Suning Xiaodian, the convenience store unit of Chinese retailer Suning.com, is testing the leisure beverage business with the launch of its first in-store coffee shop as the company looks to double down on its coffee market bet.
Why it matters: Coffee chains in China like Starbucks and Luckin face growing competition from the likes of Suning, which has an extensive offline presence.
- Convenience stores are increasingly offering coffee-based beverages are entry-level pricing.
- China’s coffee market size has grown to RMB 56.9 billion (around $8.01 billion) in 2018 from RMB 15.6 billion in 2013. It is expected to grow 26.0% annually to reach RMB 180.6 billion in 2023, according to Frost & Sullivan.
- In September, China’s state-owned gas and petrochemical conglomerate Sinopec rolled out a new coffee brand called EasyJet to approximately 50,000 convenience stores located in the company’s gas stations across the country.
Details: Targeting white collar consumers, the coffee shop is located on the second floor of a Suning Xiaodian store in Nanjing, the capital of eastern China’s Jiangsu province.
- The coffee shop’s existing menu lists 27 beverages including popular coffee and tea drinks. Beverage prices range from RMB 12 (around $1.70) to RMB 28.
- Baked goods like breads and cakes are also on offer.
- Suning Xiaodian store footprints range between 100 to 200 square meters (around 1,000 to 2,000 square feet) in size, and there are more than 5,000 stores across 71 Chinese cities as of March this year, according to the company. The stores aim to provide services for customers living within a range of three miles.
- Suning launched in July last year its own coffee brand “Lion Coffee,” offering in-store, as well as 30-minutes coffee delivery services similar to Luckin. The products on sale at the coffee shop pilot are not branded as Lion Coffee products.
- Suning did not provide details on its expansion plans for the in-store coffee shops.
Context: Suning.com spun off its conveniences-store subsidiary Suning Xiaodian, also known as Suning Stores, in July this year.
- As a major appliance seller and e-commerce platform, Suning has been pushing its offline expansion to various segments including convenience stores, supermarkets, and department stores.
- The Chinese online retailer acquired 80% stake in Carrefour China this June.