According to relevant data, the number of convenience stores in China has been growing at an annual rate of 11% in the past two years. At present, there are many convenience stores in China. And here’s a very interesting fact. That is, among the TOP10 convenience store enterprises in China, the number of local convenience stores in China is the largest, far ahead of other foreign convenience stores. Meiyijia alone has 10,000 convenience stores in China. Foreign convenience store giant 7-Eleven ranks only 10th with more than 2,000 stores on the Chinese mainland.

Obviously, foreign convenience stores in China “acclimatized”. According to Wangfujing’s 2014 annual report, Wangfujing currently holds 25 percent of 7-Eleven Beijing Co., LTD., and this stake brought wangfujing a loss of 2.591 million yuan in 2014. From this point of view, 7-Eleven’s “acclimatisation” symptoms seem to be more serious.

Why did 7-Eleven suffer an unprecedented failure in the booming convenience store market in China? This starts with China’s convenience store market.

In the booming market of local convenience stores, the awkward position of outsiders 7-Eleven

As an emerging growth engine in the depressed retail market, China’s convenience store market is characterized by low investment cost, short maturation cycle and closer proximity to shoppers. Convenience stores in China often appear in comprehensive business areas with office buildings and residential areas, because such areas have sufficient customer flow, high consumption level and great commercial potential.

Convenience stores have a wide variety of goods, including lunch, rice ball, bread, yogurt, snacks, socks, masks and so on, and the types of goods can basically meet People’s Daily needs. In fact, convenience stores are similar to traditional grocery stores, but with higher prices and higher-end brand choices.

In this way, the threshold of convenience stores is relatively low. Therefore, many local convenience store brands have emerged in China, such as Meiyijia, Easyjie, Kunlun Hospitality, Tianfu, Hongqi, FamilyMart, E-mart, Quaker, Good Neighbor, Yibaijia and so on. The Convenience store market in China is everywhere. However, Meiyijia convenience store is the most representative of them.

It is understood that Meiyijia convenience store is not only a local retail giant in Dongguan, but also the largest convenience store brand in China at present. Meiyijia currently has more than 10,000 stores in 68 cities including Dongguan, Shenzhen, Guangzhou, Zhongshan, Huizhou, Foshan and Zhuhai. It is understood that meiyijia convenience store store number copy speed is very fast, almost every month to add 300-400 stores.

For convenience stores, the number of stores is the most important factor to truly meet the needs of consumers. Therefore, it is not difficult to see the numerical advantage of Meiyijia. At the same time of the rapid development of local convenience stores in China, 7-Eleven, Rosen and other foreign convenience store brands flood into the Chinese market, but their position is rather awkward, especially 7-Eleven.

Why do you say that? As we all know, 7-Eleven is the convenience store brand owned by Ito-Yokado in Japan and the largest convenience store brand in the world. As of 2016, 7-Eleven had 61,554 stores in 17 countries and regions around the world, more than six times the number of Mirica stores two years later. 7-Eleven, a Japanese-style convenience store born in the United States and born around the world, was once dismissed by supermarket bosses, but it wasn’t long before the retail world began to think of 7-Eleven differently. There is a saying that “there are only two convenience stores in the world, 7-Eleven and other convenience stores.” Thus, 7-Eleven convenience store brand in the international scale.

However, 7-Eleven failed after entering China. According to statistics on 7-Eleven’s website at the end of June 2017, 7-Eleven had 19,588 7-Eleven stores in Japan and 8,943 in South Korea, but only 2,377 in Mainland China. 7-Eleven, as the international leader of convenience stores, has become an old dog after entering the Chinese market, and its position is really awkward.

So why did 7-Eleven fail in China’s convenience store market?

7-Eleven’s malaise behind Waterloo

There are many reasons for 7-Eleven’s failure in China.

First of all, 7-Eleven has few stores in Mainland China and insufficient distribution in each district, so it has not formed large-scale operation. 7-Eleven is very dispersed in Mainland China. The south, East and north China markets are not one faction. The South, East and North China markets belong to three different authorized investors. Among them, The agency of Guangzhou 7-Eleven in South China is in the hands of Hong Kong Milk Group, while 7-Eleven in Shanghai in East China is in the same faction as Taiwan. The branches in North China, such as Beijing and Tianjin, are directly invested by the Japanese head office.

The consequence of the fragmentation of investment agents is that supply chains vary from place to place. However, the disunity of supply chain leads to the failure to form the advantage of centralized procurement, and the procurement cost is high. In addition, due to the different agent camps, different agents may have different management methods for 7-Eleven, which is not conducive to the rapid replication of the store.

Second, Japanese-style convenience stores around the world have thrived on a large number of original products and the use of IT data, which are 7-Eleven’s biggest profits. But in Mainland China, agents copied 7-Eleven’s business model without establishing a core research and development team. In other words, 7-Eleven’s original attributes are not competitive in mainland China.

In fact, 7-Eleven has very few original products in mainland China. According to statistics released on 7-Eleven’s website, among 7-Eleven’s top-selling products worldwide, the annual sales of Kanto cook topped the list with 200 million, followed by Tycoon Bao with 45 million. But in mainland China, 7-Eleven has never produced a hit original product like kanto cooking.

Third, half of 7-Eleven’s global revenue comes from other services. These other services include utilities, ATM withdrawals, delivery and dry cleaning, which account for a significant portion of 7-Eleven’s revenue. But in mainland China, these services have largely been cannibalized by e-commerce.

7-Eleven was replaced by Alipay in water, electricity and coal payment, and meituan in takeout delivery. In terms of express delivery, the Chinese mainland market has long been wiped out by developed express logistics companies, leaving 7-Eleven with nothing to gain.

Finally, China’s consumption habits are different from those of other countries. China is a big country of delicious food, and its dietary habits vary greatly from region to region. Bento and Kwantung cooking have a small market share in China. Think of it this way: in China, where you don’t have to walk a few blocks to get a hot meal, those long-frozen bento lunches at convenience stores are no longer appealing to consumers.

In general, 7-Eleven’s “accusers” in Mainland China can be attributed to its lack of large-scale operation, lack of original products, loss of focus of profit points and lack of products that are not adapted to local conditions. So what does 7-Eleven do to survive in China?

Only by taking the right medicine can 7-Eleven settle down in China

7-Eleven’s struggles in mainland China are obvious to everyone in the industry. Does that mean 7-Eleven is going to die in mainland China? Well, that’s not necessarily true. In any case, 7-Eleven’s emergence as a global convenience store giant shows that it has deep roots. But for 7-Eleven to make it on the mainland, it needs to take the right medicine for its acculnerable symptoms.

First, in the Chinese mainland market, 7-Eleven should adjust its profit points, give full play to 7-Eleven’s original product attributes and improve product competitiveness. In other words, 7-Eleven in Mainland China should no longer rely on service as its profit point, but return to the product itself and innovate to create more products that meet the consumption habits of Chinese people based on the consumption preferences of Chinese people.

At the same time, the quality of products and stores should be strictly controlled. In resolutely adhere to the bottom line of commodity safety on the basis of local conditions. For example, 7-Eleven could try selling vegetables in cities where farmers’ markets and standard supermarkets are weak. But that’s just a metaphor. It all depends on what the customer wants. In addition, there is no unified requirement for 7-Eleven’s store standards and area, and the area and structure of stores can be determined according to the actual situation of each city. And always make it clear that the essence of running a convenience store is not the size of the store, but the goods and services.

Second, further accelerate the speed of store expansion. That is to adopt franchise mode and unify franchise standards in the areas that 7-Eleven’s agent supply chain can reach. Choose regional authorization or multiple franchises in areas not covered by 7-Eleven’s supply chain. To join the way of store expansion, can quickly realize the layout, to achieve a win-win effect of the brand and franchisee.

Before opening a store, make sure the location is populated enough to make 7-Eleven profitable — that is, there is enough consumer demand in that city. In the process of franchise cooperation, 7-Eleven should strengthen the investment in self-made products and the construction of information system to further cultivate its system management and output capacity. It should be the main direction for 7-1 convenience store to create the resource output franchise mode of “property + personnel”.

Third, the transformation of new retail, broaden sales channels, for the store drainage. In terms of new retail, 7-Eleven is already on the move. It is understood that 7-Eleven convenience stores have recently joined Meituan takeout. In fact, jingdong Home launched its online layout before 7-Eleven was connected to Meituan.

According to public information, 7-Eleven’s sales increased by 400 percent year-on-year in January 2018 after it joined Jd.com. It can be seen that Jingdong Home brings huge traffic and value to 7-Eleven, which also enables 7-Eleven to see great achievements in the online market. If 7-Eleven can cooperate with Meituan, which has 20.5 billion users, it means 7-Eleven will have a huge traffic portal.

In general, not only 7-Eleven, but also all convenience store brands should strive to find profit points, improve product and service quality, accelerate store expansion, access to the Internet and expand online sales channels in the future.

Public ID: Liukuangtmt, content cooperation plus wechat account: Sanche2017, this article was first published on The website of Venture Capital.