China Food

Can the fireworks business in the convenience store make money?

migrant workers in old Beijing have another way to eat breakfast on their way to work.
At the beginning of January 2022, with the new Jingdong convenience store and Rosen convenience store in some subway stations in Beijing officially entering the trial operation stage, migrant workers traveling in Beijing can also feel a stronger smoke and fire in the subway.
It’s a pity that some of the subway stores in Wuhan are not able to sell fresh food in the desert. It’s a pity that some people are not excited about the convenience of the subway, but it’s still a pity that they can’t wait for fresh food in the first-line cities in Wuhan.
The exquisite copywriting on the Internet gives the answer that young people are so fascinated by convenience stores on their way to work: “there is a convenience store deep in the clouds, selling pink tenderness. Then there should also be a convenience store in the city, which is small and warm enough to weave the ordinary fireworks in the world”.
The existence of convenience stores is not only a quick choice to solve three meals a day, but also a place to decompress between work. Here, whether it is the excitement of the day or the loneliness of the night, people can see all kinds of things 24 hours at a glance.
When convenience stores enter places closer to young people’s livelihood, such as subway stations and office buildings, fireworks are combined with this not new business model for the first time.
After reading this article, you will understand the following questions:
1. Under the high-speed construction of urbanization, how popular are the fireworks in convenience stores?
2. How do urban convenience stores get caught up in smoke?
3. How much does it cost to “Install” smoke and fire gas in the convenience store?
The fireworks in convenience store are getting more and more popular
Beijing was once regarded as a desert of convenience stores.
As early as 2004, affected by the 2003 Daegu subway fire in South Korea, Beijing issued the measures for the management of safe operation of Beijing urban rail transit. The subway in this international metropolis was once insulated from various commercial activities.
In Wuhan, subway convenience stores and even underground commercial complexes were born after the opening of almost every line. The “fireworks” on commuter roads in other cities are also the envy of young people working in Beijing.
At the beginning of 2020, the loosening of the policy made people see the hope of convenience stores to re-enter the subway. First, the Ministry of Commerce and other 13 departments jointly issued the guiding opinions on promoting the accelerated development of brand chain convenience stores, which mentioned that “focus on promoting the construction of brand chain convenience stores and expand the scope of implementation in due time”.
Subsequently, in August of the same year, the Ministry of commerce further refined its opinions and put forward the plan of “15 minute convenient life circle”. At that time, the Beijing subway had begun to use vending machines, fast cameras and other business models.
Of course, the most concerned is the trial operation of deligo, Rosen and JD convenience store, which were put into trial operation in July 2021.
According to the Beijing Evening News, in addition to the above brands, brands such as family convenience store and China Resources Vango convenience store have been determined to settle in Beijing subway this year. The store covers some stations from Beijing Metro Line 5 to line 15.
“Finally, you don’t have to envy that friends in other cities can buy breakfast when catching the subway”. Most office workers have great expectations for the restart of the subway business that has been “abandoned” for a long time.
Parity shooting
Of course, from the trial operation of many stores reported by the media, the overall passenger flow is not particularly high, and there are some gaps between some sites.
Obviously, at present, the scope of Beijing subway convenience stores and the restrictions on the sale of products (sandwiches, rice balls and other products in the majority) make the rising fireworks have certain limitations.
This situation is even more rare in new first tier cities such as Wuhan.
2016 is a crucial year for the development of Wuhan convenience stores. In the middle of this year, Rosen expanded its business to Wuhan and other central China regions. Among the newly opened stores, there are also underground convenience stores located in Jianghan Road subway station.
Wang Bo, who works on Hong Kong Road, starts from Jianghan Road subway station every day and takes line 6 directly to Hong Kong Road. Out of the subway is the company. There is no suitable breakfast shop for him to choose from all the way.
Now, Rosen convenience store, located in Jianghan Road subway station, has become his first choice. At the same time, it also makes up for the breakfast needs of most migrant workers in Wuhan.
From 7:40 a.m. to 9:00 p.m., from 11:50 p.m. to 12:30 p.m., and from 4:30 p.m. to 9:00 p.m., Rosen’s subway convenience store is the three most popular periods of business. Ready to eat products are often in short supply.
Of course, in addition to Rosen, there are many local brands in Wuhan, such as today, “7tt” and “loco”, in Jianghan Road subway station. Convenience stores also have a certain competitive relationship.
On the ground, the competition between ground convenience stores is more intense.
In 2020, when visiting Wuhan, Ma Yun, President of lakeside University, tasted a hot and dry noodles made in the convenience store and said it was very delicious.
By expanding local delicacies such as hot and dry noodles, local convenience stores in Wuhan have the capital to compete with foreign convenience stores. Foreign convenience stores such as 7-Eleven and the whole family, represented by fresh food products such as Kanto cooking and rice balls, are not popular in Wuhan. The former only opened seven stores in Wuhan.
“Boss, a bowl of hot and dry noodles, a fried dough stick and a cup of soybean milk”. This kind of picture, which only appeared in the street breakfast shop in the past, has now been moved into some convenience stores in Wuhan almost intact.
According to the map data of Gaode and Baidu, there are 1632 convenience stores in Wuhan, accounting for about 80% of them distributed in the third ring road. The density of convenience stores is also closely related to the surrounding commercial layout.
Oceanwide international SOHO City, located in Jianghan District, Wuhan, has at least 6 convenience stores in 8 office buildings. Among them, Rosen, Youjia and today, which can sell local foods such as hot and dry noodles, have the largest flow of people.
Enlarge the perspective. According to the sky eye survey data, there are more than 1.05 million enterprise names in China, including “chain supermarket, convenience store, convenience supermarket, convenience chain, chain convenience”. Over the past decade, the annual registration growth rate once approached 30%.
In 2021, China added more than 257000 convenience store related enterprises, an increase of 7.3% over last year. This year, the total number of branded chain convenience stores in China will reach 300000, there will be no less than 200 stores per million people in cities above medium level, and the proportion of chain convenience stores open 24 hours will be no less than 30% (including unmanned retail stores).
Source: tianyancha
With the support of policies, various types of convenience stores have achieved orderly and rapid growth. The smoke and anger has become an important magic weapon of the “city war” of convenience stores.
century of convenience store
The trial operation of Beijing subway convenience store shows that as a convenience store operated in non-24-hour hours, the peak passenger flow generally occurs in the morning and evening. Among them, the passenger flow from 7:00 to 9:00 in the morning is about 36% of the whole day.
This period of time just corresponds to the time of the day when the smoke and anger are the most intense. At the same time, it is also different from the traditional 24-hour convenience store in business format.
If you know the development history of convenience stores, you will be curious about how this business model is related to fireworks.
The original convenience store was born in the electrical age. The lack of household refrigerators, air conditioners and other air-conditioning equipment gives convenience stores the “special” significance of selling cold drinks and even basic products such as bread and milk.
In 1927, with this model. The southern ice company created the predecessor of convenience store. After nearly 20 years of pilot and exploration, the world’s first real convenience store was established in 1946. It is named “7-Eleven” because of its business hours from 7 a.m. to 11 p.m.
The world’s first convenience store: “7-Eleven”
In 1974, the number of “7-Eleven” stores reached 5176. In the same year, through unremitting efforts, Suzuki minwen, director of ITO Yokado in Japan, finally obtained the franchise right of “7-Eleven” in Japan and completed the real empowerment of convenience stores.
Until this time, even when convenience stores first entered China, their main function was to provide commodity sales services based on the concept of small supermarkets, which sounded “simple and cold”.
“The density of convenience stores in a city measures the degree of commercialization and modernization of a city. If every 3000 people have a convenience store, the overall convenience can be achieved. If every 2000 people have a convenience store, it is a high degree of commercial convenience.” Huang Jiangmin, Party Secretary of Renmin University of China, once explained the importance of convenience stores to cities.
With this concept, crazy domestic brands have launched a fierce competition for opening stores with older foreign brands in the convenience store market.
In 2021, convenient bee plans to open more than 4000 stores in China, and in 2023, it puts forward the great ambition of 10000 stores.
The prospect of domestic brands is not so good, however. In this field, the competition among 7-Eleven, the whole family and Rosen has long been white hot. The latter completed the equity acquisition of Tianhong, a listed department store company, at the end of last year. Despite the unfavorable expansion, this listed company still has a certain influence in the South China market.
At the same time, this incentive competition is also reflected in the concentration of convenience store industry. According to statistics, in 2021, the number of the top ten convenience stores in the Chinese market accounted for 67% of the total number of stores in China, and the top two were dominated by the “two heroes” of the petroleum department, accounting for 36% in total. Only Meiyijia can compete with it. The overall concentration is also slightly lower than that of European and American markets.
In the second tier echelon, the number of stores of Rosen, the whole family and 7-Eleven is less than 5000, and the annual turnover is far lower than that of the head brand.
Under the background that the head effect of the top three brands continues to be strong, the final destination of many remaining brands will become entrenched in their respective regions.
Regionalization is the second major feature of China’s convenience store market. For example, Hongqi chain, a well-known convenience store brand, has been distributed all over Sichuan for a long time. Relying on the strong regional effect, it has reaped an operating revenue of 9.05 billion yuan in 2020.
Others, such as Rosen starting from Jiangsu, Zhejiang and Shanghai, Tianfu in Wuling mountain area and the newly rising Beijing brand convenience bee, have strong regional attributes in the process of its territory expansion.
Parity tabulation
Of course, the increasingly fierce competition means that no brand can stay in its “comfort circle” forever. Another acquisition of Rosen this year was sold by Wowo, known as the “king of 24-hour convenience stores in Chengdu”. After completing this transaction, Rosen is expected to break hands with the “Mountain King” red flag chain in Sichuan market in the future.
In the Shanghai market with a larger share, brands such as the whole family, 7-Eleven and the newly added convenience bee also had a fierce battle.
Suzuki minwen, the founder of 7-ELEVEN, once wrote in his book: “people always habitually think that the fewer competitors in the market are the better for themselves, but once there are no competitors, their career often stops.”.
The obvious regionalization and suffocating competition rhythm force the brand to implement differentiation strategy to meet the diversified needs of consumers and complete self-protection in the troubled convenience store market.
The ups and downs of convenience stores in Beijing subway and the lively scenes in convenience stores in other first tier cities in the morning let a group of brands see a new way out of the industry in the noisy city, that is, to “Install” smoke and fire in convenience stores.
The question is, is this an easy business?
can you make money by “loading” fireworks in convenience stores?
People are used to “bend down to pick up steel” to describe the difficulty of making profits in the convenience store industry.
In the convenience store industry that has experienced U-shaped development, it is still difficult for a single store to make profits, not to mention how many brands that have experienced large-scale operation should realize fine operation.
Excluding the cost factors that need to be considered for the scale of supply chain, franchise fee, membership fee and so on, how much benefit can pyrotechnic gas bring to convenience stores in single store management, and how much additional cost does it need to pay to “Install” pyrotechnic gas in convenience stores?
In the main cost expenditure of convenience stores, two expenses account for most of them: rent and employee compensation.
According to the data of China convenience store development report in 2021, in the cost structure in which the main expenses account for 25.8%, the rent cost accounts for 6.5%. In contrast, in larger department stores, rent is not the highest cost, accounting for only 2.5%.
Take the restarted Beijing subway convenience store as an example. According to relevant insiders, the monthly rent of Beijing subway convenience store is 4000-5000 yuan per square meter, which means that the monthly rent of a convenience store of about 20 square meters will reach 100000 yuan.
In Wuhan and other new first tier cities, the rent will be lower, but the monthly rent of convenience stores in first tier locations will basically not be less than 50000 yuan.
Another big expense is employee salary. According to some local convenience store employees in Wuhan, their salary is between 4000 and 5000 yuan per month, while the standard convenience store is equipped with one store manager and four to five clerks. The total comprehensive monthly salary is about 28000 yuan.
Another group of profit data shows that the average turnover of a single store of convenience stores is about 100000 yuan. This shows that even if the costs of water, electricity and inventory are not calculated, some convenience stores also have the risk of loss.
Pyrotechnic gas is actually regarded by the brand as a sharp weapon to increase revenue: take advantage of the immediate demand in the peak period of passenger flow to broaden the product dimension and increase sales.
So how much income can “fireworks” bring to?
Parity visited a convenience store near the Wenchang Road subway station in Wuhan and found that the store provided breakfast products sales services, including steamed stuffed buns, boiled eggs, Kanto cooking, hot and dry noodles, etc.
According to the clerk, there are 50 to 60 customers in the breakfast business on weekdays, and the average customer unit price is close to 10 yuan. The daily turnover of breakfast business is about 500 yuan, and the monthly turnover has reached 15000 yuan.
Hot and dry noodles in convenience store # odd and even pie shooting
After calculation, it is found that breakfast, the representative of “pyrotechnic gas”, can bring a 15% increase in turnover for convenience stores. In terms of the increase rate, it has a very high development prospect.
On the other hand, while greatly increasing the income, the innovation of breakfast has also brought an increase in the cost of convenience stores.
Take the hot and dry noodles with the highest sales volume in the breakfast business as an example. The first is the machine for making products. According to online data, the market price of small simple noodle cooking machine is about 500 yuan, and the retail price of hot and dry noodles with material bag is about 5 yuan per bag.
Compared with the increase of operating revenue, the increase of cost pressure is obviously insignificant. Of course, not every convenience store has the “ability” to sell breakfast service. The franchise mode means that no matter hot and dry noodles, Kanto boiled eggs or even boiled eggs, they need to pay an additional deposit to the headquarters before they can be authorized.
From this point of view, the high margin may be the biggest risk point of the breakfast business, but it still can not hide the high profit potential of “fireworks”.
At the same time, the data also verify this view. According to the 7-Eleven brand, the gross profit margin of Kanto cooking, steamed stuffed buns and local specialty food products is as high as 60%. The gross profit margin of packaged food is only about 25%.
As a local convenience store brand in Wuhan, song Yingchun, founder of today’s convenience store, believes that “fresh food localization” is an important direction for convenience stores to develop fresh food business. Statistics show that today is the first convenience store to sell hot and dry noodles in Wuhan, with a total sales volume of more than 3.8 million copies in a single year.
In all stores selling hot and dry noodles, fresh SKU accounts for 10%, while sales account for 30%.
Urban convenience stores, human fireworks. In this era of increasingly catering to young people, adding fireworks to convenience stores and this tireless perpetual motion machine is gaining more recognition in the market.
“At present, the development model of China’s subway business can learn from the stones of other mountains”. For the follow-up development of convenience stores in Beijing, Lai Yang, member of the expert committee of the China Federation of Commerce, said that we can refer to the development model of some first tier cities, that is, to create subway business of various formats.
The same is true for the development of the convenience store industry itself. From the initial sale of refrigerated food, to the 24-hour convenient service of the whole category, to the fireworks born in today’s differentiated demand. The format of convenience stores is also constantly optimized and changed.
Judging from the current situation, fireworks have a great chance to be accepted by more convenience store brands and really make a decent business.
However, we still need to be vigilant that once exposed to the field of fresh food, the problem of food safety will be infinitely amplified. The black cat platform shows that the fresh food products of many convenience store brands have been complained by customers to varying degrees.
While attracting customers’ attention, the fireworks in convenience stores also hide many invisible risks. Brands may need to make more trade-offs between convenience and safety.
The birth of “fireworks” in convenience stores is a two-way contribution of consumer demand and supply and demand under the fierce competition of convenience stores. From our research, the profit margin of these “pyrotechnic” commodities is much higher than that of packaged products. Therefore, major convenience stores are keen to expand these commodity categories and counters, and even look like a restaurant.
Naturally, it has both commercial interests and full of warmth and humanity. A piece of fried chicken and a piece of corn in the subway in winter is really a beautiful day!
reference material:
[1] “Convenience store Beijing subway competition” spirit beast media
[2] “Beijing subway convenience store can learn from” stones from other mountains “for its future development by pressing the restart button”, Securities Daily
[3] War on the corner: How did convenience stores rise Attack wave Finance
[4] “There is” fireworks “on the commuter road. According to the sky eye survey data, China’s convenience store enterprises increased by 7.3% year-on-year in 2021”
[5] “Industry depth” insight 2021: China’s convenience store industry competition pattern and market share (with market concentration, enterprise competitiveness evaluation, etc.) “prospective economist
Author: blackcurrant; Editor: Zhao; Source: Yuanchuan Sea Research Institute (ID: aotekuaitan), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Join the community: Cherry (micro signal: 15240428449). foodaily daily food joined hands with the world’s top business and industrial partners to build fbic222 global food and beverage Innovation Conference & the first foodaily Expo daily food innovation Expo “new food era – brand ecology” in Shanghai from May 31 to June 2, 2022. We invite you to witness it together. (click the picture to see the detailed introduction).

food people are “watching”

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