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Modern trade in China experienced no growth in Q1


Kantar Worldpanel, the global leader in consumer panels, reports the spending in FMCG market showed sluggish growth as it expanded by 2.0% for the first quarter of 2016 from last year. This puts consumer spending behind the official statistics that reported China’s economy grew by 6.7% in the first quarter of 2016. Spending in modern trade (including hypermarkets, supermarkets and convenience stores) declined by 0.5% as shoppers moved to other channels such as e-commerce. Geographically, West is ahead of other regions with growth rate reaching 4.6%, primarily driven by large format stores such as Hypermarket.

Walmart share trend starts to rebound and Sun Art consolidates its market lead

Entering 2016, international retailers started to show sign of recovery that saw their market share fall to 13.2% (down only 0.3% from Q1 in 2015, the smallest recorded market share decline in recent years). Wal-Mart group was one of the more successful players in reversing its share – seeing share growth for a second consecutive month. Its quarterly share is now 5% of the market recorded in the first 12 weeks of 2016 (up 0.2% from 2015Q1). This was driven by the strong performance in West where the retailer holds 6.4% of the market (up 0.7% from 2015Q1).

Local retailers have continued to perform better. Sun-Art group leads the market with 8.3% share nationally as a result of the group’s outstanding performance in lower city tiers.


Regional retailers are gearing up

Yonghui maintained its steady growth by gaining 0.4% (from the quarter a year ago) and now represents 2.6% of the market nationally. The retailer has entered the top player league in the fiercely competitive East region, reaching a market share of 1.5% in 2016Q1.

In South region, WSL group maintained its growth momentum reaching a share of 6.5% through attracting new shoppers to its stores. We expect to see this group close the gap with the regional leader Wal-Mart group (8.9% share of the market) if it can execute its ambitious expansion plan that targets to open more than 100 new stores in 2016 and maintain strategic alliances with Yonghui group.

Hongqi was in the spotlight for taking over Huhui supermarket in West region last year but the merger has not yet translated into sales performance with the group’s market share has maintained at 1.3% of the market in 2016Q1.

E-commerce spending accelerated in the first quarter

Modern trades sales have been hit by the rapid growth of E-commerce which increased by 48.1% in the first quarter of 2016. This channel growth is a result of more households purchasing on the platform (penetration was up 33.7%). Faster penetration growth has been witnessed in lower city tiers. County level cities saw the fastest gains (grew by 48.9%) as a result of e-commerce retailers pushing to develop the demands

Competition between E-commerce retailer giants is intensifying. Tmall launched a “Two headquarter” strategy to shift focus to converting buyers in the top cities where the group is behind JD.com in terms of size and growth rate. Consumers in key cities are also enjoying deep price promotions to encourage them to purchase from Tmall stores.

Modern trade in China experienced no growth in Q1

Modern trade in China experienced no growth in Q1

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Jason Yu
General Manager in China

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