Ministry of Commerce of PRC Released Prosperity Index for the Chinese Convenience Stores over the second quarter of months in 2018.
A few days ago, Ministry of Commerce of PRC released a report on the Prosperity Index for the Chinese Convenience Stores over the second quarter of months in 2018 (hereinafter referred as the report).
According to the report, the overall prosperity index for the Chinese convenience stores was 70.25 over the second quarter of months in 2018, going up 20.25 above the threshold of the purchasing managers' index (hereinafter referred as PMI) and the entrepreneur expectation index; this disclosed that the market for the Chinese convenience stores was in a healthy development range. As the report suggested, on one side, the prosperity index for the Chinese convenience store enterprises is 75.7, exceeding the threshold of the PMI and the entrepreneur expectation index by 25.7, falling down by 1.9 compared with its corresponding index over the previous quarter of months in 2018; on the other, the prosperity index for the Chinese convenience stores was 66.6, rising above the threshold of the PMI and the entrepreneur expectation index by 16.6, showing a decline of 1.2 compared with its corresponding index over the previous quarter of months in 2018. The synchronically slight drops in the prosperity indexes for the Chinese convenience store enterprises and their stores disclosed a fact that the Chinese convenience store enterprises’ managers and their grass-root stores’ operators felt a certain stress about the Chinese convenience stores’ overall business operation over the second quarter of months in 2018. From the view of the sub-indexes, the sales index for the Chinese physical convenience stores, the index for incoming shoppers’ quantity and the index for the Chinese convenience stores’ operating profits had kept up at the same time for the consecutive 3 quarters of months by then; moreover, the overall cost index for the Chinese convenience stores dropped compared with the corresponding index over the previous quarter of months in 2018, which mirrored the constant enhancement in the profit-earning capabilities of the Chinese convenience store enterprises and their stores.
First of all, let’s look at the overall index.
The overall prosperity index for the Chinese convenience stores was 70.25 over the second quarter of months in 2018, going up 20.25 above the threshold of the PMI and the entrepreneur expectation index, declining 1.59 and 3.7 respectively compared with its previous quarter’s counterpart of 2018 and the corresponding quarter’s counterpart of last year. In terms of the overall trend, its range of vibration was relatively small, and the holistic performance of the Chinese convenience stores is comparatively stable, being in a healthy range of development.
As a whole, with the background of new technology updating and upgrading as well as the capital growing continuously, the Chinese convenience stores’ market over the second quarter of months in 2018, in terms of overall size, remained a relatively steady development; meanwhile, every single convenience store’s ability of business operation improved noticeably though facing large pressure in choosing proper location for opening up stores. Concurrent with this, the continuously rising up costs from the production factors such as store rent, labor, the expenditure of water and electricity supply had not been effectively improved. For the next second half of 2018, there will be various challenges waiting ahead of the market for the Chinese convenience stores.
(Graph 1 reflecting the overall prosperity index for the Chinese convenience stores over the second quarter of months in 2018)
Viewing the sub-indexes, the prosperity index for the Chinese convenience stores over the second quarter of months in 2018 is 75.7, which was 25.7 up above the threshold of the PMI and the entrepreneur expectation index, dropping 1.9 compared with its corresponding index over the previous quarter of months in 2018, and falling down by 6.8 compared with its corresponding index over the same period in 2017; as abovementioned, the prosperity index for the Chinese convenience stores was 66.6, rising above the threshold of the PMI and the entrepreneur expectation index by 16.6, showing a decline of 1.2 compared with its corresponding index over the previous quarter of months in 2018, and going down by 1.7 compared with its corresponding index over the same period in 2017. The synchronically slight drops in the prosperity indexes for the Chinese convenience store enterprises and their stores revealed a fact that the Chinese convenience store enterprises’ managers and their grass-root stores’ operators felt a certain stress on the Chinese convenience stores’ overall business operation over the second quarter of months in 2018.
(Graph 2 suggesting the prosperity index for the Chinese convenience store enterprises over the second quarter of months in 2018)
(Graph 3 showing the prosperity index for the Chinese convenience stores over the second quarter of months in 2018)
(Form 1 listing the indexes for the convenience store enterprises and their stores in China over the second quarter of months in 2018)
Secondly, let’s have a look at the sub-indexes.
To begin with, we will have a look at the sub-index for the Chinese convenience store enterprises.
As the statistics shows, the sales index for the Chinese convenience store enterprises over the second quarter of months in 2018 was 93.4, rising up 7.3 compared with its corresponding index over the first quarter of months, and dropping down by 2.8 compared with its corresponding index over the same period in 2017; at the meantime, the index for the Chinese convenience stores was 8.11, falling down by 11.4 compared with its corresponding index over the first quarter of months in 2018, and going down by 8.0 in comparison with its corresponding index over the same period in 2017. To a certain extent, this presented that every single convenience store’s ability of business operation improved noticeably though facing large pressure in choosing suitable places for opening up stores. On one side, the places suitable to opening the small-size convenience stores became the rare sources because of the increasingly high cost for renting stores; on the other, the Chinese convenience store enterprises had to confront the trial originated from the pressure of achieving profits; thus, enlarging every single convenience store’s capacity for business operation was the fundamentally key factor to ensuring the Chinese convenience store enterprises’ sustainable development.
(Graph 4-1 The sub-indexes for the Chinese convenience store enterprises over the second quarter of months in 2018)
In addition, the Chinese overall business environment remained a steady tendency, which indicated that the business environment cultivated by the Chinese government’s policies over the convenience store industry was relatively open; thereby, the Chinese convenience store industry needed to focus on the issues originated from itself and adopted more trials, endeavor as well as innovation to facilitate the formulation of the supportive policies related.
(Graph 4-2 indicating the sub-index for the Chinese convenience store enterprises over the second quarter of months in 2018)
The number of employees in the Chinese convenience stores over the second quarter of months in 2018 slightly decreased. Known as labor-intensive, the Chinese convenience store industry had suffered from the shortage of talents. In face of labor cost rising up constantly, how to enhance the attraction to the talented was still an important challenge for the industry. Simultaneously, the fallback of the overall cost index proved that the convenience store industry tried reducing the number of employees and saving labor cost as well as any other expenditure by putting new technology into practice.
(Graph 4-3 displaying the sub-index for the Chinese convenience store enterprises over the second quarter of months in 2018)
The main business index for the Chinese convenience stores over the second quarter of months in 2018 was 87.7, slightly rising up 1.1 compared with its corresponding index over the first quarter of months in 2018, and increasing 1.2 compared with its corresponding index over the same period in 2017. In overall, the main business profit index for the convenience stores in China has been in a relatively steady tendency with a comparatively small vibration as a whole. This meant the overall profit room for the convenience stores in China tends to be stable, and the managers of the convenience stores have objective controls over the profit rooms for their respective enterprises; whereas the synchronic fall of the overall expenditure index and main business cost propelled the elevation of the profit index to a certain extent.
(Graph 4-4 manifesting the sub-indexes for the physical convenience stores in China over the second quarter of months in 2018)
(Form 2 listing the sub-indexes for the convenience stores in China over the second quarter of months in 2018)
Next, let’s check out the sub-indexes for the convenience stores in China.
As the sub-indexes for the convenience stores in China over the second quarter of months in 2018 shows, the sales index for the convenience stores and the incoming shopper quantity index synchronically kept rising up for the past consecutive quarters of months by then. It reflected that the convenience stores’ operators kept relatively high confidence about hoisting the daily level of their single store’s business operation and improving their ability to usher in consumer flows.
(Graph 5-1 demonstrating the sub-indexed for the convenience stores in China over the second quarter of months in 2018)
By the second quarter of months in 2018, the operating profit index for the convenience stores in China had gained rise-up for 3 consecutive quarters of months; every single convenience store’s ability to earn profit had gone up increasingly. The above phenomenon is extremely important to the sustainable development of every physical convenience store. Simultaneously, the fall of the labor cost index and the index for the expenditure of water as well as electricity sent a positive signal to every single convenience store’s operation. As the strength of Chinese government’s regulation and control over the real estate market growingly gets stronger, the store rent will become steady though rising up constantly recently. After all, store rent, labor cost and the expenditure in water and electricity supply are still the 3 major facts affecting the convenience stores’ operation in China.
(Graph 5-2 manifesting the sub-indexes for the convenience stores in China over the second quarter of months in 2018)
(Form 3 listing the sub-indexes for the convenience stores in China over the second quarter of months in 2018)
Finally yet importantly, let’s have a look at the holistic analysis.
On a whole, the convenience store industry in China remained a stable yet healthy development over the second quarter of months in 2018, and was in a relatively steady range of development because of the small vibration of its prosperity index. Viewing the sub-indexes from the perspectives of the convenience store enterprises and their stores, we can make a conclusion that the tendencies of sub-indexes over the past quarters of months in 2018 moved in a reasonable range of vibration.
As to the entire convenience store industry, the advancement of every single convenience store’s ability to operate fundamentally guarantees the steady development of the whole industry. Over the second quarter of months in 2018, we can find out that every single convenience store’s ability to operate was remarkably improved in the convenience store industry; meanwhile, the convenience store industry was under multiple pressures in choosing suitable places for opening up stores due to many external factors’ affection.
The continuously growing factor cost of production has been a potential threat to the sustainable development of the convenience stores in China, posing bigger challenges to the convenience stores’ operational capabilities. This means, the convenience store industry in China needs to fight against the increasingly rising operational cost by ways of constant innovation and further improvement on operational efficiency based on implementing new technology.
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