CHINA RETAIL MARKET: KEY FACTS, FIGURES AND PLAYERS

This week let’s analyze some key figure on Chinese retail overall business, a sector that increased an average of 10% a year in 2017 and 2018, overcoming 6 trillion USD total revenue. Astronomic!

The total import of consumer oriented products had an even higher increase in percentage terms achieving 45 billion USD (up approx. 20% VS 2017). Here below to the split for country of origin:

Italian export volume is accounted in “others” block, but how was the export of Italian pasta and EVO ( two of the most iconic and recognizable made in Italy products ) performing in the last few year? these are the official figures 2012 – 2018:

Pasta basically have tripled the volume since 2012 , consistently growing YoY except in 2018 while EVO had a clear roller-coaster path due to the volatility cost of the raw material. This is a very clear indication of how price-oriented China market is, especially for this kind of “niche” categories.

In terms of modern-trade the situation is very peculiar, with few important trends to be well evaluated, such as :

– Rise of second-tier cities (on top of the list Chengdu, Nanjing, Suzhou, Qingdao and Xiamen);

– Digitalization still heavily expending, in particular for food sector: in 2018 the number of online food orders through Alipay/Wechat/Applepay basically doubled reaching an impressive 11 billion transactions;

– Convenience-stores are the top performers among brick-and-mortar retailers and they are consistently improving the food offer;

– Big traditional hypermarkets are losing market shares and a relevant number of POS closed during 2018;

But who are the main national modern-trade players? Here a brief description of the top 10 :

1. China Resources Vanguard (www.crvanguard.com.cn): China Resources Vanguard with over 3,100 POS. Vanguard, Suguo, Vivo, Ole’, Legou Express, Vango, BLT, Voi_la!, Lenonardo, Huanleshong, Zhongyi, Huarun Tang are all VANGUARD banners. The most premium supermarkets in their portfolio are Ole’ & BLT, roughly 80 POS through the country.

2. RT-Mart (www.rt-mart.com.cn): Retail chain originally from Taiwan with more than 400 stores; in 2011 they joined the French group Auchan. The penetration strategy of RTmart was particularly brilliant as almost 70% of their stores are located in second-third tier cities.

3. Wal-Mart China (www.wal-mart.com.cn): By far the largest international retailers, Walmart it’s price and neighborhood community oriented. High-end consumers are targeted in SAM’s CLUB (www.samsclub.cn).

4. Yonghui (www.yonghui.com.cn): big players with more than 1200 stores and pioneer in OtO. In 2015 the leading online platform JD bought 10% of YH shares. The high-end banner is BRAVO , 50 stores currently operating in the country.

5. Lianhua: this chain recently faced hard time due to poor management leading to big sales drop in 2017 can now counts on 3370 store in multiple formats mainly located in eastern region.

6. Carrefour (www.carrefour.cn): second biggest international player counting more than 300 stores and a high-end format called Le Marche.

7. Wu-Mart: counts approx 700 stores, mainly in North China targeting middle to lower- end consumers.

8. Bubugao (Better life, http://www.bbg.com.cn): 550 stores mostly in second and third tier cities, some of them in high-income areas targeting high-end consumers with imported products.

9. Metro: (www.metro.com.cn) : hybrid concept BtB & BtC with approx 100 stores, half of them in the East. Metro developed good own-brand lines and recently launched its online mall at http://www.metro.com.cn/onlinemall .

10. Hema: (www.freshhema.com) Brick-and-mortar spin-off from Alibaba focusing on fresh products and fully automatized supermarkets. Nowadays can count on more than 150 stores.

 The top sales categories are common through all the supermarkets and include :

– Fresh Fruits: import of fruits from all over the world in 2018 overcame the impressive figure of 64 million tons ( top suppliers Vietnam, Philippines and Thailand ) .

– Pork : China population consumes 28 million tons of pork a year with and imported pork accounts less than 10% ( top suppliers Germany , Spain and USA) . Interesting to see the real impact of the recent swine fever outbreak. Beef and poultry are also heavily rising in pro-capita consumptions achieving respectively 4,8 and 1,1 billion USD import value in 2018.

– Diary : the consumption of diary is relatively flat however only 18% is accounted in imported products.

Italian products have a good potential as depicted in previous statistics, however it’s good to be aware that our categories are not the top-demanded ones and only few Italian brands have access to all the channels including food-service, traditional retail and e-commerce.

Stay tuned as soon we will specifically talk about e-commerce, subscribe the newsletter and keep eating only the TOP !

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