China’s FMCG market has stabilised on the back of strong online demand.
The sector posted value growth of 5.6 per cent for the year to June 13, reports researcher Kantar Worldpanel with lower tier cities the key driver for total growth.
International retailers continued to lose share to local retailers. At national level, international retailers occupy a share of 20.4 per cent in terms of sales values in the second quarter, and are seeing a 1.4 point share decrease when compared with the same period last year.
Local retailers in the north are seeing stronger growth over the last quarter in terms of market share, reaching 84.8 per cent with 2.6 points gained compared with same period last year. Among top local players in the north, Yonghui saw an impressive share gain reaching 2.4 per cent in share with 0.5 points more than the same quarter last year.
Yonghui also saw noticeable share gain in the south regions. Constant penetration expansion across all regions has been the key driver for Yonghui’s success as they open more and more new stores: 46 new stores were opened in 2013, and it is expected to open 60 more stores in 2014 to further expand its footprint.
Local retailer Bubugao has also been aggressively pursuing a regional expansion strategy. In the south, Bubugao has managed to surpass Carrefour to become one of the top five players with four per cent market share in latest quarter. Bubugao is now the fourth largest local retailer in the south region, and is expected to grow further following recent acquisition in Guangxi province.
Kantar also revealed e-commerce continues to change the retail landscape as more and more families turn to the web to buy their FMCG products. The e-commerce channel penetration has now reached 32 per cent in latest 52 weeks, it added.
The impact from e-commerce to the retail landscape and household FMCG purchase behaviour will continue, and 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, Kantar concluded.
