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From the current point of view, around the digital capacity building application, or an opportunity market. Heading deputy general manager Wang Lulu accept the "third eye retail" exclusive interview, in-depth interpretation of the current opportunities and challenges facing convenience stores, as well as the head of convenience store enterprises how to successfully break through.

The following article comes from the third eye retail, the author Zhang Siyao

The era of scale and profit is over. Convenience store enterprises have entered the era of "reducing cost and increasing efficiency" through digitalization and intelligent tools for collaborative operation management and supply chain management.
"Third Eye Retail" learned that many convenience store companies have reached two important consensus in recent years. First, the previous idea of "pre-loss scale, and then achieve overall profit" is no longer suitable for the current convenience store market. Shorten the profit cycle of a single store, expand the cash flow is particularly key; Second, the pattern of convenience stores began to penetrate each other from the previous regional division, and cross-regional merger and integration is the expansion method of some head enterprises. Some convenience store brands that have no intention of long-term layout began to seek exit.
A series of phenomena reflect that the operation of convenience stores requires further intensive cultivation. For example, how to assist store operation through digital means to improve human efficiency, quality efficiency and flat efficiency; How to improve the competitiveness of different categories such as fresh food and cope with the competition of different industries such as snack shops; How to improve franchisee management and empowerment, so as to support cross-regional operations and attract more complex franchisees and other issues, are related to whether convenience store brands can continue to sit at the poker table.
Convenience store companies not only need to pay attention to their own development, but also to understand the changes in the industry. "Third eye retail" hereby interviewed Wang Lulu, deputy general manager of Shanghai Heading Information Engineering Co., LTD., through Heading docking more than 40% of the service providers of the head convenience store business perspective, to explore the true background of the convenience store market.
Wang Lulu said that the stage of building digital infrastructure capability is gradually coming to an end, and most convenience store companies have better applied digital capabilities, so that the number of intelligent chemicals can assist in business decision-making. This process needs to be strongly promoted by the leader of the enterprise, and it is also one of the weights for convenience store enterprises to open the gap. On the one hand, the more we need to reduce costs and increase efficiency, the more we need digital capabilities and other support. For example, a convenience store enterprise uses the Heading cloud fund solution to integrate the management of franchise business funds, access supplier cooperation platform to achieve supplier settlement intelligence, without affecting the effectiveness of the work, the financial personnel from a dozen people to 4-5 people, greatly reducing the financial cost of the enterprise. On the
other hand, the number of convenience store enterprises that apply digital capability to assist the operation, and the iterative process of digital capability of convenience store enterprises are basically at 50% progress. This means that there is still an opportunity market around the application of digital capacity building. This may not only help large-scale convenience store enterprises to consolidate market positions, but also promote the opportunity for small and medium-sized enterprises to achieve corner overtaking. 

Convenience store enterprises consolidate market positions

From infrastructure to application

of third eye retail: What do you think of the current convenience store landscape, and what are the significant changes this year? Does the industry as a whole show a good trend or suffer a crisis?
Wang Lulu: Heading docking more than 40% of the head convenience store enterprises, of which more than 70% of the enterprises in 2022 to achieve store size and average daily sales double growth. So we believe that the industry as a whole continues to improve, but faces some challenges. The common problems worth paying attention to in the industry are the tightening of tobacco license policy, resulting in a decline in tobacco revenue of convenience stores, and it is difficult to get a license (tobacco sales license) for newly opened stores; The development of discount stores, snack stores and other formats has brought greater challenges to the standard products of convenience stores; Convenience stores have basically completed regional segmentation, entered the stock era, and began to penetrate each other.
In this context, there have been some changes in the convenience store industry, which also contains new market opportunities.
First of all, some pure loose franchise, B2B supply type of convenience store enterprises are more and more difficult.
Secondly, the convenience store industry is gradually transforming and upgrading from traditional retail to flexible manufacturing retail enterprises.
Thirdly, enterprises believe that online business is just needed, but it is difficult to make profits, which is a problem to be solved. We are no longer willing to lose money, but rational thinking about how to wash online traffic to the line, effectively combining public and private potential energy. For example, selling coupons online and writing them off at the store is a way. 

On the whole, the convenience store industry has experienced the era of entrepreneurship, expansion and upgrading, and has now entered the era of brand chain, digitalization and intelligence; At the same time of rapid development, the convenience store industry is also constantly innovating and optimizing services to meet the needs of consumers and cope with the fierce market competition.

 
Third eye retail: As a service provider, what changes have taken place in the needs of convenience store companies that you receive? What does this reflect?
Wang Lulu: Digital capability is moving from infrastructure to application. In the design and application of digital product tools, it is also necessary to shift from process to operation. The
so-called process means that different digital products are set up according to different business segments, but they cannot really guide management in the application process. The operational approach is to maximize the value of digital tools. There are two takeaways. First, customers basically have a system, which precipitates a lot of data. In the past, the analysis and use value of these data were low, and they did not really run. Now we hope that the system can precipitate these data to guide operations and give business decisions.
For example, the system can alert customers that you have these items due and suggest clearing them. What kind of promotion plan is more suitable, a total of five suggestions for customers to choose; For suppliers, the system can also make targeted grade evaluation, give renewal, cost negotiation, attention to problems and other suggestions.
Second, with the help of the system and digital capabilities to help enterprises achieve cost reduction and efficiency. For example, through the system ability, applied to the store clerk management training, so that young employees quickly get started, shorten the training cycle, reduce the difficulty of execution.
This reflects the past era of convenience store enterprises relying on scale to benefit the market. Market competition is becoming increasingly fierce, and the operation and management requirements of enterprises are improving. Therefore, we need to rely on digital and intelligent means, through big data algorithms, AI algorithms and other tools to help enterprises to analyze data, guide management, and replace some manual thinking.
Of course, this needs to have a boundary, let people do the correction. For example, there is a big event going on around your store, which only the clerks know, but the AI can't know. Therefore, it is necessary to rely on AI to assist the human brain and use tools to assist the operation.

 
"Third eye retail" : There are views that the speed of convenience store enterprises has slowed down, and some service providers have begun to explore other small business formats such as beauty independent stores and snack stores. Does this mean that the incremental space of this industry is smaller? The upstream and downstream of the industry chain are also affected?
Wang Lulu: We are still optimistic about the convenience store industry. It is just that it is difficult for new convenience store enterprises to emerge in this pattern, and the source of new customers is relatively small, mainly old customers are developing. As long as they develop, there will be demand, and the upstream and downstream of the industry will also benefit accordingly. The
entire retail industry is constantly changing. Online, franchise, Tiktok, category management, fresh food and other needs are the new direction gradually proposed by convenience store enterprises, and our products are constantly changing to cope with it. And we mainly serve the head customers, docking new customers for us, there is not too much pressure. Because many of the new customer needs are already realized by Big Brother.
Objectively speaking, we have many small businesses such as fresh food, fast fashion, mother and baby stores, snacks, and stewed food stores. All of them can be classified as chain retail enterprises, and a large number of retail management concepts and management organization structures can be reused. The business management experience of other business formats can in turn provide reference for convenience stores.
For example, the idea of New Jiayi to do milk pre-sale temporary storage activities is to learn from the experience of mother and baby stores. Consumers buy six cans of milk at a time, there is a relatively large price advantage. But they may not be able to eat it all at once, so they can store it temporarily and pick up a bottle every day. This can not only lock in sales in advance, but also drain to the store.

 
Testing the resolve of the top leader
Focusing practically on profitability

"Third eye Retail" : Compared with convenience store companies of different sizes (such as more than 10,000 stores, 5,000 stores, and less than 1,000 stores), what are the differences in their focus on digital demand? Does this represent the phased issues that need to be paid attention to in different development stages of enterprises?
Wang Lulu: No matter the size of the enterprise, the digital construction must be basically small and complete, but there will be different digital priorities. Small
scale enterprises pay more attention to how to consolidate the digital foundation, so that the sectors that can be digitized can be digitized, and at the same time, the health and replicability are summarized and tested. Larger enterprises will focus on improving efficiency, not solidifying processes, in order to improve the existing digital processes and "slim down" the enterprise. After the
further expansion of the enterprise, the human structure, brand building and organizational coordination of the enterprise need to change, and continue to maintain vitality. Enterprise business exploration and innovation also need rapid response and trial and error. At this time, they usually need: first, dedicated service teams and system versions. The second is to do self-research on the premise of ensuring the stability of the overall digital infrastructure of the enterprise.
Heading is a symbiotic relationship that can accompany enterprises from small to large. We have many customers with more than 20 years of cooperation. On the
whole, customers who can achieve their goals basically have the following capabilities. First, the leader must have enough concentration. Because digital construction will bring a strong sense of discomfort to relevant personnel at certain stages, the team may have negative emotions. More than 90% of our clients are contracted by the first executive. The second is to have enough funds and a team that can smoothly connect and land.
"Third Eye Retail" : From the perspective of service providers, what are the specific operational needs of convenience store companies that you see? At present, how many percent of the completion?
Wang Lulu: It's basically less than 50% complete.
Because, such a volume of the era is not long coming, this is a brand new topic, is the determination of convenience store owners, business processes, system reshaping, testing the ability of team members.
Secondly, it needs to be driven by big data. In the early years, computing power was very expensive, but now everyone can afford big data.
Again, methodology is needed in many aspects, such as the introduction of index system and evaluation system.
From the perspective of demand, it is mainly the refined operation of enterprises around the people's goods yard. In the "people", it is to obtain benefits with the lowest human cost input as much as possible, while not losing the satisfaction of employees and customers. Digitize and intelligentize more transactional work. For example, through system support, supervisors can review online, from guiding 2 stores a day before to dozens of stores now.
In terms of "goods", it combines operation and data, introduces product category management, and improves product efficiency, ping efficiency, and single store efficiency.
"Field" refers to getting a better shop at a better rent and realizing the digitalization of site selection.
"Third eye retail" : Under the impact of snack discount stores, Heading serves a variety of small formats, how to view the scale growth point of convenience store enterprises?
Wang Lulu: The whole is to survive in the change. Changes include fresh food, management, supply chain reform, cultural cultivation, information technology to improve efficiency and so on. Heading a lot of customers in fresh food to increase category share, such as neighboring several, have a home, Tangjiu and other customers of fresh food sales proportion are increasing year by year. There are some customers to build fresh food factory, central kitchen, in addition to better control of quality, can also get better comprehensive gross margin.
In short, the era of relying on scale growth has passed. The consensus is to do fine management, attract and retain customers from goods and services, so as to find out what customers need and accurately meet their needs. At the same time, convenience store enterprises are also more down-to-earth, from each process to analyze and improve efficiency, reduce costs, pay more attention to whether they can make profits, and let franchisees make money.

Sorting out and improving the digital level of 

business processes still need to improve 

the Third eye retail: service providers and retailers belong to the symbiotic relationship, do you think how to divide the division of labor in the cooperation, what are the core capabilities that each needs to play? What are the sectors that service providers need to stick to?
Wang Lulu: We very much agree with the symbiotic relationship. Heading is interdependent with its customers, and only by allowing our customers to serve their customers well can it develop better. 
Heading has a lot of experience in the retail sector. Let a lot of customers step on a little pit, constantly carry out technology, new business research, leading customers, industry development, is what we have to do.
We believe that we should not only do retail information experts, but also do business experts, such as from the category management, operation management and other aspects, from the perspective of customer needs to do business guidance.
For example, in the implementation phase, the customer will put forward a lot of requirements, Heading will not say according to the customer said one on one of the head stem, but standing in the Heading Angle, tell him you the business process optimal design, advantages and disadvantages are what, and then give advice. To a large extent, the customer will accept the proposal after listening. Because in the customer plan of Heading service, many aspects are the successful experience that people have tried. 
So a very important reason for the enterprise to choose Heading is that it hopes to improve the combing of my business process and guide the future development. 

"Third eye retail" : In the process of cooperation with enterprises, Heading what direction of continuous force? At present, how is the progress?
Wang Lulu: In 2020-2021, we have determined the core guiding ideology of the product at this stage. First, the transformation from informatization to digitalization. Second, the product design from tool thinking to operational thinking, so that customers better use, provide greater value and help. The third is to let data lead the business, transforming from a tool to an intelligent decision-making system.
For example, many systems are now simple entry tools that can only be mechanically presented based on personnel output when promoting a business. In the future, you open the system, click "51" promotion, the system will tell you the promotion plan, including which products to choose, which stores, so as to make intelligent decisions.

In another 2-3 years, we can achieve it. Now we are testing it with customers. We can solidified it and promote it by running a few more samples.