Family Mart plans aggressive expansion in China

Family Mart, the convenience-store chain under Taiwan-based Ting Hsin International Group, is preparing to increase the number of its outlets on the Chinese mainland fivefold to 4,500 by 2015.

Ting Hsin is operating about 870 Family Mart stores on the Chinese mainland with about 600 stores in Shanghai. It opened three new stores in Chengdu on June 22, the capital city of Sichuan province, which marks the retailer's entrance into southwestern China.

"Statistics show that in Japan, each convenience store serves 2,838 people, while here on the Chinese mainland, the number is 20,833 people. You can see how big the market potential is," said Lynn Hsu, general manager of Family Mart China. "The development of convenience stores is closely related to the development of the city."

The company said that the development focus will remain in Shanghai and East China without giving exact figures about how many new stores will open in Shanghai before 2015.

Compared with the development speed of Family Mart at an earlier stage, the current expansion plan is much more aggressive. Ting Hsin said it is confident about the expansion plan and prepared to differentiate Family Mart from its rivals.

"We will pay more attention on improving the consumer experience in the store and increasing our competitive edge on fresh-food offerings," Lynn said.

As government regulations do not allow convenience-store operators from outside the mainland to sell cigarettes, which are a big portion of sales revenue for convenience chains, the company said fresh-food offerings have become an important way to attract consumers.

To better serve customers and expand the customer base in different regions such Shanghai and Chengdu, Ting Hsin has established its own research-and-development centers and food manufacturing factories on the Chinese mainland. R&D center will develop special food to satisfy local customers' needs.

In addition to providing customers with more food choices, Family Mart plans to upgrade its stores to make customers more comfortable. Each new store will occupy an area of about 100 square meters. There will be a dining area with tables that allow customers to enjoy food in the store. Some existing stores will be upgraded with the new furnishings.

Experts have said that providing more service items to customers is a must for continuous growth. Lynn said Family Mart will expand its services to make customers' daily life far easier. Currently, Family Mart can provide more than 50 services, including bill payment. The number is far lower than in its branches in the Japanese and Taiwanese markets.

"The demand for convenience stores will increase as cities grow bigger, and convenience store should be able to provide one-stop service to attract more consumers," said Lynn.

Currently, about 60 percent of Family Mart stores are directly controlled by the company. However, the company is hoping that franchised stores will contribute a bigger part in its mainland business operation, and some existing stores will become franchised stores.