Sun-Art experiences further penetration loss

Kantar Worldpanel’s latest figures for the 12 weeks ending 7th October 2016 in China.

Kantar Worldpanel’s latest figures for the 12 weeks ending 7th October 2016 in China shows consumer spending on FMCG grew by 2.5% when compared with the same period last year. Interestingly, while modern trade grew by 1.1%, eCommerce experienced a staggering growth of 60.2%.

Within the top five retailer groups, only Yonghui has grown ahead of total modern trade at 32%. By contrast, growth within the Sun-Art’s group is on par with total modern trade at 1.1%. Moreover, the business’ penetration has continued to decline since September 2016.

Both WSL and Bubugao grew rapidly in the South of the country (WSL’s share in the South increased from 5.4% to 6.2% while Bubugao saw an increase from 2.7% to 3.2%). As a result of successful multi-format strategies, both have benefited from greater store visits, while WSL has also benefited from an increase in penetration.

Looking at O2O, Bubugao’s investment in this space has resulted in a stronger O2O ecosystem covering ecommerce, online payment, logistics and a membership platform. Regional retailers have also been challenging the national players, as more and more adopt a multi-format strategy, embrace O2O practices and improve scale through acquisitions.

E-commerce retailers continue to recruit new shoppers through rounds of promotions under the name of created festivals and activities. The most well-known – Double 11 (or Singles’ Day) – is expected to once again set a new record for penetration compared with previous years. Kantar Worldpanel data shows that during the four weeks of 2013’s Double 11 activity, only 7.7% of China’s urban households purchased FMCG products online. However, during the same period in 2015, 16% of Chinese urban households participated. If we extrapolate this trend to 2016, we would expect to see a penetration of 20% achieved – an increase in participation of 32 million households.