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JD.com has made a bold statement that the company is going to open 1,000 convenience stores a day by the end of this year, mainly through franchise. It has also formed a partnership with CR Vanguard. 

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JD.com has made a bold statement that the company is going to open 1,000 convenience stores a day by the end of this year, mainly through franchise. It has also formed a partnership with CR Vanguard. 

Ambitious plan to open new stores

JD opened its first batch of 1,111 stores in November last year, and has been opening about 1,000 stores every week so far. It plans to open a million convenience stores in the next five years, half of them in rural areas. These stores will be selling products supplied by JD.com under JD's banner. They are run by independent investors and JD could offer loans for potential franchisees.

We receive 50,000 applications every day,” says Liu Qiangdong, founder and CEO of JD.com, “The applicants are mostly migrant workers who have returned to their villages or small towns. JD Finance can provide them with loans to open stores. They can earn more than CNY8,000 (US$1,275) a month. Our goal is to open 1,000 stores a day by the end of the year and have a JD store in every 300 metres in the future.

New partnership with CR Vanguard

Chinese retail conglomerate CR Vanguard is bringing its retail shops to JD.com's online-to-offline platform JD Daojia. CR Vanguard will open online stores on JD Daojia for its stores in Hangzhou, capital city of Zhejiang province and Nanjing, capital city of Jiangsu province. Customers will be able to purchase from its offline stores via JD Daojia's online platform, and get them delivered to their homes.

The partnership will extend to CR Vanguard’s 2,000 retail stores in more than 30 major cities in mainland China.

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Chinese supermarket chain Vanguard has announced plans to open new Suguo stores to fill the remaining gaps in the market, with expansion in key cities outside Nanjing also expected.

Suguo increasing dominance in Nanjing

CR Vanguard plans to open 700 Suguo CVC stores in China during the next five years, accelerating Suguo's coverage to over 1,800 stores nationwide, with approximately 1,000 stores in Nanjing. The Jiangsu-based banner, Suguo, has three different retail formats; supermarket, convenience and community, the latter two are particularly relevant in serving local communities with tailored product ranges. CR Vanguard will look to optimise Suguo's supply chain during this expansion and will focus on offering customers convenience and service.

The development of Chinese CVC format

The development of the convenience format in China is relatively simple in its concentration, but complex in where the retailers operate in the different provinces across the country. There is a high concentration of convenience stores in regions like Shanghai and Guangdong and in large cities along the east coast like, Shenzhen, Xiamen and Dongguan. International retailers like 7-Eleven, FamilyMart and Lawson have expanded nationally, while domestic convenience store operators except for Easy Joy and uSmile (who operate nationally), tend to dominate and focus on their own regions of origin. Suguo's latest announcement, once executed, will grow Suguo's presence in Jiangsu further. They should, however, expect fierce competition as they move further outside Nanjing and into other cities in the region.

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Chinese supermarket chain Vanguard has announced a 50-50 joint venture on data science with Dunnhumby, Tesco's data analysis firm.

Big data to drive growth

The joint venture will help Vanguard better understand shopper habits and consumer behaviour so that they can target their marketing campaigns and promotions more effectively. The data analysis may also prove useful in providing important insights to drive efficiencies in the retailer's distribution and supply chain networks.

Vanguard will utilise its new professional data firm for more than its 3,000 stores, and may consider expanding into financial services, telecommunications and other industries.

Increasingly competitive landscape triggering partnerships...

Vanguard recognises that they are not only competing with other retailers in terms of store network and total sales, but also keeping up with the latest technologies in the modern retail landscape. Vanguard's latest announcement follows several recent high profile strategic partnerships from online giants like JD.com and Alibaba.

JD.com recently formed an alliance with Walmart to share web platforms and supply chains. They have also recently invested in a fresh produce chain - a strategic investment in brick-and-mortar fresh produce chain store operator Qiandama. Alibaba for example, bought a controlling stake in Lazada Group last year, and their mobile application Alipay can be used in all Lawson stores in Japan and China.

As markets become increasingly competitive, the landscape often streamlines, either with disposals or the formation of joint ventures. When Tesco in China partnered with CR Vanguard for example, they closed over 100 big box stores in FY15.

Other recent technological news...

Many retailers are turning to technological advancements to drive and sustain growth. We have seen stores with innovative store concepts across many different markets. Amazon announced their check-out free experience in U.S last year via Amazon Go. In Sweden, Näraffär are testing an unmanned store through a smartphone ID application.

In Japan, Lawson recently announced a self-service and unstaffed mini convenience store 'Petite Lawson' to launch this fiscal year. 7-Eleven introduced their first unstaffed convenience store at Lotte World Tower, Seoul in May. In China, Auchan also opened its first unmanned store this month.

Return on investment and ease to scale-up, however, will determine the success and profitability of new store concepts like the ones outlined above. It will be interesting to see how far Vanguard embraces technology in the next few years relative to its competitors. 

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Datacentre the most reliable and robust source available for data of this type. 

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