What does an oil company know about operating convenience stores? The answer: not much. This is why state-owned China Petroleum & Chemical Corp, better known as Sinopec, is relying on private sector experts to step up its non-oil business.
In the first major experiment, the state-owned oil giant has partnered with retail heavyweight Ruentex Group to transform some of the outlets of its massive 23,000 convenience store network. The first eight relaunched shops have been running for a few weeks and the results have been extremely encouraging.
Ruentex owns a stake in Hong Kong-listed Sun Art Retail Group, which operates more than 300 hypermarkets across China under two labels — RT-mart and Auchan.
The eight relaunched Sinopec Easy Joy outlets have seen their sales soar nearly 50 percent during the soft launch period since mid-August. Sales of food, beverages and liquor surged as much as 156 percent during the period, thanks to much wider product offerings and a nicer shopping environment.
Half the outlets are located in downtown Shanghai and the other half in the suburbs, with different strategies adopted between them.
Sinopec stores in downtown Shanghai have copied the format of C-store, the convenience store subsidiary of Ruentex, which focuses on fresh food such as hot buns, Japanese Oden, rice dumplings, fresh juice and milk.
Stores in suburbs, meanwhile, use the ‘promotion model’, which involves drawing in customers through greater discounts to help clear slow-moving merchandises.
Easy Joy is also working with online grocery firm Yihaodian on QR code shopping techniques. Every product sold in Easy Joy will come with a QR code. All the customers need to do is to scan the QR code; they can then finish the transaction online, making the purchase even more convenient.
In another initiative, Sinopec teamed up with Fosun Pharma to offer more than 200 over-the-counter drugs in selected Easy Joy stores.
Chai Zhiming, deputy general manager of Sinopec Sales, the oil giant’s retail arm, told the China Securities Journal that the group has far bigger ambition for the non-oil business.
In addition to merchandise commonly available in convenience stores, things like movie and concert tickets and holiday packages are also on the drawing board. Arrangements for customers to order online and pick up items at Easy Joy will also be made.
The next step is to increase the number of revamped stores to 300, covering Zhejiang province and Guangzhou city, apart from Shanghai.
It is expected that the scale will be expanded further later. Sinopec chairman Fu Chengyu had earlier said that boosting sales in non-oil business is key to better profitability, and a major step toward ensuring that the group can realize its full potential.
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