Revealing Shanxi Convenience Store Business: Sinking the Market and Playing "Combination Boxing"

Flexibility and digitalization are the advantages of local convenience stores.

Author | Zhao Xiaomi

Produced by | 36Kr-future consumption

"Shanxi Convenience Store", with a density comparable to that of Japan, is ahead of the industry and has recently become a hot word on the Internet.

In Shaanxi, the convenience store brand with the widest regional coverage is Hujin Convenience.

The number of convenience stores owned by Hu Jin exceeds 1 100, and the total number of stores in various formats exceeds 1500. These stores are not only very dense in Taiyuan, but also sink to other 7 cities and more than 30 county markets in Shanxi Province.

Shanxi province itself is not a province with high GDP, and the cities, counties and townships expanded by Hu Jin are not as strong as those in Guangzhou, Shanghai, Shenzhen and Hangzhou. It can be said that the convenience of Hu Jin has sunk to a national market with high requirements for convenience stores, and the depth of sinking is similar to that of Meiyijia (all county-level areas).

Like Meiyijia, Hu Jin Convenience did not follow the standard "Japanese convenience store". In more than half of the community stores, household consumer goods account for a relatively large proportion; However, unlike Meiyijia, Hu Jin entered the market early in hot meals, baking and other categories, and thoroughly reformed its localization and differentiation.

Local regional convenience store brands generally encounter a problem: when making fresh food with high gross profit margin, if you find an independent supplier to do it, the research and development of new products is not flexible enough, and it is difficult to get competitive prices; If you build your own fresh food factory, there are few convenience stores, so it is difficult to support the operation of the factory.

Hu Jin used a set of format "combination boxing" to provide a solution to the above problems. In addition to a single convenience store, Hujin Convenience Group also owns franchisees such as early fast food and baking.

These high-end fast food restaurants and bakeries in Mao Lijiao can not only support the convenience stores in the supply chain, but also reduce the rental cost and attract more customers by combining the types of stores.

Using digital tools to open these multi-format stores has played a "living water effect" in the user pool. For example, after Hu Jin's convenient consumption, consumers can receive baking coupons at Alipay, and vice versa, realizing two-way diversion.

At present, Hu Jin Convenience has more than 2 million members in Alipay applet, and most of Taiyuan are members of Hu Jin. During Alipay's "Cool Red Packet Festival", the cancellation rate of coupons issued by Hujin convenience store ranked first in Shaanxi convenience store.

Hu Jin's convenience, offline and online innovation are worth learning from local convenience stores.

Multi-format combination reduces cost and increases income

Hujin Convenience Group owns more than 1 150 convenience stores, as well as more than 150 baking shops, fast food restaurants and other stores.

The original intention of developing these formats stems from the thinking of grafting Chinese fast food into convenience stores in Jinhu. In 2006, Hu Jin conveniently acquired the fast food brand "Early Fast Food" owned by Meitehao, and the early central kitchen and fresh research and development capabilities were also bought.

At that time in 2006, Shanxi people could buy steamed buns, hot porridge, tea eggs, sausages and other daily hot foods. For the convenience of Hu Jin. These products were developed in the central kitchen in the early hours of the morning, such as black pepper sausage, which was already cooked by online celebrities at that time.

Not only are these hot foods ready-made, but some convenience stores in Hujin directly integrate convenience stores with early fast food, and customers can even eat in restaurants.

Its specific form is one store and two doors, which not only highlights the attributes of convenience stores, but also highlights the attributes of fast food, attracting two groups of customers to enter the store. The second format can reduce the cost by subletting.

For example, renting a facade room and then taking the shop on the second floor above, sometimes the rent can be reduced to less than half of the original price. In addition, in Hu Jin's convenience stores and fast food restaurants, both the store manager and the clerk can be the same person, which further reduces the personnel cost.

Compared with convenience stores, the gross profit margin of fast food is higher. After a year or so of operation, the overall gross profit margin of this merged store can reach more than 30%, close to 7-ELEVEn. Coupled with the reduction of rent and labor costs, it is conceivable that the net interest rate of convenience stores+fast food restaurants is considerable.

This convenience store has become a dining scene, not limited to the phenomenon of buying scenes, and it is becoming more and more common. In first-and second-tier cities, except for Convenience Bee, 7 1 1, Ledoujia and Tang Jiu, the dining area is relatively large.

Consumers in second-and third-tier cities have a slower pace of life and have more time to sit down and chew slowly. In Hu Jin's shop, in addition to regular foods such as steamed stuffed buns, porridge and covered rice, there are also daily foods such as fried dough sticks, old tofu and hand-grabbed cakes.

But at this time, the bigger problem facing convenience stores is that competitors in catering have become small restaurants next door.

In this regard, Hu Jin will further standardize and brand local specialties. At present, Hu Jin Convenience is still developing noodle food with Shanxi characteristics.

Standardize the production process of this noodle, so that residents everywhere can eat authentic and delicious pasta. For example, besides eating Daoxiao Noodles, Shanxi people also have a very popular "pick noodles", but there is actually no chain store in Shanxi to make this kind of noodles. At present, Hu Jin has standardized the production process of "picking noodles" so that residents everywhere can eat authentic and delicious "picking noodles".

So is the logic of Hu Jin's bakery. On 20 10, Hu Jin founded the brand "Jindu Baking" (formerly Jindu E). On the one hand, this baking degree can increase the competitiveness of desserts such as bread and cake in Hujin convenience store; On the other hand, the two brands jointly rent stores, and the bargaining power of rent is obviously enhanced.

However, the number of convenience stores in Hu Jin was not enough to support the daily operation of a fresh food factory. Therefore, Hu Jin established an independent baking brand to share the supply with convenience stores.

Through this "combination boxing", Hu Jin can reduce costs as much as possible, improve profit margins and make franchisees profitable in the sinking market.

Differentiated competition

At present, community stores account for more than 60% of all convenience stores in Hujin. On the one hand, there are not many business districts in Taiyuan, Hu Jin's main market; On the other hand, Xu Meng, assistant to the chairman of Hujin Convenience Store, believes that there will be more community stores in local convenience store brands in the future.

With the intensification of competition in first-and second-tier cities, convenience stores have become a trend. Even Japanese convenience stores headed by Rosen have fallen into a "fourth-tier city".

Xu Meng believes that business district stores and office stores are exactly what Japanese convenience stores are good at. Even if local convenience stores occupy a favorable position in advance, Japanese convenience stores will sink into the city, and almost the same position will definitely lead to a decline in the sales of local convenience store brands.

Instead of confrontation, it is better to play differentiated competition. Hu Jin's convenience store is very different from that in Japan. If Japanese convenience stores enter the market, not only will the location not conflict, but it will also drive the whole convenience store market, which is beneficial to local convenience stores.

In addition, community stores and third-and fourth-tier cities are also friendly to franchisees' money investment. According to Hu Jin's convenient joining page, when Hu Jin joins a convenience store, the initial start-up capital needs 200,000-250,000 yuan, which is really low compared with the cost of more than 600,000 other convenience store brands.

Hu Jin's convenient joining is relatively flexible in addition to high requirements for site selection. For example, the size of the store, "the ideal is 60-80 square meters, but there are also dozens of small shops and big stores whose size exceeds 100 square meters." Xu Meng said.

There are more than 3,000 convenience SKUs in Hujin, of which 90% of the product categories and display methods are guided by the headquarters, and the rest 10% can be freely selected by the store manager from the headquarters commodity warehouse. On the one hand, we can use the big data and analysis ability of the headquarters to guide stores to ensure basic revenue, on the other hand, we can create more personalized stores through the manager's understanding of local consumers.

According to the size, shape and business circle of the store, Hu Jin has different operating templates. There are dozens of templates, and different templates match different decoration schemes and commodity structures.

At present, there are only 9 convenience stores in Hu Jin, and the rest are franchisees. Xu Meng revealed that the profit cycle of franchise stores is generally 1.5-3 years.

After the penetration of Taiyuan market was basically completed, Hu Jin also sank to Taiyuan, Shanxi Province, including seven cities including Yangquan, Jinzhong, Changzhi, Linfen and Xinzhou. In more than 30 county markets, the number of stores in each city is currently around 30-50.

Xu Meng told 36Kr-Future Consumption that Hu Jin's short-term goal in the future is to fully penetrate Shaanxi Province and then open stores in Yuncheng and other cities.

Digital "living water"

As a representative of an old convenience store, Hu Jin's digitalization process is very fast. Coincidentally, the two main pain points of digitalization are very representative in the entire retail industry.

The first is the problem of multi-format efficiency improvement. Because Hu Jin has many formats and brands, it is necessary to effectively integrate the data of various businesses and regions.

This problem is a common problem faced by many brands. For example, in some convenience stores in Japan, due to different registered companies in different regions, online points and coupons cannot be used universally; For example, some local convenience stores need member integration to build different brands for different markets.

Hu Jin facilitated the development of "three platforms", namely, data platform, business platform and member platform, through the cooperation between Alibaba Cloud and Alipay service provider.

Specifically, the data center can unify and standardize the data of independent business systems within the company, and combine the big data of various business systems to form valuable data assets. Put users and members of different independent businesses in the same pool and integrate them.

The business of the middle office is mainly to improve the work efficiency of Hu Jin's employees. Employees can intuitively count the store business with nails, and get professional business analysis guidance such as member's accurate marketing analysis, commodity correlation analysis, store performance analysis, promotion effect analysis and inventory turnover analysis through Alibaba Cloud's big data mining algorithm. Xu Meng said that through the business center, everyone can save two to three hours a day.

Members in Taiwan Province, after integrating the data and analysis of the above two, can push the promotion activities of members with one click.

In this way, Hu Jin can get consumers of all formats through Alipay applets and other tools. For example, Hu Jin sometimes carries out activities to buy goods at Hu Jin's convenience and get discount coupons for baking this year.

The second pain point to be solved is brand aging. Even if the popularity is as high as that of Hu Jin, it is necessary to attract people after 00 or even 10 to shop. In recent years, Hu Jin has also been increasing the proportion of food and imported goods among online celebrities.

The most direct way is to directly push online celebrity food and imported goods that young people like through tools such as Alipay applet, so as to attract store consumption. Another method is to attract young customers who are baking this year into convenience stores by issuing coupons.

According to the data provided by Hu Jin, digitalization has helped Hu Jin accumulate more young users. In the past, the main users were over 35 years old, but now the most people are 25 -35 years old.

The format and digital management of "combination boxing" keep Hu Jin's convenience alive. Flexibility and digitalization are the advantages of local convenience store brands compared with Japanese convenience stores, and they are also the general trend of the industry.