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FMCG posts strong growth in Q2

Jason Yu

Greater China General Manager

Retail 25.07.2017 / 05:50

Shopping carts 2 col

Spending in FMCG in Q2 grow by 3.2% on yearly basis, noticeably stronger than previous quarters. Key cities and provincial capitals grow slightly faster, up 3.4%, with e-commerce remaining a key engine.

Kantar Worldpanel reports the spending in fast moving consumer goods (FMCG) in the second quarter of 2017 grew by 3.2% on yearly basis, noticeably stronger than previous quarters.

Modern trade (including hypermarkets, supermarkets, and convenience stores) grew by 3.5% in the second quarter of the year, as more retailers strived to transform their business models to meet shopper needs. Key cities and provincial capitals grew slightly faster, up 3.4%, with e-commerce remaining a key engine behind the expansion. Across all regions, West (+5.8%) and North (+3.4%) market reported more upbeat trend.

Regional players catching up

Among top 10 retailers, most of them grew or maintained share in Q2 compared to previous year, as they are either opening more stores to expand their footprints or pursue multichannel strategies to meet consumers’ different demands.

Leading Grocery Share of Modern Trade (%) - National Urban China

 

52 w/e 2016/06/17

52 w/e 2017/06/16

16Q2

17Q2

SUN ART GROUP

8.1

8.2

8.1

8.2

  AUCHAN

1.3

1.4

1.4

1.4

  RT-MART

6.8

6.8

6.7

6.8

VANGUARD GROUP

6.5

6.4

6.3

6.3

  TESCO

1.0

0.8

1.0

0.8

WAL-MART GROUP

5.1

5.1

5.1

5.1

CARREFOUR

3.4

3.3

3.2

3.3

YONGHUI GROUP

2.6

3.1

3.0

3.1

BAILIAN GROUP

2.8

2.8

2.8

2.8

WU-MART GROUP

1.7

1.9

1.7

2.0

WSL GROUP

1.6

1.8

1.7

1.7

SPAR GROUP

1.3

1.4

1.3

1.4

BUBUGAO GROUP (Incl. NANCHENG)

1.0

1.1

0.9

1.1

Amongst international retailers, Carrefour started to regain share on quarterly basis. The retailer has been expanding steadily into the small-format neighbourhood store place by launching Easy Carrefour, now already 29 in Shanghai and one in Wuxi. The new store format, with its bright orange colour, aims to appeal younger shoppers who want convenience and right mix of merchandise at the same time.

Local retailers continue to outpace their global counterparts in Q2. It is worth noticing that Wu-mart share also grew from 1.7% to 2.0% between Q2 2016 and Q2 2017. Wu-mart is one of the local retailers adopting a more aggressive OAO strategy (Offline and Online) by utilizing its Dmall platform to create a seamless mobile and offline shopping experiences.  Now consumers can pay their purchases in Wu-mart stores with Dmall APP or receive the deliveries within 2 hours after ordering on their phones. While strictly focusing on Beijing and Hangzhou markets, Wu-mart went from strength to strength and delivered fastest growth through its unique footpath. Another local retailer Bubugao also saw its share grow from 0.9% to 1.1% through its regional M&A acquisitions and organic store expansions in the Southwest region.

E-commerce now accounts for 6.9% of FMCG spend

Kantar Worldpanel reported a robust 28.2% growth in FMCG spend through e-commerce channel in 1st half of 2017. Now e-commerce accounts for 6.9% of FMCG spend over the first 6 months of 2017, 1.4 percentage points higher than the same period of last year.



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Given more aggressive sales promotions by major players across the year, e-commerce channel continued to gain tractions with the Chinese shoppers. In the latest 24 weeks ending June 17, 2017, more than a half of consumers in key cities and provincial capitals purchased online. Even in lower tier cities (county-level cities and counties), 40% families there had shopped online.

‘New Retail’ has been the buzzword for ecommerce players in H1 2017, with JD planning to work with 1 million grocery stores to shake up the traditional retail infrastructure and Alibaba’s involvement in Bailian and Intime to create integrated online and offline shopping experiences through sophisticated payment and logistic/data system. New retail formats like Hema and Yonghui Super Species also want to woo middle-class shoppers who want to integrate premium shopping and dining experiences. 

Source: Kantar Worldpanel

Editor's notes

* Key cities: Beijing, Shanghai, Guangzhou, Chengdu; Tier 2 cities: Provincial capitals; Tier 3, 4 cities: prefecture-level and county-level cities as well as counties. International retailers refer to retailers originated outside China’s Mainland, Taiwan, Macau, and Hong Kong.

EAST: Shanghai, Jiangsu, Zhejiang , Anhui, Henan

SOUTH: Guangdong, Fujian, Hubei, Hunan, Jiangxi

WEST: Chongqing, Shaanxi, Sichuan, Guangxi, Guizhou, Yunnan

NORTH: Heilongjiang, Jilin, Liaoning , Beijing, Tianjin, Hebei, Shandong, Shanxi

* To reach the author, or to know more information, data and analysis of China's FMCG market, please contact us.

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