Sales volume of China's convenience stores maintains high growth rate of over 10 percent for three consecutive years

The sales volume of convenience stores in China has maintained a high growth rate of more than 10 percent for three consecutive years, according to a report released recently by the China Chain Store and Franchise Association (CCFA) and KPMG.

Photo shows visitors in front of a smart convenience store at the second China International Consumer Products Expo in Haikou, capital of south China's Hainan Province. (Photo/Yuan Chen)

In 2021, the sales volume of convenience stores in the country reached 349.2 billion yuan (about $48.8 billion), up 17.7 percent year on year. The sales volume of chain convenience stores hit 305 billion yuan, a year-on-year increase of 12.3 percent.

According to data from the CCFA, the sales growth rate of China's convenience store industry increased from 13 percent in 2019 to 16 percent in 2020 and reached 17.7 percent last year, outperforming other physical retail store categories, which bucked the trend after brick-and-mortar stores, especially supermarkets, had been hit hard by the COVID-19 epidemic since the beginning of 2020. Last year, sales of the top 100 supermarkets in the country saw a declining trend.

In addition, the number of convenience stores in the Chinese mainland reached 253,000 in 2021, up from 132,000 in 2019.

Convenience stores have proliferated in big cities thanks to their advantages such as a diverse range of goods and long business hours, and the number of stores serving local communities has also expanded.

The proportion of stores serving local communities out of China's total convenience stores rose to 58.7 percent in 2021 from 30.4 percent in 2019, and over half of convenience stores offered community-based group buying services, the report said.

China's support for the development of convenience stores is an important reason for the sector's rapid growth. In May last year, the Ministry of Commerce and other departments issued guidelines on building 15-minute community life circles in cities and encouraging the development of convenience stores in communities.

Photo shows a 7-11 convenience store in Chaoyang district, Beijing. (People’s Daily Overseas Edition/Wang Wenzheng)

The sector's growth can also be attributed to convenience stores' unique advantages in their ability to meet the needs of consumers, who prefer nearby brick-and-mortar retail stores to avoid crowds and new business models such as community-based group buying and instant retail, due to the impact of the epidemic.

Meanwhile, thriving instant retail has given a leg up to the development of China's convenience store industry. Nowadays, brick-and-mortar convenience stores are capable of delivering foodstuffs, beverages, vegetables, fruits, and medicines, among other goods, to customers within an hour through efficient third-party or self-owned logistics systems after orders are placed online.

"In the past, I bought food from supermarkets' online platforms. Due to long distances and limited delivery capability, my orders were always delayed. Sometimes, I had to place an order one day in advance," said He Miao, a resident of Haidian district, Beijing.

"Nowadays, I buy vegetables from a nearby convenience store that has third-party logistics services, which ensures that the vegetables can be delivered to me within 45 minutes after I place an order online," He added.

Data from Chinese food delivery giant Meituan showed that orders related to instant retail of branded convenience stores on the platform soared 39 percent year on year between January and July this year.

According to the report, 88 percent of Chinese convenience store enterprises launched online businesses in 2021, up from 29 percent in 2016, and over 70 percent of these enterprises did online business by working with third parties.

Pei Liang, head of the CCFA, said instant retail benefits both online platforms and brick-and-mortar retailers by integrating online and offline resources.

Experts believe that convenience stores will provide more services for daily life, such as catering, fuel charging, laundry, and delivery services.