The Economist - USA (2020-10-17)

The EconomistOctober 17th 2020 Business 57

2

C

ornershopsarewithinwalkingdis-

tanceofmanyhomes,openlonghours

andsmallenoughnottorequirecustomers

tolingertoolonginside.Theynolonger

selljust basicnecessities,suchasmilk,

beerandsweets.Andtheyofferotherser-

vices,fromcharginge-bikesinSouthKorea

topayingforonlineshoppinginMexico.

Onpaper,thismakesthemperfectlysuited

tothepandemic.Andinpractice?

Goingintocovid-19,conveniencestores

werea mixedbag.Somebenefitedasbusier

lifestyles,smallerhouseholdsandageing

populationsledmorepeopletoshoplittle,

oftenandlocally.Theyweretheonlybrick-

and-mortarshopsinSouthKoreawhose

salesgrewin2019.oxxo, a Mexicanchain

withsome20,000outletsacrossLatinAm-

erica,reportedsalesof$8.7bnin2019,upby

10%ontheyearbefore.Minimarts,which

mostlyoperateasfranchises,havebeen

openinginChina,IndiaandThailand.

Elsewheretheyhavestruggled.In Ja-

pan, home to the world’s three biggest

chains,theyhavebeeninoutrightdecline.

ThesharepriceofSeven&i Holdings,the

giantwhichowns7-Elevenandaccounts

fora thirdoftheindustry’s$360bninglo-

balrevenues,hasdroppedbyaround30%

overthepasttwoyears,asinvestorscooled

on its saturated domestic market. Its two

Japanese rivals, FamilyMart and Lawson,

have been laggards, too (see chart). In many

countries supermarkets have been mus-

cling in on their traditional high-street

turf. In September Asda, a British super-

market, launched Asda on the Move, join-

ing Tesco Express and Sainsbury’s Local.

Despite the potential pandemic boost,

performance this year has been similarly

patchy. The average value per convenience-

store transaction in China increased by

120% at the height of the pandemic, and

stayed high. In Britain the Co-operative

Group declared that sales rose by 8% in the

first half, year on year, to £5.8bn ($7.6bn),

thanks to its Co-op and Nisa minimarts. At

the same time Seven & i reported a 12%

drop in operating profits in the three

months to August. FamilyMart lost money

in the third quarter. oxxo’s parent com-

pany, femsa, is also in the red this year.

Although some pandemic shopping

habits favour convenience stores, others

do not. Rivals are offering the same goods

for less and brought to your doorstep, often

in an hour or two. Deliveroo, a British food-

delivery app (part-owned by Amazon), fer-

ries booze from supermarkets. In August

DoorDash, an American one that teamed

up with 7-Eleven in the pandemic’s early

days, launched its own virtual DashMart.

To fend off rivals, stores must evolve

with shoppers’ changing ideas of conve-

nience, says Amanda Bourlier of Euromon-

itor International, a research firm. One

American chain, Wawa, has opened drive-

through stores. Another, Casey’s, has re-

ported a surge in digital sales. Stores in

South Korea and Japan, which face labour

shortages, are toying with automated pay-

ments. In America 7-Eleven now delivers

online orders to homes, as well as public

places like parks. But its parent has also

bought Speedway, a chain of American pet-

rol stations, for $21bn. That adds 3,900 out-

lets to the 9,000-odd 7-Elevens in America

(and 70,000 or so globally). It is a big bet

that petrol cars aren’t soon disappearing—

and nor are convenience stores. 7

BRISTOL ANDTOKYO

Conveniencestorescouldbenefitfrom

thepandemic—iftheyadapt

Retail

Turninga corner

Inconvenient truth

Convenience-store firms, share prices

January 1st 2018=100, $ terms

Source:DatastreamfromRefinitiv *Ownerof OXXO

225

200

175

150

125

100

75

50

2018 19 20

Lawson FEMSA*

FamilyMart

Seven & i

Thefifthgenerationofprofits

Sources:Bloomberg;Canalys *IncludingHongKong,MacauandTaiwan †Europe,MiddleEastandAfrica

300

200

100

0

102007 1915

Apple,revenues

Financialyearsending

September,$bn

Other

iPad

Mac

Services

iPhone

Latin

America

North

America

EMEA†

AsiaPacific

(excl.China*)

China*

150100500

Smartphoneshipments,

byregion,H12020,m

5G Other

Others

Oppo

Xiaomi

Vivo

Samsung

Huawei

3020100

Worldwide5Gsmartphone

shipments,byvendor,H12020,m

Having more or less invented the smartphone in 2007, Apple has lately lagged behind

other gadget-makers. On October 13th it caught up, unveiling its first 5g-enabled

iPhones. Expect sales to pick up as users who have put off purchases finally upgrade.

Whether they can find a zippy 5gnetwork is another matter. Opensignal, a research

firm, finds that most 5ghandsets are connected to one less than a quarter of the time.

The iPhone gets up to snuff

declined by 2%. The smaller tractors are

used on properties of less than 100 acres

(40 hectares). That makes them ideal for

organic farms, which, because they eschew

pesticides, cannot be large. They are also

handy for tasks such as mowing lawns or

hauling things around the rural properties

where many city-slickers have fled from

covid-infested urban areas.

In India other factors are at play. Stories

about Indian farmers have long focused on

suicides and misery. This year there is good

news. The summer harvest was 6% bigger

than last year. Prices for farm produce were

up by an average of 12%. This has boosted

farm incomes (even though it has concern-

ing implications for inflation). The winter

crop looks equally promising, thanks to fa-

vourable monsoon rains, which have been

9% heavier than usual and, critically, well-

distributed over India’s northern agricul-

tural belt. Reservoirs are at their highest

level in a decade, which bodes well for har-

vests to come.

The extra cash, combined with lower in-

terest rates and cheaper credit, has enabled

farmers to modernise. Some are upgrading

to slightly larger machines, capable not

just of pulling a plough but also of hauling

heftier kit like harvesters. The draconian

national lockdown, which for weeks pre-

vented migrant workers from returning to

their villages from cities, added another in-

centive to accelerate mechanisation. Farm-

ers in India often regard buying a Mahindra

tractor as akin to having a child: both be-

come part of their lives and livelihoods for

decades to come. With brighter prospects

than in years past, many may wish to add

more little Mahindras to the fold. 7