Generally, the definitions of convenience store in Taiwan given by Directorate-General of Budget, Accounting and Statistics (DGBAS) and Department of Commerce, Ministry of Economic Affairs are as follows: (i) the store area is between 50 to 230 square meters, (ii) the main commodities sold are food and beverage which should cover half of the total revenue, (iii) the variety of commodities should be at least 1500 classifications, (iv) the business hours should be over 14 hours in one day and also over 340 days in one year, (v) the efficient installations such as cash registers and security systems are required in every store. A convenience store, in simple terms, is aimed at providing convenient goods which can satisfy the instant demand of customers.
From the research made by the Fair Trade Commission, the four leading convenience store chains in Taiwan have a total of 9,916 stores at the end of 2012.1 Giving the highest density of convenience store in the world, as seen in Table 1, with one store per 0.2756 square kilometers, it is usual to see two convenience stores across the street or within just a few hundred meters of each other in Taiwan. Furthermore, despite market saturation, there was still room for expansion, as shown in Figure 1, the four convenience store chains still reported net increases in their store numbers every year.
As the data are summed up as in Table 2, Taipei city has the highest density of convenience stores in comparison to other main cities in Taiwan. With an astonishing
1 After FamilyMart took over Nikomart in 2007, 7-Eleven, FamilyMart, Hi-Life, and OKmart became the four leading convenience store chains in Taiwan which held a total 98.69% market shares.
number of 5.27 stores per square kilometers in density, convenience stores may be of crucial importance for understanding the situation of retailing industry in Taipei city. Besides, we can summarize from both Table 4 and 5 that with 1,437 convenience stores located in Taipei city, President Chain Store Corp’s 7-Eleven has 704 stores, sharing the largest market share of 49%, followed by Taiwan FamilyMart Co. with 419 stores, market share of 29%, Hi-Life International Co. with 198 stores, market share of 14%, and OKmart Co.’s 116 stores, market share of 8%.
Overview the history of Taiwan’s convenience store industry, most of the retailing suppliers are small grocery stores around the corner or on the street at an early stage, and the products offered included groceries and daily necessities which were similar to supermarkets; however, there had been tremendous changes since the chain brand and business model were introduced from Japan and the United States in the 1980s. With the advantages of lower managing and operating costs, extended business hours, and various merchandises and services, chain convenience stores had gradually replaced the small grocery stores in the metropolitan area. Starting from the first convenience store was found2, during the early 20 years of the development of chain convenience stores, the principal items being sold were beverages, instant noodles, snacks, tobaccos, newspapers, hotdogs, steamed buns as well as tea eggs which could be on-the-go conveniently. Subsequently, in the last decade, with the development of internet, we have seen a shift in the patterns of management in chain convenience store industry. On one hand, the convenience store retailers kept innovating grab-and-go meals such as packaged sandwiches or onigiri (rice balls with various stuffing), odens (many different kinds of food boiled in soup), obento
2 The first chain convenience store in Taiwan, 7-Eleven Chang-An shop, was opened in 1980.
(lunch box consists of meat, vegetable and rice) and so on; on the other hand, in addition to setting multifunction printer machines and ATMs in the stores to help customers deal with specific affairs, convenience stores have become centers of bill-paying and fee-paying services. Moreover, convenience store retailers were devoted to not only constructing the connections with pre-ordering and on-line shopping services but expanding store area in order to provide parking lots or toilets for customers in recent years. As has been mentioned above, the various operation styles and multiple kinds of services of convenient stores do provide many convenient choices to time-starved consumers who want to get maximizing satisfactions within a limited time when they visit convenience stores.
Referring to “The Current Situation and Future Development of Convenience Store Chains (2011)3” prepared by Commerce Development Research Institute (CDRI), we can basically figure out some essential development trends of convenience store chains in Taiwan:
(1) Releasing new goods and services: to satisfy the changing preferences of customers and to attract different groups of customers.
(2) Building private brand: to control costs efficiently and to improve brand imagine of customers.
(3) Promoting café and fresh meals provided in the stores: to focus on the most profitable merchandise by sales strategies such as discounts for the second item bought or point-collections to get the target rewards in a limited time.
(4) Expanding the physical store area: to increase the retention times and various consumptions of customers.
3 The present status and future development of chain convenience stores(2011)
(5) Developing the electronic commerce: to stimulate the operating performances by integrating both the physical and virtual storefront.
Table 1. The Density of CVS Comparing to Other Countries in the World
Country Area (km2) Store Number Density(Store/Area)
Taiwan 35,980 9,916 0.2756
Korea 98,480 20,035 0.2034
Japan 377,835 45,175 0.1196
Thailand 514,000 12,246 0.0238
US 9,631,418 148,126 0.0154
Source: Fair Trade Association; The Association for Convenience & Fuel Retailing;
Japan Franchise Association; TAITRA Global Trade Source
Figure 1. The Number of CVS in Taiwan (2007-2012)
Table 2. The Density of CVS in Different City in Taiwan
City Area (km2) Amount of Stores Density (stores/km2)
Taipei City 272 1437 5.27
New Taipei City 2053 1968 0.96
Taoyuan County 1221 1170 0.96
Taichung City 2215 1152 0.52
Kaohsiung City 2946 918 0.31
Source: eTax Portal, Ministry of Finance
Table 3. The Store Numbers of Four Leading Brand in Taipei
Brand 7-ELEVEN FamilyMart Hi-Life OKmart
Store Number 704 419 198 116
Source: Official Website of 7-ELEVEN, FamilyMart, Hi-Life, and OKmart
Table 4. The Market Share of Four Leading Brand in Taipei in 2012
Brand 7-ELEVEN FamilyMart Hi-Life OKmart
Market Share 49% 29% 14% 8%
Source: Fair Trade Association