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Convenience store: Franchising is the way to expand fast
( 2003-11-19 10:42) (Shanghai Daily)

Shanghai's convenience store chains are quickly expanding through franchising, a cost-effective way to grow amid fierce competition, participants at the 9th China Retail Conference and Exposition were told.

Shanghai Maya 21st Century Commercial Development Co Ltd, a major player in Shanghai's convenience store sector, has franchised more than 100 stores among its 600 outlets to private investors since the company started its franchise program two months ago.

Meanwhile, Shanghai Buddies CVS Co Ltd, a joint venture between Shanghai Liangyou (Group) Co Ltd and Shanghai Xinmeng Investment Co Ltd, also announced aggressive franchising plans at the event yesterday.

"It's a trend that convenience stores will enlarge its outlets through franchising," said Wang Ping, a Shanghai Maya 21st Century's executive, at the exposition which ends tomorrow. "Most of our future stores will be operated in the form of franchises. The strong sense of responsibility by private investors will benefit my company's future development and it's also cost-effective," he added.

The company now runs 600 21st Century convenience stores and 200 Maya audio and video product chain stores around Shanghai.

Wang said the company opened its first comprehensive store combining convenience store with Maya audio and video products last month.

"We will open nearly 100 such comprehensive stores in a short period, which will distinguish the company from other rivals," Wang said. "In the future, most of them will also be franchised."

Shanghai Buddies CVS Co Ltd hopes to expand its franchised stores to more than 1,000 in six years, accounting for nearly 60 percent of its total outlets.

Currently, it has 130 franchised stores among its 500 outlets under the Liangyou Buddies brand.

"A growing number of retailers are using franchise as a way for quick and inexpensive expansion," said Hu Wenzhang, secretary general of Shanghai Chain Enterprise Association. "Franchising is suitable for convenience store business because the store size is comparatively small. Companies turned to franchise as they hope to grow strong in a short period."

Currently, Shanghai has about 3,500 convenience stores run by more than 10 convenience store chains.

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