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The
"am/pm" Convenience Store Chain Quits Guangzhou 2002
British Petroleum (BP) as of late March 2002 completed a deal
with the local 7-11 convenience store chain licensee to transfer
the assets of the am/pm convenience store chain and closed the
six am/pm convenience stores in Guangzhou. The deal leaves 7-11
as the only overseas convenience store chain remaining in the
Guangzhou market, but BP is not completely out of the convenience
store business in China. The BP stores that are attracted to its
gas service stations will remain open and their numbers may expand
as BP in conjunction with its local partner PetroChina opens more
gas service stations in south China. At the present time, BP operates
60 stores located among its approximately 250 gas service stations
in southern China. The Guangzhou am/pm convenience store chain
up until closure carried some imported food and beverage products
and in 2000 participated in an ATO Guangzhou imported food and
beverage products retail promotion.
According to local BP company sources, the main reason for discontinuing
the am/pm chain in Guangzhou was that high rent and poor infrastructure
(i.e. electricity and water) made sustaining store profitability
difficult. While sales were good, operating expenses were hard
to control. Under this situation, the company decided to shift
its retail focus and only concentrate on stores attached to their
gas service stations. The sources denied that competition from
7-11 was a factor in the company's decision. They added that private
kiosks actually took away more business than other overseas invested
retail chains. The am/pm convenience store chain was one of the
few in Guangzhou that did not charge its suppliers a multitude
of fees for the opportunity to put product on store shelves.
The am/pm convenience store chain started retail operations in
Guangzhou in 1998, not long after 7-11 stores began opening in
the city. Establishing the chain in China was initiated by the
ARCO petroleum company, but China operations were taken over by
BP after their purchase of ARCO. In Guangzhou, am/pm stores had
an average of 1,600 to 1,800 SKUs and some of which were imported
products. Among these imports, according to a local BP source,
candies generated good sales, especially when the product was
new to the market. At BP's gas station convenience stores, candies
did not and still do not sell well, because the customer base
is different. Children and young people, the main candy buyers,
are fewer, while older people are more numerous. BP's gas station
stores average between 500 and 1,000 SKUs.
Despite am/pm's departure from the market, the editor of the local
retail publication "Purchasing" magazine said that a couple of
convenience store chains which already operate in northern China
are looking to enter the south China market. No details were specified.
In addition, a retail industry source says that the Circle K chain
is planning to open stores in Guangzhou. According to this source,
the chain currently is trying to acquire a local business operating
license and will start operations sometime after local government
approval. A local source with BP also claims that the am/pm chain
may return to Guangzhou in the future, but much depends on whether
retail market conditions change.
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