The number of convenience stores in Taiwan may top 10,000 next year, boosting their total sales to a level higher than department stores and enabling them to become the leading retailer on the island, thanks to decision of President Chain Store Corp., operator of local 7-Eleven stores, to slash the threshold for new franchise stores, in a bid to expand the number of the stores to the 5,000 mark.
According to the statistics of the Directorate General of Budget, Accounting, and Statistics (DGBAS), total sales of convenience stores in Taiwan grew 9.7% year-on-year to NT$223.9 billion in the first 10 months this year. In the same period, total sales of local department stores upped 4.4% year-on-year to NT$224.7 billion, only 0.4% higher than that of convenience stores.
About one month ago, President Chain Store, the largest convenience-store operator in Taiwan, relaxed the conditions for new franchise stores, including halving the franchise fee from the existing level of NT$600,000-800,000, and permitting singles to open franchise stores. The policy is expected to considerably increase the number of new 7-Eleven stores next year, boosting the total amount to over 5,000.
In contrast to the aggressive expansion of 7-Eleven, FamilyMart, however, is more conservative in opening new franchise stores, focusing its effort on renovation of stores and information facilities, as well as the rollout of more differentiated products and services, instead.
This year, the four major convenience stores, 7-Eleven, FamilyMart, Hi-Life, and OK, are estimated to open 30-50 new stores each. After deducting the number of closed stores, the net increase of local convenience stores is less than 100 this year and the total amount of local convenience is expected to hit 9,870 by year end, for growth of less than 10%.
Market players remarked that aggressive expansion policy of 7-Eleven may prompt other convenience-store operators to follow suit. The allowance for singles to open franchise stores will induce young people to join the convenience-store business, bringing fresh vitality to the line.
Industry insiders noted that convenience-store operators have also endeavored to augment their sales by increasing the share of large-scale stores and diversifying their businesses by, for instance, providing various dining services, increasing the business volume of parcel delivery, and offering ticket sales.
