Convenience store chain 7-Eleven Inc is looking forward to a massive expansion in Shanghai.
7-Eleven has opened 100 outlets since it made its entry into Shanghai in 2009. It is planning to open 50 outlets during the next three months, boosting it to 165 within three years and 300 stores within five years.
Huang Qianli, GM of the China division at Taiwan’s President Chain Store Corp, the operator of 7-Eleven in Shanghai, said two of the 7-Eleven stores in Shanghai are currently operating on a trial franchised basis.
7-Eleven’s gigantic expansion in Shanghai is partly to catch its arch rival, Taiwan-based FamilyMart and Shanghai’s local chains like Alldays which are also poised for an expansion. FamilyMart plans to open 1000 stores across China by end of this year, 700 of them in Shanghai.
But analysts say 7-Eleven will be facing tough competition in Shanghai market where labor is expensive and rents are higher.
“The rental cost in Shanghai is twice that in Taipei, making store expansion tough. Therefore, the biggest competition in the future is meeting customer demand,” Qianli said.
7-Eleven is also using franchising strategy as its catalyst for business growth in Taiwan. The convenience store chain has 4800 stores in Taiwan, of which 85 per cent are opened by franchisees. At present, it has 1700 stores in total in mainland China.
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