Is China’s Greater Bay Area the next battlefield for convenience stores?

Lawson, one of Japan’s top 3 convenience store franchise chains, starts up its investment project in Guangzhou, building up towards its expansion into the Guangdong-Hongkong-Macau Greater Bay Area (GBA). The headquarter of the retailer in this region is set to be in the Guangzhou city of Huangpu, as according to Guangzhou Municipal Commerce Bureau on 24 November.

The move follows its first annual profit achievement in China in 2020 after having entered the market over 25 years ago, which also makes Lawson the first player pulling off an all-round profit in China among the other two rivals from Japan – FamilyMart and 7-Eleven. As the latter two have so far only fulfilled regional profits in this country, showing Lawson’s ability to make greater strides in the market whilst showing the time needed to start exceeding in it.

With over 4,100 existing stores covering most of China’s first and second-tier cities, Lawson is set to bring another 1,500 stores in the Greater Bay Area. This expansion, into the region that saw the earliest development of modern convenience stores in China, is a strategic plan by the retailer in a bid to leverage the mature market. Noticing their sizeable growth, they have taken this chance to double-down and further increase their growth in one of the most lucrative geographies within the Chinese landscape.

The region possesses a large consumption base, with a population of over 86 million as of 2020, and these numbers are expected to grow over the next 10 years. Southern cities within the Greater Bay Area such as Guangzhou, Shenzhen, and Dongguan are among the top 10 with the highest convenience store developing index, as according to China Chain Store & Franchise Association.

Both the maturity of the market and the potential consumer power, have made the Greater Bay Area an ideal soil for retailers like Lawson who are clearly looking to leverage it further with its latest expansions.

However, opportunities coexist with challenges, With fiercer competition expected as the first one facing the newcomer. On top of that,  two local brands, Meiyijia and Tianfu, rank as second and fourth respectively on China’s top 100 convenience store chain chart 2021, with this posing questions as to the ability of Lawson to expand as much as they envisage within this region.

As convenience stores become larger in China, the battle between brands to dominate the market and areas will prove hotly contested, with sound judgment and China cultural insight needed to effectively gain market share.

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