Chinese retailers increase FMCG share

Warc, 18 July 2014

SHANGHAI: International retailers have seen a modest yearly fall in their share of the Chinese FMCG market as domestic retailers have made impressive gains, a new report from Kantar Worldpanel has revealed.

It said overall FMCG growth slowed to 5.6% in the year ending June 13 2014 compared to the same period last year while FMCG sales in Q2 2014 remained relatively stable at 4.7% versus the 4.6% growth recorded in the first quarter.

However, this was a significant decrease from the 15% growth recorded in Q2 2011 and Kantar attributed the slowdown to fewer consumers trading up to more premium products across many categories.

International retailers took 20.4% market share in terms of sales values in Q2 2014, a year-on-year fall of 1.4%, although the picture differed across the regions.

They achieved nearly a quarter (24.5%) of the market share in the eastern region, but secured only 15.2% in the north where Yonghui alone reached 2.4% share in the second quarter. The domestic chain also performed well in the south.

Also expanding rapidly in the south was fellow domestic retailer Bubugao, which overtook French retailer Carrefour to become one of the top five vendors with 4% regional market share.

On a national basis, Carrefour's market share fell to 4.7% (versus 5.1% in Q2 2013) while Auchan, also from France, declined slightly to 1.6% (1.7% in Q2 2013).

Meanwhile, UK chain Tesco fell to 1.7% (2%) – although its joint venture with China's Vanguard took 8.5% (9.2%) – Walmart fell to 6.6% (7.1%) while Netherlands-based Spar held steady with 1.7% share.

Sun Art Retail Group, the Chinese hypermarket chain, secured the largest share with 9.1% (up from 8.7%) while RT-Mart increased its share to 7.5% in Q2 2014.

Separately, Kantar reported that e-commerce is continuing to change the country's retail landscape.

It said e-commerce channel penetration for FMCG sales reached 32% in the year to June 13 2014, up 44% since 2012, driven particularly by categories such as beer, foreign spirits and non-UHT milk.

"The future belongs to retailers and brands that see the bigger picture and leverage the opportunities of e-commerce and offline by developing a bespoke multi-channel strategy," the report said.

Data sourced from Kantar Worldpanel; additional content by Warc