The convenience store sector in China recorded higher revenues and continued store number expansions in 2024, while making efforts to continue to optimize product category structures, according to an industry survey.

The survey, the Development of Convenience Stores in 2024 — released on Jan 21 by the China Chain Store and Franchise Association — covered 60 convenience store chains nationwide, representing about 124,000 stores.

Sales growth in the sector was seen by 70 percent of surveyed enterprises, versus 81.4 percent in 2023 and 64.1 percent in 2022.

Expansion remained a key trend, with 80 percent of operators opening new locations last year. A total of 14,550 new stores were launched, with larger operators driving growth. Chains with over 1,000 stores accounted for 8,510 of the 9,570 net new stores, representing 89 percent of the total net increase.

Profitability improved for some enterprises. Of 27 surveyed companies reporting profit growth in 2024,85 percent saw year-on-year increases in total sales, while 56 percent recorded growth in comparable store sales. The report highlighted a strong correlation between sales, profits and daily sales at comparable stores, indicating that success in one area often boosted overall performance.

Customer visit numbers were also critical to store success.

Among companies with a year-on-year increase in visitors, 62 percent saw higher comparable store sales, and 86 percent reported total sales growth. In contrast, businesses with fewer visitors struggled, with 65 percent experiencing lower comparable store sales and 42 percent reporting a decline in total sales.

While challenges persist, the sector continues to focus on optimizing product offerings and improving operating capabilities to drive long-term growth, said the report.

Convenience store chains in China, including major names Meiyijia and Tianfu, are ramping up expansion efforts. Meiyijia, for instance, had grown its nationwide store count to 35,000 by April 2024, adding nearly 300 new stores per month on average.

Hu Chuncai, founder of Shanghai UI Sharing Consulting, told 21st Century Business Herald that convenience stores primarily serve consumers' immediate needs.

To remain competitive, domestic players must focus on product differentiation and unique offerings.

"Stores must give customers a reason to visit and make purchases," Hu said.

Hu added that long operating hours are key to their success. He noted that in northern regions, particularly during winter, foot traffic declines sharply as residents stay indoors for extended periods.

"In the northeast, this can last for months, affecting both daytime and nighttime business. In such cases, extended store hours become crucial. Moreover, in sparsely populated northern areas, the customer base within a 500-meter to one-kilometer radius is often insufficient to sustain a store. In contrast, the same radius in southern cities can support two or three stores," he said.

While southern China has fostered more homegrown convenience store brands, many focus on specific regional markets, such as Tianfu in Guangdong province and Fook Convenience Store in Fujian province.

The primary constraint behind this regional approach is supply chains. Companies achieve economies of scale by densely clustering stores, thus optimizing distribution efficiency, said Hu.

However, expanding across regions requires rebuilding local supply chains, which means more costs, he added.

Despite these challenges, Hu sees growth opportunities in lower-tier markets.

"There is significant potential in county-level cities and towns, where consumer demand is evolving, and preferences are increasingly aligning with those in first and second-tier cities," he said.