Kantar Worldpanel - www.kantarworldpanel.com

China FMCG market enjoy stronger growth in Q3

19/10/2017

Kantar Worldpanel, the global market leader in consumer panels, reports the spending in fast moving consumer goods (FMCG) in the third quarter of 2017 grew by 3.6% on 12 weeks basis, indicating a clear recovery for the industry.

Across all regions, the West and South markets reported a more upbeat trend, up by 6.0% and 4.2% respectively. Key cities and provincial capitals grew slightly faster, up 3.7%. Offline channel grew by 2.2%, which is slower than the total trade. However, modern trade (including hypermarkets, supermarkets, and convenience stores) did report higher growth at 2.9%, suggesting consumers are returning to brick and mortar stores as they create better shopping experiences through technology.

Offline world saw sales rebound

Amongst international retailers2, Walmart and Carrefour started to see share recovery on a quarterly basis. Although they are still closing non-performing stores, they are proactively reformatting their existing stores to be more competitive and appealing to shoppers. They are introducing new stores which are 30% to 50% smaller than the old ones to make their merchandises more accessible while reducing the sales area for non-food. In June, Carrefour opened its first Easy Carrefour store in Wuxi and this is the first time the retailer introduced the smaller format store outside its home base in Shanghai. More recently it launched its own digital wallet ‘Carrefour Pay’ together with Union Pay to facilitate more mobile payments in store.

Local retailers continued to outgrow their global counterparts during quarter 3 of this year. The Sun Art group saw its share increase by 0.4pt over the last quarter driven by successfully growing the size of shopper’s baskets. Yonghui and BuBuGao kept growing by opening more new stores. Within the first half of 2017, Yonghui opened 64 stores and BuBuGao opened 22 stores. It largely helps to strengthen their position, and both of them gained 0.2pt share during quarter 3 of this year.

Apart from that, in order to seek growth in the new retail era, most of the top 10 retailers adopted a more aggressive OAO (Offline and Online) strategy, by providing an integrated shopping experience with multi-channel offers. For example, Yonghui works with JD platform to deliver its fresh produce and essential grocery items to consumers within 1 hour. They also introduced their own APP Yonghui Life in selected cities to expose to consumers directly.

More Ecommerce players moving offline

Kantar Worldpanel reported a robust 24.3% growth in FMCG spend through Ecommerce channel in the latest quarter. Now e-commerce accounts for 7.4% of FMCG spend in the latest 52 weeks ending 8th September 2017, which is 1.7 points higher than the same period last year.

As online shopping becomes part of consumers’ routine, nearly 60% of China urban families purchased FMCG online in the past 12 months. Even in lower tier cities (county level cities and counties), over 50% Chinese families shopped online.

The battlefield of Chinese ecommerce giants has shifted offline. Aside from more frequent promotions and driving sales through more themed ‘Brand Day’ activities, both Alibaba and JD are advancing rapidly into offline. On top of its investment in Yiguo, the leader in fresh foods ecommerce, Alibaba recently invested another RMB 5.3 billion in Cainiao Logistic network and announced its plan to transform millions of mom-and-pop stores into a vast network of Tmall offline stores a via a data-backed retailer management system, with the aim to enhancing traditional grocery’s capabilities in merchandising, delivery and inventory management. The move will allow China’s ecommerce giants not only expand its online footprint, but also reach more shoppers who are not digitally literate in lower tier cities and rural China.

China FMCG market enjoy stronger growth in Q3

China FMCG market enjoy stronger growth in Q3

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Jason Yu
General Manager in Great China

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