It wasn’t long ago when doing any daily task in China was a chore. Queues at banks rivalled wait times of popular Disneyland rides, supermarket checkout staff seemed to work in slow motion, and buying a train ticket felt longer than the journey itself. Then, almost overnight, day-to-day activities in China became some of the most convenient on the planet.
Consumers can now pull out a smartphone in the middle of the night and have fresh food and coffee, meds and adult toys, delivered in under an hour. Arranging a massage or dog grooming is just a few taps on WeChat. People can watch a livestream of their favourite influencer and simply click to buy the lipstick they’re wearing. Getting around cities has become a breeze on shared bicycles and expanding subway systems, with the number of Chinese cities with metros tripling in the last decade, and existing networks setting world records for growth (check out this animation illustrating Shanghai’s network expansion since 1993), where commuters can increasingly just walk on and pay with their faces.
The rapid transition has moulded consumers to expect things to be convenient. Retail, products and services that aren’t simple to research, buy and use are unlikely to get any traction in China’s hyper-competitive market. That is, unless they provide a unique experience, benefit or bring status/selfie opportunities – it wasn’t long ago people would queue for hours for cream cheese-topped tea.
Whilst most of the examples we hear about convenience in China are relatively recent innovations such as New Retail, ecommerce, personalisation and payments; good old-fashioned convenience stores shouldn’t be overlooked. China’s network of convenience stores is growing almost as fast as Shanghai’s subway system.
In any tier 1 city in China – and increasingly lower tier cities – you are never far from a convenience store. Many blocks have two, or even three stores. The market value for convenient stores is forecast to reach ¥246 billion ($35 billion) by 2024, from ¥140 billion ($20 billion) in 2018. The number of stores will grow from 75,000 stores to 117,000 over that time.
The most popular purchases in convenience stores are dairy, soft drinks and snacks – all products which are well-aligned with the imported products – but interestingly, foreign brands are yet to gain a stronghold in the channel. Reading the tea leaves would indicate that smart brand strategies and relationships with the Japanese chains that dominate the landscape, could lead to a lucrative new channel for foreign brands. Convenience stores’ cold chains can accommodate a wider range of premium foreign products, and increasingly affluent consumers are more prepared to pay for them. If we look online – often a barometer for changing Chinese consumer tastes – imported FMCG products grew 35% in the first nine-months of the year. Something to keep in mind when devising a channel strategy that plays to the need for convenience.
On the subject of speeding up processes, one of the last bastions of seemingly-unnecessarily long queues and admin in China, is on track to be streamlined. Plans have been rubber-stamped to cut work permit red tape for foreigners in the Yangtze River Delta, including Shanghai, as authorities recognise the value foreigners bring to the local economy. A positive move in all respects! Go to Page 2 to see this week’s China news and highlights.