For retailers, China has long been an expansion story, as more outlets open to serve the huge consumer market. But for the convenience store industry the growth phase may be over – for the time being, at least. CBN reports that Lawson – a chain from Japan – will shut 30 of its stores this year, trimming its network to 300 nationwide. Another chain KEDI has closed 10 stores in Shaoxing, and FamilyMart is rumoured to be looking to close 200 more. The reason? There’s a store every few hundred metres in China’s main cities, reckons CBN. As with other instances of oversupply (see page 7 for suggestions that KFC may be facing something similar), this hurts profitability at some store locations. The problem is worsened by two other trends: rising rents and increases in employee salaries. An industry expert told CBN that stores now need to earn Rmb6,000 ($963) a day to break-even – a hurdle that many shops are struggling to achieve.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.