Grocery Retailing - China - November 2018

OVERVIEW
What you need to know
Covered in this report
Sub-group definitions
EXECUTIVE SUMMARY
The market
Figure 1: Best – and worst-case forecast of total grocery retail (online and offline), China, 2013-23
Companies and brands
Figure 2: Top 10 comprehensive offline retailing groups sales value, China, 2018
The consumer
Family status is one of the most influential factors on the grocery shopper profile
Figure 3: Repertoire analysis of grocery shoppers – by family status, August 2018
Consumers show preference to buy different products from different grocery channels
Figure 4: Grocery shopping channel, August 2018
Consumers choose retailers for different reasons however mainly driven by product selection, convenience and price
Figure 5: Reasons for choosing different channels, August 2018
More people shop without a shopping list
Figure 6: Grocery shopping behaviour, by generation, August 2018
Online shopping experience becomes as important as product quality
Figure 7: Top factors preventing consumers from buying online, August 2018
What we think
ISSUES AND INSIGHTS
Different retailers targeting different consumption occasions
The facts
The implications
Driving consumers’ experience of shopping crucial for retailers
The facts
The implications
Figure 8: Waitrose launched healthy eating specialist in store
“Old style” has not entirely gone out of style for young consumers
The facts
The implications
Figure 9: Consumer shopping at Wanyou market
Figure 10: Pike Place promotion about its Christmas activities, 2018, US
THE MARKET – WHAT YOU NEED TO KNOW
Market growth slow down
Shift in consumer spending with BPC taking more share
Online grocery retail grows steadily and creates new challenges
Macro factors have significant impact on the market
MARKET SIZE, SEGMENTATION AND FORECAST
Grocery retail market will slowdown in growth
Figure 11: Best – and worst-case forecast of total grocery retail (online and offline), China, 2013-23
Figure 12: Grocery market share by category, China, 2018 est
Different grocery segments face different levels of slowdown in growth rate
Figure 13: Total grocery retail value sales and CAGR by sector, China, 2013-23
Figure 14: Share of grocery retail sales by category, China, 2013-23
16% grocery shopping takes place online
Figure 15: Online VS offline grocery value sales, China, 2013-18
Figure 16: Online grocery value sales share by segments, China, 2018 (est)
MARKET DRIVERS
Domestic economy to slow in future
Figure 17: Personal disposable income of Chinese consumers per personal, 2017-18 Q1-Q3, China
Changes in consumers’ lifestyles
Consumer sophistication
Complication of the retailers
KEY PLAYERS – WHAT YOU NEED TO KNOW
Competition remains intense for offline retailers
Online and offline retailers are merging into new era
Innovation on a physical level and beyond
COMPANY SALES OF KEY COMPETITORS
Annual sales of leading players
Figure 18: Top 10 comprehensive offline retailing groups sales value, China, 2018
COMPETITIVE STRATEGIES
Collaboration of online giants and traditional leaders to move towards new retailing era
Amplify online retailers unique feature as media platform
Small brick-and-mortar compete by being experience-driven
Loyalty programmes based on multiple consumption scenarios enhance consumers’ shopping experience
Pingduoduo’s growth shows how grocery retailing can leverage social media
WHO’S INNOVATING?
Ole experimenting new ways of automated shopping
Hema brings total transparency in product sourcing
Figure 19: Hema products with QR code to track product information, China, 2018
What’s new in global markets?
Seamless retailing for the grocery sector
Increasingly seeking of eco-friendly consumption
Individualizing the grocery shopping for different consumers
Figure 20: Butternut Curry from Tesco’s vegan range “Wicked Kitchen”. UK, 2018
Humanizing the shopping experience
THE CONSUMER – WHAT YOU NEED TO KNOW
Singles buy fewer types of groceries
Supermarkets lead, but are increasingly challenged by online retailers in non-fresh product sectors
Product selection, price and convenience are key factors driving purchase
Young consumers:  shop with a list and demand more in-store activities
Concerns over online shopping shift from product quality to service elements
GROCERY SHOPPER PROFILE - WHO ARE THE GROCERY SHOPPERS
Consumers with larger size of family household buy more types of groceries
Figure 21: Repertoire analysis of grocery shoppers – by family status, August 2018
Figure 22: Incidence of shopping on different grocery categories, by marital status, August 2018
Gender bias still observable, but less paramount in BPC and household care
Figure 23: Incidence of shopping on different grocery categories, by gender, August 2018
GROCERY SHOPPING CHANNELS
Super/hypermarkets still take the lead
Figure 24: Grocery shopping channel, August 2018
Warehouse retailers are losing appeal as bulk-buy fits less well with consumer lifestyles
Figure 25: Incidence of consumers buying grocery from warehouse stores, by demographic, August 2018
Wet market is still relevant, especially for young consumers
Figure 26: Incidence of consumers shopping in wet markets, by generation, August 2018
C-stores become a critical touch point for reaching young consumers
Figure 27: Incidence of consumers shopping in C-stores, by demographic, August 2018
Competition between super/hypermarkets and online retailers is fiercest in BPC and household care
Figure 28: Incidence of consumers buying grocery via offline and online comprehensive channels, August 2018
Figure 29: Incidence of consumers buying grocery via offline and online comprehensive channels, August 2018
New retailers such as Hema and Super Species are already grabbing shares in food shopping
Figure 30: Incidence of consumers buying grocery via new retail channels, August 2018
Social e-commerce and food delivery apps starting to excel in certain product categories
Figure 31: Incidence of consumers buying grocery via social ecommerce channels and food delivery app, August 2018
WHY CHOOSING DIFFERENT CHANNELS
Retailers need to be competitive on three things: choice, price and convenience
Figure 32: Reasons for choosing different channels, August 2018
Strengths and weaknesses of each channel
Offline comprehensive retailers
C-stores
Wet markets
Online channels
Figure 33: “more imported goods or premium goods” as reason to choose grocery shopping channels, by city tier, August 2018
O2O channels
GROCERY SHOPPING ATTITUDES
Eco-friendly and organic factors act positive
Figure 34: Attitudes towards grocery shopping, August 2018
Figure 35: Willingness to pay more, by age  generation, August 2018
Figure 36: Attitudes towards a price premium, by shopping planning behaviour of shoppers, August 2018
Consumers born in the 90s plan purchases and are responsive to promotions
Figure 37: Attitudes towards a shopping planning, by generations, August 2018
Figure 38: Methods for saving, by selected demographics, August 2018
Consumers aged 20-24 and consumers with kids are experience seekers
Figure 39: experience seekers, by age, August 2018
ATTITUDES TOWARDS ONLINE GROCERY SHOPPING
Online retailers battle on product price and variety
Figure 40: Top factors driving consumers to buy online, August 2018
Figure 41: Aveeno Tmall Super Brand Day offline event
Concerns for online shopping starts to shift towards in-direct-relevant with products
Figure 42: Top factors preventing consumers from buying online, August 2018
Figure 43: Factors prevent consumers to buy online, by selected demographics, August 2018
MEET THE MINTROPOLITANS
Mintropolitans seem more likely to be advanced grocery shoppers
Figure 44: Incidence of shopping at different channels, by consumer classification, August 2018
Mintropolitans are more likely to pay for premium pricesr for grocery shopping
Figure 45: Attitudes towards a price premium, by mintropolitans and non-mintropolitans, August 2018
APPENDIX – MARKET SEGMENTATION
Figure 46: Total value sales of grocery retail market by segments, China, 2013-23
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations