Crafted ads, reminders driving store sales

For example, the Lawson convenience store chain is expanding into Shandong province, with plans to open about 1,000 stores in the area this year.

Over the next few years, Lawson is expected to join forces with local powerhouse brand Ykym Mart, leveraging the latter's local market experience to unleash the potential of Lawson's brand and supply chain advantages, thus jointly propelling Lawson's rapid development in the region.

In 2023, Lawson China's operating income increased 11.9 percent year-on-year and net profit surged 94.2 percent.

Meanwhile, convenience chain giant FamilyMart announced a significant expansion in the country by further collaborating with its Chinese partner, Ting Hsin International Group.

The two sides will establish a new joint venture to oversee operations in East China, while Ting Hsin will take charge of Family-Mart stores in other regions, reaffirming Tokyo-based FamilyMart's ownership of the brand. The move is to foster continued collaboration and actively propel FamilyMart's growth across the Chinese mainland.

The number of FamilyMart stores on the mainland surged 15.4 percent from 2019 to 2021, reaching 2,967 outlets, according to the China Chain Store & Franchise Association. Shanghai alone hosted nearly half of these stores, boasting 1,400 outlets.

Furthermore, the industry survey shows that there's an enhancement in store quality, reflected in 61 percent of enterprises observing a year-on-year increase in comparable store sales. A significant proportion of companies achieving total sales growth also saw a corresponding rise in comparable store sales, underscoring a qualitative improvement.

In terms of 2023 profitability, 52.5 percent of surveyed enterprises reported a year-on-year growth in net profit, 32.2 percent experienced a decrease, with 15.3 percent maintaining stability.

Despite an overall improvement compared to 2022, companies grappling with declining profits face notable challenges, particularly those witnessing declines in visitor numbers and comparable store sales.

The data signal a positive trajectory in 2023, with a gradual uptick in visitor numbers witnessed by 55.9 percent of surveyed enterprises. However, 37.3 percent still experienced a decline, with decreases in comparable store sales and net profit.

To gain profitability over the long term, Fook Convenience Store has placed a priority on product development and memberships to build its core strengths.

Zhang said that products in the store must offer unique value, and strategies like copying from suppliers and engaging in price wars are not sustainable methods for growth. The company has initiated efforts to work from the very source of each value chain to ensure the safety and value of its privately branded products. Thanks to industry-leading warehousing and supply chain capabilities, the company has established its own self-built fresh food factories and logistics centers.

For instance, Fook's zero-antibiotic eggs — amid concerns over antibiotic usage in some market eggs — have become a top-selling item for many consumers.

He said integrating consumers' lives into lifestyles and positioning convenience stores as hubs for all aspects of daily life within 15 minutes of their homes are key objectives.

Looking ahead to 2024, convenience store enterprises are prioritizing standardization, digitization and online expansion. A total of 71 percent of surveyed companies are opting for expansion strategies, with a focus on deepening existing market penetration, according to the survey.

Additionally, they're exploring new store formats to adapt to evolving consumer preferences.

For Fook, the catering category of the convenience store is poised to be the next growth driver for their business, currently comprising 30 percent of their product offerings, which is 10 percent higher than the industry average, but still 20 percent lower than that in Japan's convenience store sector, Zhang said.

"Our policy this year is steady growth and avoiding reckless expansion. Survival is our primary objective," Zhang added.