News Centre
Kantar Worldpanel -

Regional Retail Leaders Expanding Their Territories



Regional Retail Leaders Expanding Their Territories

The latest report from Kantar Worldpanel indicates a significant improvement in China's fast-moving consumer goods (FMCG) market during the fourth quarter compared to the same period last year when it was heavily affected by the pandemic. The year-on-year growth rate has reached 5.6%. Looking at the entire year, the consumer market continued to exhibit a moderate recovery trend, with a sales growth rate of 1.2%.

In terms of different city levels, provincial capitals experienced the fastest rebound. Across different regions, the northern and western regions are leading the recovery. In terms of categories, beverages, and household cleaning products maintained significant growth in the fourth quarter, while food, dairy products, and personal care categories showed signs of recovery, although at a pace slower than the market average.

The latest data released by the National Bureau of Statistics also shows that in 2023, final consumption contributed as much as 82.5% to economic growth, significantly higher than the pre-pandemic contribution rate of 57.8% in 2019, making it the main engine driving macroeconomic growth.

Q4: Membership Stores Deepen Penetration into Lower-tier Cities, Regional Leaders Strategically Expand Market Share 

In the fourth quarter, modern channels experienced a resurgence compared to the previous year's downturn, with hypermarkets and large supermarkets demonstrating notable overall improvement.

Among the top ten retailers, Jiajiayue within the SPAR group experienced double-digit sales growth in the fourth quarter compared to the same period last year, maintaining a stable overall market share. Due to the large-scale closure of Carrefour stores, Suning Group's share in modern channels decreased by 1.3 percentage points, dropping out of the top ten retailer ranking.

2023 FY top retailers.PNG


Compared to the fourth quarter of last year, the market share of the top ten retailers in modern channels further decreased by 1.6 percentage points, indicating a further reduction in the concentration of the Chinese retail market under the trend of diversified formats and fragmented markets.

Throughout 2023, Walmart and Yonghui increased their market share amongst fierce market competition, while Wumart, the SPAR Group, and Hongqi Chain maintained a stable market share.

Membership stores continued to grow in the fourth quarter of 2023, but the overall growth rate slowed compared to the first two quarters. It is worth noting that since the third quarter, the growth rate of membership stores in lower-tier cities has exceeded that of upper-tier cities. Although the size of membership stores in lower-tier cities in China is still relatively small, with the gradual saturation of membership stores in upper-tier cities and intensified competition, the trend of membership stores expanding into lower-tier cities may emerge.

In 2023, RT-Mart successively opened M membership stores in Yangzhou and Changzhou, indicating that local membership stores will focus more on deepening their presence in affluent second and third-tier cities, while also introducing more small-scale, small-packaged, and low-priced products to meet the quality of life demands of local consumers. Regional retail chain brands in China have emerged in competition, gaining more market share from the national giants.

Retailers such as Hebei Beiguo, Beijing Jingkelong, and Anhui Joymart all saw an increase in market share in modern channels in the fourth quarter. Known as the "Northeast Pang Donglai", Biyoute achieved double-digit sales growth in the fourth quarter. Biyoute took over several Carrefour stores and revitalized them through re-planning layouts and multi-format operations, bringing new vitality to old locations.

Five Outlooks for the Retail Market in 2024 

1. Small Formats, Big Business

In 2023, consumers continued to maintain the habit of shopping in proximity channels. Although the decrease in average spend per trip led to a slight slowdown in the growth rate of small-format sales, small supermarkets and convenience stores continued to enhance convenience for consumers in terms of time, space, and service. They developed new service offerings in response to trends like scene-centric, service-focused, and customized consumption.

Sizable brands such as Meiyijia, Hongqi Chain, and Lawson all increased their market share in 2023 compared to the previous year. The latest publicly available data indicates that Meiyijia, while maintaining its consistent community-centered strategy and deepening its market penetration, experienced significant growth despite challenges. Both its revenue and store count increased, surpassing 30,000 stores and establishing itself as a leading brand in China's convenience store sector.

In the upcoming year, proximity channels will encounter a general slowdown in consumer spending growth, increased competition from community discount formats, and heightened competition for traffic. Small-format brands must enhance their supply chain operations and digital capabilities to swiftly adjust to evolving consumer preferences in their surroundings.

At the same time, large-format brands are actively deploying community retail by opening smaller stores, streamlining SKUs, and increasing investment in fresh produce. Through an integrated online and offline model, they aim to meet consumers' shopping needs across multiple time periods and scenarios.

The penetration of convenience stores slowed down in upper-tier cities in 2023, whereas lower-tier cities, particularly prefecture-level cities, emerged as the main drivers of growth. Compared to mature convenience store markets internationally, there is still significant room for improvement in the saturation of convenience stores in most Chinese cities. For chain retailers, as more foreign and local convenience store brands enter third- and fourth-tier cities, proximity consumption still holds tremendous potential. 

2. Key Year of Transformation for Traditional Retailers, Membership Stores Vie for Dominance

In 2023, the sales for hypermarkets saw an accelerated decline, with a decrease of 1.8 percentage points in the overall market share. Although large supermarkets are on a downward trajectory, their overall performance surpasses that of hypermarkets.

In 2024, large-format retailers will continue to confront significant challenges. Only through transformations, such as product differentiation, supply chain optimization, establishment of distinctive stores, and refined operations, can they survive the intense competition across all channels.

It is noteworthy that the transformation of some traditional brands began to yield results in 2023. Bravo, a premium brand under Yonghui, saw an increase in its market share in modern channels, with penetration remaining stable compared to 2022. While Yonghui is opening new stores against the odds, it continues to advance store optimization and iterative adjustments, enhancing the fine-grained transformation of the "customer flow, product portfolio, and store layout”, and reinforcing the capability for refined operations with a 'store-specific strategy'.

Over 10% of Chinese households purchased fast-moving consumer goods from membership stores in 2023, with sales growth exceeding 40% compared to 2022. As major membership store giants accelerate their expansion in 2024, competition will further intensify, leading to direct confrontations in key cities.

In the short term, foreign retail giants will maintain their advantage. Sam's Club and Metro continue to dominate market share and sustain rapid growth. Domestic brands such as Hema X, RT-Mart M Membership Stores and Fudi still lag behind foreign counterparts in terms of store numbers and expansion speed.

However, with consumer segmentation and the pursuit of value-for-money becoming a consensus, domestic membership stores are introducing products better suited to the daily needs of Chinese consumers, with smaller package sizes and more aggressive pricing strategies.

In the long term, membership stores can only achieve sustainable development through long-term investments in product selection, supply chain and product development. They are more likely achieve long-term sustainability by focusing on core customer groups, providing better experiences to attract customers to stores and achieving differentiated competition.

3. E-commerce Shifts to 'Low Price' Competition: Douyin May Surpass Pinduoduo in Penetration

In 2023, with the return to normal life for consumers, a proportion of them reverted to in-person shopping, leading to a nearly 3 percentage point decrease in the penetration of e-commerce. Accompanied by the normalization of promotions, consumers showed a significant increase in purchase frequency on e-commerce platforms, with overall sales still growing by 5.3% for the year.2023FY online.PNG

In recent years, mobile internet traffic has peaked, and the dividends have gradually saturated. The homogenization of competition has prompted major platforms to intensify their efforts in price competitiveness. As consumers become increasingly rational, simple and direct low-price marketing alone cannot stimulate additional growth. Consumers are accustomed to comparing prices across different platforms, and their loyalty to a single platform is decreasing.

Data from the Kantar Worldpanel shows that the penetration of e-commerce platforms such as Taotian,, and Pinduoduo declined compared to 2022. To establish long-term price advantages in consumers' minds, platforms must improve supply chain efficiency, reduce fulfillment costs, and expand the ecosystem of non-self-run goods with higher cost-effectiveness.

The strong rise of interest-based e-commerce and the 'lowest price in live broadcasts' have caused significant disruptions to traditional shelf-based e-commerce. Douyin attracted over 40% of Chinese urban households to purchase fast-moving consumer goods in 2023, ranking third among e-commerce platforms.

With the dual-drive of 'content' and 'shelf,' as well as the entry of major brands, Douyin's penetration is expected to surpass Pinduoduo in 2024 and further narrow the gap with Taotian.

For brands to continue to benefit from platforms like Douyin, they must adhere to high-quality content output, achieve synergy between 'content scenes' and 'shelf scenes,' cultivate loyal user groups, expand repurchases through high-quality product services and supply chain efficiency, and thus form a closed-loop of long-term growth.

4. CGB Landscape Consolidates, Retailers Ramp Up Self-Operated Business

Experiencing three years of rapid growth amid the pandemic, O2O slowed its growth pace in 2023. Community group buy underwent multiple rounds of reshuffling, with established giants gradually withdrawing and consolidating their operations. The more sizable platforms now include Meituan Youxuan, Duoduo MaiCai, and Taobao MaiCai, all backed by giant corporations.

Meituan Youxuan and Duoduo MaiCai saw continued growth in sales over the past year, with penetration nearing 25%. It is expected that in 2024, these two platforms will continue to lead the community group buy sector and dominate the market.

Recently, Meituan MaiCai, focusing on fresh produce, rebranded as "XiaoXiang Supermarket," indicating a shift from a focus solely on fresh produce to a comprehensive platform, gradually moving away from subsidy battles and strengthening its proprietary brands and diversified product selection.

Benefiting from higher frequency and average spend per trip, retailers’self-run apps/mini programs have become an important second growth curve for physical retailers, with their share of total revenue continuously expanding.

For instance, Watsons experienced notable growth in its self-operated app/mini program over the past year, despite an overall decline in its performance. The revenue of RT-Mart's self-run app "RT-Mart Youxian" increased by approximately 40% compared to the same period last fiscal year.

Facing continued sluggish foot traffic in stores, it is anticipated that major retailers will invest more in digitalization, especially in self-run delivery services in 2024. They will actively utilize external ecosystems and local life services to drive traffic to offline stores, conduct member-centric refined operations, and thus drive overall business growth.

5. The Expansion of Discount Formats Accelerates Whilst Crisis Looms

In 2023, the discount store format across all categories surged, as seen in the data from the Kantar Worldpanel, indicating sustained sales growth for Hotmaxx and Hema Outlet. Established less than four years ago, Hotmaxx has surpassed 600 stores, while Hema Outlet opened its inaugural store in 2022 and presently operates over 70 stores.

Hunan-based discount brand Le Er Le, an early entrant in the discount store race, recently announced its foray into the national retail market, setting an annual target of surpassing a revenue of 100 billion and opening over 10,000 stores.

Discount store formats improve operational efficiency by engaging in large-scale production and sales of their own-brand products, and by minimizing intermediary steps. This strategy appeals to cost-conscious shoppers, intensifying competition between them and full-service supermarkets in 2024.

As a "category killer" specializing in snack discounts, snack discount stores became popular nationwide in 2023. In the fourth quarter of 2023, over 7.6% of Chinese urban households purchased from snack discount stores.

At the city level, snack discount stores have the highest and most improved penetration in prefecture-level cities, with rapid growth in the East and South regions and significant room for development in the North.

The merged Busy For You Group announced a focus on the Northern region in the future, entering direct competition with the Wan Chen Group, which focuses on the Northern market. Currently, snack discount stores are still in the early stages of development, driven by capital, they leverage scale advantages to form a "low price" mentality and achieve high turnover and efficiency per square meter, leading to a channel revolution in the snack industry.

However, whether full-category discount stores or snack discount stores, compared to European and American markets, they have not yet become mainstream retail formats and they need to avoid the painful lessons of the tumultuous battles of previous years. The closure of Biyide at the end of 2023 signifies that simple "discounting" itself is by no means the winning strategy in the market.

As traditional retailers increasingly join the discount competition, the competition within discount stores in 2024 will not only center on superficial price rivalry but will primarily concentrate on the competition related to building and operating 'vertical supply chains'.

The ongoing rise in industry concentration and the solidification of scale advantages will also compel leading brands to draw in more consumers through enhanced product quality and value recognition, ensuring consistent profitability and fostering the sustainable growth of the entire retail ecosystem.


Get in touch

Jason Yu
Managing Director, Greater China, Worldpanel Division


Print this page