Supermarkets and Hypermarkets - China - July 2012

INTRODUCTION
Definition
Provinces of China
EXECUTIVE SUMMARY
The market
Figure 1: Supermarkets and hypermarkets’ number of outlets, retail sales, floor space and staff numbers, by sector, 2007-11
Figure 2: Supermarkets and hypermarkets’ average outlet retail sales, floor space and staff numbers, by sector, 2007-11
Figure 3: Supermarkets and hypermarkets’ retail market significance, 2007-11
The forecast
Figure 4: Supermarkets and hypermarkets forecast total value of retail sales, 2007-17
The companies
Figure 5: Top 20 leading chains’ supermarket and hypermarket-only annual revenues, 2008-11
Figure 6: Top 20 leading chains’ supermarket and hypermarket-only outlets, 2008-11
Figure 7: Top 20 leading chains’ supermarket and hypermarket-only average annual revenues per store, 2008-11
Issues in the market
Trolley dash: the race to reach Chinese consumers
Figure 8: Provincial supermarket outlet density map for the top 20 chains, 2011
Top shop: why certain chains have grown faster than others
Figure 9: Leading Supermarket/Hypermarket Chain Operators Ranked by Outlet Growth, 2008-11
Trading up: regional income growth drives strong variation in consumer shopping habits
Figure 10: Survey cities ranked, by average urban wage growth, 2008-10
Format adaptation: from fresh markets to hypermarkets
Figure 11: Food products bought at grocery shopping in the past six months, April 2012
Big-box label: branding and positioning grow in importance
Figure 12: Middle class attitudes towards shopping, April 2012
Project creep: non-retail services growing in value
Groceries to your door: online supermarkets & home delivery
Figure 13: Respondents grocery shopping at least once a week at online stores in the last 12 months, by city, April 2012
TROLLEY DASH: THE RACE TO REACH CHINESE CONSUMERS
Key issues
China’s supermarket industry grew from nothing within a generation
Figure 14: Total supermarket/hypermarket outlets, floor space, staff and retail sales, 2007-11
Figure 15: China GDP and total retail sales growth, 2007-11
The five key macro factors affecting modern grocery sector growth
1. Urbanisation
2. Personal income tax reform
3. Increased subsidies
4. Rising incomes
5. Social security system enhancement
Figure 16: Financial impact of children's education, by demographics, April 2012
Figure 17: Urban average household income, expenditure, savings & potential expendable income after basic outgoings, 2006-10
Supermarket chains increasingly moving into lower-density provinces
Wide variance in supermarket/hypermarket penetration by region
Figure 18: Supermarket outlet/population density for the top 20 chains, by province, 2011
Supermarket/hypermarket density spreading from East to West China
Figure 19: Provincial supermarket outlet density map for the top 20 chains, 2011
Population density in low store density provinces helps indicate market opportunity
Figure 20: Provincial population density map, 2011
Population density alone is not enough, there needs to be growing wealth
Figure 21: Provincial average annual urban wage map, 2011
Figure 22: Percentage average urban wage growth, by province, 2007-11
Which cities in the next stage growth provinces are most ripe for development?
Figure 23: Hebei, Shanxi, Liaoning and Jiangxi cities ranked by average urban income size and growth, 2006 and 2010
Urban average incomes still rising faster than rural average incomes
Tackling the perennial problems of logistics in China
Figure 24: Daily grocery shopping, by outlet type, April 2012
Figure 25: Most important factor when deciding which supermarket/hypermarket to shop at, April 2012
Supermarket retailing moving into smaller towns and cities
Figure 26: Growth of rural organised retail chain store market, 2006-10
Figure 27: Percentage annual growth of urban and rural retail sales, 2007-11
What does it mean?
COMPETITIVE ENVIRONMENT: INTERNATIONAL, LOCAL AND DOMESTIC CHAINS
Key issues
Greater geographical spread is leading to accelerated outlet expansion
Figure 28: Leading supermarket/hypermarket chain operators ranked, by outlet growth, 2008-11
Carrefour, Wal-Mart and Tesco and the race to cover China
Figure 29: Top three Western supermarket and hypermarket operators outlets, by province, 2011
Figure 30: Top three Western supermarket and hypermarket operators’ China outlets map, 2011
Lianhua, RT-Mart and China Resources defending their “home” market
Figure 31: Top three “domestic” supermarket and hypermarket operators outlets, by province, 2011
Figure 32: Top three “domestic” supermarket and hypermarket operators’ China outlets map, 2011
NCS: the rising rural giant moving into the cities
Figure 33: Cooperation Joint-stock Chain Co., Ltd.: store numbers and retail sales, 2005-15
How strong are the leading brands in each region?
Figure 34: Leading four foreign supermarket and hypermarket chain shopping occasion response (over the past 12 months), by city, April 2012
Beijing versus Shanghai
Figure 35: Beijing and Shanghai average urban incomes, populations and per capita GDP compared, 2010
Figure 36: Retail chains shopped at in the past 12 months in Shanghai, April 2012
Figure 37: Retail chains shopped at in the past 12 months in Beijing, April 2012
The Pearl River Delta
Figure 38: Retail chains shopped at in the past 12 months in Guangzhou, April 2012
Figure 39: Retail chains shopped at in the past 12 months in Shenzhen, April 2012
Figure 40: Retail chains shopped at in the past 12 months in Dongguan, April 2012
The Sichuan Basin
Figure 41: Retail chains shopped at in the past 12 months in Chengdu, April 2012
Figure 42: Retail chains shopped at in the past 12 months in Chongqing, April 2012
The Wealthy East
Figure 43: Retail chains shopped at in the past 12 months in Suzhou, April 2012
Figure 44: Retail chains shopped at in the past 12 months in Qingdao, April 2012
Harbin and the Northeast
Figure 45: Retail chains shopped at in the past 12 months in Harbin, April 2012
Where are the big chains heading next?
What does it mean?
TRADING UP: REGIONAL INCOME GROWTH DRIVES STRONG VARIATION IN CONSUMER SHOPPING HABITS
Key issues
Income growth by region shows significant variance
Figure 46: Survey cities ranked, by average urban wage growth, 2008 and 2010
Weekly shop focused on supermarkets
Figure 47: Main weekly grocery shop outlet used, by city, March 2012
Figure 48: Main weekly grocery shop used, by demographics, March 2012
Figure 49: Important factors ranked first when deciding which supermarket/ hypermarket to shop at (Core Retail), by income group, April 2012
Figure 50: Frequency of grocery shopping, by outlet type, by income group, April 2012
Figure 51: Frequency of grocery shopping, by outlet type, by region, April 2012
Figure 52: Frequency of grocery shopping at wet markets, by income group and region, April 2012
Foreign and domestic stores offer different experiences
Figure 53: Ranking of service attributes of foreign and domestic retailers, April 2012
Household income affects choice of retailer in each region
Shanghai
Figure 54: Shanghai retail chains shopped at occasionally in the past 12 months (domestic stores), by household income bracket, April 2012
Figure 55: Shanghai retail chains shopped at occasionally in the past 12 months (foreign stores), by household income bracket, April 2012
Beijing
Figure 56: Beijing retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Guangzhou
Figure 57: Guangzhou retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Shenzhen
Figure 58: Shenzhen retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Dongguan
Figure 59: Dongguan retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Chengdu
Figure 60: Chengdu retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Chongqing
Figure 61: Chongqing retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Suzhou
Figure 62: Suzhou retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Qingdao
Figure 63: Qingdao retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
Harbin
Figure 64: Harbin retail chains shopped at occasionally in the past 12 months, by household income bracket, April 2012
What does it mean?
FORMAT ADAPTATION: FROM WET MARKETS TO HYPERMARKETS
Key issues
Shifting populations changed retail market
Figure 65: New car and motorcycle registrations in China (000s), 2007-11
Retailers increasingly adapt outlets to suit locations
Figure 66: Average store sales, size and staff number, by outlet type (for chain stores above the government statistical threshold), 2007-11
Case study: Tesco
Car-owning middle class create new needs
Figure 67: The growth of China’s middle class, 2006-10
Figure 68: The forecast growth of China’s middle class, 2011-15
Figure 69: Car purchase over previous three months and plans to buy cars in next three months among middle class consumers, by demographics, April 2012
Case study: Auchan Drive-through
How is the modern grocery sector competing with the traditional wet markets?
Figure 70: Food products bought at grocery shopping in the past six months, April 2012
Figure 71: Frequency of grocery shopping, by outlet type, April 2012
Figure 72: Outlets used for main weekly shop and top-up shopping, March 2012
Case study: Yonghui 永辉 and the “supermarketisation” of wet markets
How does product mix affect format performance?
Figure 73: Comparing purchasing of grocery items with 12 months ago, March 2012
Figure 74: Non-food products bought at grocery shopping in the past six months, April 2012
Can warehouse clubs work in China?
Do hard discounters attract budget consumers?
Figure 75: Carrefour store network in China, 2007-11
How are supermarkets and hypermarkets competing with other formats?
Boutique and high-end supermarkets
High-end supermarkets are filtering into the system
What does it mean?
BIG-BOX LABEL: BRANDING AND POSITIONING GROW IN IMPORTANCE
Key issues
Foreign and domestic supermarkets have different strengths
Figure 76: Ranking of service attributes of foreign and domestic retailers, April 2012
Figure 77: Middle class attitudes towards shopping, April 2012
Figure 78: Reasons for grocery shopping visits, by time of week, April 2012
Retailers begin to rebrand and refocus
How important is ambience to a store brand?
Figure 79: Important factors when deciding which supermarket/ hypermarket to shop at, April 2012
Foreign vs domestic supermarkets – brand image
Figure 80: Ranking of service attributes of foreign and domestic retailers, April 2012
How important is private label?
Figure 81: Selected supermarket and hypermarket retailer private-label entry, 1995-2006
Figure 82: Consumer attitudes towards private label in supermarkets/ hypermarkets, April 2012
What does it mean?
PROJECT CREEP: NON-RETAIL SERVICES GROWING IN VALUE
Key issues
Non-core retail services can help to positively differentiate retail chains
Figure 83: Ranking of service attributes of foreign and domestic retailers, April 2012
Figure 84: Factors ranked first when deciding which supermarket/ hypermarket to shop at (extra services), by gender and age group, April 2012
Figure 85: Factors ranked first when deciding which supermarket/ hypermarket to shop at (extra services), by income bracket, April 2012
Figure 86: Factors ranked first when deciding which supermarket/hypermarket to shop at (extra services), by region, April 2012
Satellite services and retailers can help attract greater consumer footfall
Figure 87: Middle class leisure activities, April 2012
Other services that have the potential to draw consumer footfall
E-checkouts and e-trolleys, are they the future in China?
Which companies are building brand through loyalty cards?
What does it mean?
GROCERIES TO YOUR DOOR: ONLINE SUPERMARKETS & HOME DELIVERY
Key issues
Online grocery retailing is growing fast
Figure 88: Total e-commerce and online food sales in China, 2004-11
Online supermarkets focus heavily on non-food SKUs
Figure 89: Stock keeping units (SKUs) of leading online supermarkets, 2011
Many chains still holding back on online development
Online payments are a matter of consumer trust
Figure 90: Number of credit and debit cards in circulation and value of transactions, 2007-11
Increased technology penetration raises the need for online retail effort
Figure 91: Middle class Chinese household computer ownership, April 2012
Figure 92: Smartphone and mobile phone ownership, by demographics, April 2012
Online supermarket retail penetration differentiated by region and demographic segment
Figure 93: Frequency of grocery shopping online in the last 12 months, by household income bracket, April 2012
Figure 94: Frequency of grocery shopping at online stores in the last 12 months, by city, April 2012
Figure 95: Online shopping, by types of product bought in the last 12 months, April 2012
Figure 96: Online food and beverages shopping in the last 12 months, by demographics, April 2012
What does it mean?
THE FUTURE OF THE MARKET
Figure 97: Supermarkets and hypermarkets forecast total value of retail sales, 2007-17