Leading convenience retailers in Asia generated more than $164 billion in sales in 2014 through a combination of higher sales from existing stores, as well as significant new store expansion.
This strong growth is expected to continue, with Asia’s ‘megacities’ containing a perfect mix of high population densities, rising affluence, consumers who prefer to shop daily and close to where they live, as well as in some market legislation restricting the development of larger stores.
Big three retailers to watch
The ‘big three’ retailers to watch are 7-Eleven, FamilyMart and Lawson, all of which operate in multiple markets across the region.
7-Eleven opened its first store in Japan in 1974 and currently has more than 43,300 stores trading under the banner across 11 markets in the region.
FamilyMart’s first store opened in Japan in 1973, where today it has more than 10,000 stores, with over 15,700 others across a further six markets.
Lawson has 12,800 stores in Asia, split across five markets. In March 2015, the retailer opened its first store in the Philippines’ capital, Manila.
As retailers expand, strategies are becoming more sophisticated, with some clear trends emerging:
1. Private label seen as a key differentiator
Leading retailers are investing in private label in order to drive innovation, lower prices and improve quality. Activity tends to focus predominantly on standard and premium tiers, with new tactics emerging focused on expanding ranges.
7-Eleven Japan is targeting JPY3 trillion (AU$3.5 billion) of sales from private label by the end of its 2016 financial year. In order to achieve this, the retailer regularly renews products and is expanding both its Premium and Gold brands, with private label now making up 30-40 per cent of products.
Co-branding private label with well-known brands is also a growing tactic, particularly in Japan. This activity helps to improve the quality image of private label and, from a supplier’s perspective, ensures their brand presence is maintained in-store. For example, SunKus’ Style One private label and confectionery manufacturer Glico has co-branded on a biscuit line.
2. Simple, convenient and relevant marketing
Marketing activity in-store is very much tailored towards the convenience shopper. Campaigns look to target specific shopping missions, help increase basket size, promote regular shopping trips and deliver great value for money.
Lotte Market 999 in South Korea provides a simplified pricing structure with the majority of products positioned around three price points: KRW990 (AU$1.15), KRW1,990 (AU$2.30) and KRW2,990 (AU$3.50).
Time-based promotions help target shopper needs. Ministop in Japan, for example, offers a discount on coffee between 6am and 9am, while loyalty cards (eg, Lawson’s Ponta Card), electronic money payment systems (eg, 7-Eleven Japan’s Nanaco) and collectable promotions are all popular tactics that convenience retailers use to drive repeat shopping visits.
3. Linking online and offline together
As online retailing grows in popularity, convenience retailers in Asia are looking to develop multichannel operations. This includes customers being able to access various online services in stores. For example, FamilyMart’s multimedia terminal Famiport allows shoppers to buy tickets and general merchandise products, make payments, access financial services, buy lottery tickets and make charity donations.
Convenience stores are also providing click and collect solutions. By the second half of 2015, 7-Eleven Japan expects all of its group’s online products to be available for collection at any convenience store. Through this strategy it hopes to provide a more seamless experience, make a much broader range of products available through its store, increase customer numbers and win new shoppers.
This is particularly relevant in Japan’s rural areas, where there is a growing elderly population, so retailers are increasingly offering delivery services with a focus on providing meal solutions.
What can we learn from convenience in Asia?
Asia’s convenience channel is set to experience greater focus over the coming years, providing inspiration for suppliers and retailers looking for innovation in areas such as promotional mechanics, new product development and how to win in a multichannel world.
Combined with this, the big three retailers – 7-Eleven, FamilyMart and Lawson – offer world-leading store networks, between them having almost 72,000 stores across the region. They are set to become increasingly important in terms of their global scale.
Nick Miles
Asia-Pacific Region Manager
Nick heads up IGD’s Asia-Pacific research team and is its main analyst covering Australia. He regularly travels to the market, visiting stores and engaging with retailers and manufacturers. Nick brings seven years of experience working for Tesco to IGD.
Contact: nick.miles@igd.com
About IGD
IGD is a food and grocery research membership organisation with around 900 members worldwide across the whole food supply chain.
It is a leading source of insight covering retail, supply chain, shopper and people development. IGD’s research team also identifies best practice across the world through its global innovation tracker. For more information, visit www.igd.com or contact liam.gilbert@igd.com
