally, strong SKU selection and supply chain management capabilities. In the choice of goods, more emphasis is placed on the healthy and diversified consumption tendency of young groups, and the continuous freshness is guaranteed through a higher replacement rate.
2. The entry of convenience bee to the south is another impact of the new convenience store on the traditional “vassal separatist regime”
Of course, there have been many senior people of traditional convenience stores who have pointed out that a large number of intelligent hardware equipment and it developers will bring more initial investment costs to the convenience store industry, which has a low profit margin.
This requires that there must be a certain scale to support, in order to make the development cost, operation and maintenance cost and income even.
And where is the equilibrium? When can we find it? How much are you willing to spend on trial and error? There’s a long way to go.
But it is undeniable that the new convenience store represented by convenience bee is indeed the most noteworthy new species in the past two years.
In Shenzhen, where consumers are more diversified and younger, the flexible advantages brought about by the “thousand stores and thousands of noodles” may be further deepened and enlarged.
More importantly, the entry of this new type of convenience stores to the south is an industry symbol. It symbolizes the traditional mode of “vassal separatism” of convenience stores, which is increasingly being impacted.
In the past, convenience store is a highly urbanized industry, which depends on the specific consumption habits and supply chain of local people. In the past, this has created a number of “local Princes”, such as Meiyijia in Dongguan, Furong in Changsha, every day in Xi’an, today in Wuhan, etc.
However, with the emergence of data-driven “new species”, these local characteristics which depend on past experience can be captured and presented faster, more obviously and more directly through data, so that the regional “shackles” will be gradually broken.
Therefore, in Shenzhen, we will see a confrontation between the first generation of convenience stores dominated by individual businesses, the second generation of convenience stores dominated by chain franchise, the third generation of convenience stores represented by the three Japanese companies, and the fourth generation of convenience stores driven by data and carrying out the concept of new technology.
In the next two or three years, the southern region represented by Shenzhen may usher in an important change in the convenience store industry. This is the direct collision between the city with the most dynamic consumption and the most representative and imaginative new form of offline consumption. It is also an epitome of the wave of consumption reform that is slowly unfolding.
It remains to be seen who can break through in this new round of competition.
Author: Zhiqi; source: Inspur new consumption (ID: icxinxiaofei), reprint has been authorized. Join the community: Cherry (wechat: 15240428449); business cooperation: Amy (wechat: 13701559246). A week’s hot news of the high quality original selection column of innovation interview lingting new Xu brand trend insight packaging sentinel food people are watching

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