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Convenience stores boom in China

SALES from China’s convenience stores added 13 percent from a year ago to 130 billion yuan (US$18.8 billion) in the past year, with regional players quickly catching up and new entrants from the online retail sector also boosting the market growth, according to a report released today.

The total number of convenience store outlets in China's mainland rose 9 percent to 98,000 by the end of 2016, and the average daily transaction value of a single domestic convenience store was up 4 percent to 3,714 yuan, according to a joint report released by the China Chain Store & Franchising Association and the Boston Consulting Group at the China Convenience Store Convention in Shanghai today.

A sample survey of 37 branded convenience stores showed that 45 percent have introduced online to offline services but online sales still contribute to a small part of their overall sales value.

Wang Hongtao, deputy secretary-general of the China Chain Store and Franchise Association, called for balance between growth pace and profitability management, the competition from industry rivals as well as from new entrants such as Internet companies.

However, challenges like rising operation cost and rental expense still haunts convenient chain stores.

Investors are also keen to pour capital into the fast-growing sector which means a fierce competition would follow in the coming years.

Vincent Lui, Partner & Managing Director of Boston Consulting Group, said that convenience store operators should seek to diversify merchandise offering and also leverage digital technologies to enhance their capability to build multi-channel business formats in the future.

He also suggested businesses to offer more fresh food and self-labeled brands to boost profitability.


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