C-stores focus on food as growing strategy in Southeast Asia

Turning to fresh food is helping convenience stores to face down the rise of e-commerce competition.

Convenience store across Southeast Asia are expanding their fresh good offerings to attract customers from traditional eateries to their shops and boost their sales in this segment. The move would be paying off, according to research company Nielsen, with growing rates for the offering of fast-moving consumer goods at around 8% in Southeast Asian market.

Fast-moving consumer goods (FMCG) include packaged food, drinks, daily necessities and tobacco products. Nielsen reported that the strong sales growth is mainly due to expanded food lineups targeted at customers who do small but more frequent visits to the shops, in addition to an improved selection of personal care products.

The rise in food offering in convenience stores has been so remarkable that some convenience retail chains would be now "competitors to some of the larger quick-serve restaurant chains," according to Nielsen managing director Vaughan Ryan.

The total number of convenience stores in Southeast Asia – 74,000 registered in 2018 - has been recently rising at an annual rate of 10%. Malaysia, with a 17% recorded growth in FMCG sales, is the fastest growing market in the region. Local and Japanese players are however at the forefront of the trend. Mynews Holding, FamilyMart’s and 7Eleven Mynews are among the chains expanding their ready-to-eat and hot meal offerings.

Convenience stores are the region's fastest growing retail channel in Southeasia, rivaled only by online commerce. Often just a short walk away in cities, convenience stores proximity would be the biggest advantage over e-commerce when it comes to fulfilling immediate needs.

"As e-commerce grows, physical stores will need to adapt, and convenience retail will have to do the same," commented Nick Miles, head of Asia Pacific at the Institute of Grocery Distribution, to Nikkei Asian Review.

Partnering with online commerce platforms to offer their goods, or working with food delivery services, are some of the actions convenience stores are already taking to coexist along these platforms.