Over the last five years, China’s supermarket industry has been growing at an annualised rate of 15.4 per cent reaching $131 billion, says a report.

The main drivers of growth have been the government’s program to establish a national rural retail network and strong rises in consumer purchasing power.

Since February 2005, the central government has been rolling out a rural retail network to cover 70 per cent of all villages. Distribution infrastructure improvements, as well as support from local governments allowed supermarket operators to expand into these rural areas.

Ibisworld says China’s supermarket industry is very fragmented. The top four players – China Resources Enterprise, Walmart, Carrefour, and RT-MART China – account for 35.9 per cent of total industry revenue in 2012, a much lower share than in developed countries like Australia and the US.

The industry is very young and relatively undeveloped in China – the first modern supermarket opened in 1990. The majority of enterprises are small-scale with low management and investment levels. New stores and formats are constantly emerging and consumers have many choices.

As the government considers the retail sector a strategic industry in China’s economy, and in anticipation of a large foreign capital flow into China, many domestic operators have started to accelerate expansion, says Ibisworld.

GB