Top demands of convenience store shoppers in China

Today, the value-added 24-hour services provided by convenience stores allow consumers to buy whatever they want, whenever they want – and it seems there is a need for differentiation among chains to attract the discerning urban Chinese consumer.

New research from global market intelligence agency Mintel reveals that over half (53%) of convenience store consumers in China* cite product quality as a key factor in influencing their decision when choosing which convenience store to shop at, followed by proximity (52%), and range of products available (31%). In addition, one in four (25%) indicate that the range of in-store services available is an important decision influencer, while 24% respectively say the same of a convenience store’s payment options, and speed of customer service. In fact, these all come ahead of appealing promotions (20%) or loyalty schemes (12%).

According to Mintel data, total convenience store retail sales have performed well in the past five years in comparison to supermarkets and hypermarkets. The convenience store retail market experienced a Compound Annual Growth Rate (CAGR) of 13.6% from 2011 to 2016, and is forecast to increase a moderate 9.0% from 2016 to 2021, according to Mintel research. Furthermore, there was a 10.2% CAGR in outlet numbers between 2011 and 2016.

Matthew Crabbe, Director of Research, Asia-Pacific at Mintel, said:

“While recent growth in the convenience store market has been strong, convenience store chains must start to innovate as today’s consumers are seeking wider product and service ranges. They also want more localised and individualised service, and for store chains to respond quickly to their changing needs. Putting things into perspective, there is a demand for convenience stores to fulfil a growing list of local community needs in order to differentiate, and improve customer retention.”

Among all the product types that urban Chinese customers are consuming, salty snacks, bakery products and confectionery items have seen the biggest growth in convenience store purchase. Today, 70% of convenience store consumers in tier one to three cities say they buy salty snacks from these stores, up from 58% who said the same in 2015. Meanwhile, 63% say they buy bakery products, up from 56% in the same time frame, and 62% say they buy confectionery, which is an increase of 7 percentage-points from 2015.

While these products have seen an uptick in purchase among convenience store users in the past two years, currently the most commonly bought items are dairy products (75%), soft drinks (72%) and salty snacks (70%).

When considering the services consumers use while shopping at convenience stores, mobile phone top-ups top the list for urban Chinese consumers, with over half (52%) of convenience stores using this in the past six months, followed by collecting and sending parcels (45%). Compared with Mintel’s 2015 survey data, collecting and sending parcels has seen the biggest growth in use, up by 23 percentage-points.

“Urban Chinese consumers are now enjoying more fast-paced lifestyles, creating an obvious rise in demand for convenience. Choosing more ready-to-eat foods from convenience stores, especially snacks, indicates these stores fulfil a role in satisfying consumers’ immediate and discretionary needs. Additionally, consumers are increasingly embracing the convergence of online and physical retail store, as reflected by the increased used of services such as online account top-ups and delivery collection. This is widening the range of services and products available, and adding yet more convenience for them. This also creates more reasons for consumers to make return visits, helping convenience stores to become more competitive,” Matthew continues.

As a community-based store and service provider, ease of use is key for convenience retailing. Mintel research shows that half (49%) of urban Chinese consumers prefer being able to visit a convenience store any time, day or night, while 64% are drawn more by the budget-priced, basic products available at convenience stores. A significant 59% would also be prepared to try using automated check-outs, if available.

Meanwhile, Mintel data shows that building loyalty and rapport with local customers may help retailers better adapt their stores to suit local consumers’ needs and habits. Mintel research reveals that three in four (75%) urban Chinese consumers think convenience stores should be bigger, while two in three (66%) convenience store shoppers would like to see more new overseas products offered by convenience retailers. What’s more, 66% agree that shopping online for home delivery is as convenient as visiting a convenience store, while 46% say they prefer being able to order online for delivery from a convenience store any time, day or night.

“Set within local communities, convenience stores really need to understand their customers’ preferences. Convenience store chain models are rapidly shifting towards the ‘new retail’ mode, in response to changing consumer behaviour. Stores should raise their ‘convenience factor’ in the future, both to improve consumer enjoyment, and to counter –  or integrate –  the rising demand among consumers for online shopping and delivery services. In addition, given the growth in developments in cashless and checkout-free stores, this could be an increasingly significant service trend for convenience stores to introduce.” Matthew concludes.

*3,000 internet users in tier 1-3 cities aged 20-49; survey conducted February 2017

Press review copies of Mintel’s Convenience Stores China 2017 report and interviews with Matthew Crabbe, Director of Research, Asia-Pacific at Mintel, are available on request from the press office.