04-05-2015, 11:38 AM
An article of China grocery retail market, which is relevant to the company China venture...
Foreign grocers struggle in China’s fast-moving retail landscape
BEIJING — From fast food to smartphones, from luxury goods to groceries, the way China shops — and what mainland shoppers want to buy — is changing rapidly. The changes are leaving foreign supermarket and hypermarket chains struggling to keep up by revamping store formats and selling more groceries online, retail analysts said.
Last week, Walmart announced a plan to turn round its declining sales in China by boosting store numbers by more than 25 per cent, renovating existing shops and introducing a new online shopping app.
The United States chain has been hit by food safety scandals in China, along with rapidly intensifying competition from other big hypermarket chains and from new online grocers.
But Walmart is far from the only foreign grocer that has struggled in China in recent years: Tesco, the United Kingdom chain, failed to make it alone on the mainland despite an ambitious programme of building so-called “lifestyle malls”, anchored by Tesco stores.
That gamble failed, largely because Tesco did not have the expertise to compete as a property developer in the difficult mainland property market, retail analysts said. Tesco was forced into a joint venture with one of the mainland’s leading retailers, China Resources Enterprise (CRE).
But turning round Tesco’s mainland business has not proved easy for CRE either, and the company last week sold its lossmaking non-beer (including grocery) businesses to its parent, China Resources Holdings.
The sector’s woes are not limited to foreign brands. A report by OC&C strategy consultants found that “nearly all the major players among China’s big-box grocers ... have experienced near-consistent negative growth since 2010”. Growth during that period came almost entirely from new store openings, OC&C said.
Competition from online grocers is one of the biggest threats to bricks and mortar sales at chains such as Walmart, Carrefour and Auchan’s SunArt Retail, retail analysts said. Consumer tastes in China change more rapidly than in many established markets, and in the past year or two, online grocery sales have exploded.
“In China, older people don’t have a lot of entertainment so shopping (even in grocery stores) is entertainment for them, but our younger generation has grown up with a computer at their side and so they prefer to entertain themselves by travelling, not shopping in physical stores,” said Ms Huang Aizhu, head of Tmall’s food business. The business, part of the Alibaba group, is growing annually in the “triple digits”, she said.
“The combination of online and offline is the way of the future,” Ms Huang added. Sales of fresh foods such as fruit, vegetables and seafood — traditionally the preserve of bricks and mortar stores or traditional wet markets — are growing faster online than other grocery items, she said.
Walmart already has one of the strongest e-commerce presences in China, through its 51 per cent stake in Yihaodian, the popular online grocer.
Mr Doug McMillon, Walmart global chief executive, told a press conference in Beijing last week that the retailer plans to expand both online and offline.
“We want to help customers shop in a way that is most convenient for them. For some convenience is shopping online and having products delivered to their homes, for others it is shopping online and picking up at a store and for others it’s the experience of being in a store, seeing and handling products that they buy ... new ways are being invented every week.”
“Consumer spending power in China is rising at about 10 per cent per year and tastes are changing rapidly. Keeping up with that for retailers is tough, and there is increasingly competition with each other. A lot of chains are having to close existing stores and reopen and redevelop new formats,” said Mr Matthew Crabbe, China retail analyst at Mintel.
Solving the cold chain logistics problem is key for online food retailers, he said.
JD.com, a leading mainland e-commerce company, has struck a deal to distribute fresh, chilled and frozen products through convenience stores that either hold them for customer collection or deliver to their homes.
“They are leapfrogging the big chains, which will have to respond in kind to compete,” he added, noting that Walmart and Tesco have been “developing their stores to be more like delivery depots”. THE FINANCIAL TIMES
http://www.todayonline.com/chinaindia/ch...epage=true
Foreign grocers struggle in China’s fast-moving retail landscape
BEIJING — From fast food to smartphones, from luxury goods to groceries, the way China shops — and what mainland shoppers want to buy — is changing rapidly. The changes are leaving foreign supermarket and hypermarket chains struggling to keep up by revamping store formats and selling more groceries online, retail analysts said.
Last week, Walmart announced a plan to turn round its declining sales in China by boosting store numbers by more than 25 per cent, renovating existing shops and introducing a new online shopping app.
The United States chain has been hit by food safety scandals in China, along with rapidly intensifying competition from other big hypermarket chains and from new online grocers.
But Walmart is far from the only foreign grocer that has struggled in China in recent years: Tesco, the United Kingdom chain, failed to make it alone on the mainland despite an ambitious programme of building so-called “lifestyle malls”, anchored by Tesco stores.
That gamble failed, largely because Tesco did not have the expertise to compete as a property developer in the difficult mainland property market, retail analysts said. Tesco was forced into a joint venture with one of the mainland’s leading retailers, China Resources Enterprise (CRE).
But turning round Tesco’s mainland business has not proved easy for CRE either, and the company last week sold its lossmaking non-beer (including grocery) businesses to its parent, China Resources Holdings.
The sector’s woes are not limited to foreign brands. A report by OC&C strategy consultants found that “nearly all the major players among China’s big-box grocers ... have experienced near-consistent negative growth since 2010”. Growth during that period came almost entirely from new store openings, OC&C said.
Competition from online grocers is one of the biggest threats to bricks and mortar sales at chains such as Walmart, Carrefour and Auchan’s SunArt Retail, retail analysts said. Consumer tastes in China change more rapidly than in many established markets, and in the past year or two, online grocery sales have exploded.
“In China, older people don’t have a lot of entertainment so shopping (even in grocery stores) is entertainment for them, but our younger generation has grown up with a computer at their side and so they prefer to entertain themselves by travelling, not shopping in physical stores,” said Ms Huang Aizhu, head of Tmall’s food business. The business, part of the Alibaba group, is growing annually in the “triple digits”, she said.
“The combination of online and offline is the way of the future,” Ms Huang added. Sales of fresh foods such as fruit, vegetables and seafood — traditionally the preserve of bricks and mortar stores or traditional wet markets — are growing faster online than other grocery items, she said.
Walmart already has one of the strongest e-commerce presences in China, through its 51 per cent stake in Yihaodian, the popular online grocer.
Mr Doug McMillon, Walmart global chief executive, told a press conference in Beijing last week that the retailer plans to expand both online and offline.
“We want to help customers shop in a way that is most convenient for them. For some convenience is shopping online and having products delivered to their homes, for others it is shopping online and picking up at a store and for others it’s the experience of being in a store, seeing and handling products that they buy ... new ways are being invented every week.”
“Consumer spending power in China is rising at about 10 per cent per year and tastes are changing rapidly. Keeping up with that for retailers is tough, and there is increasingly competition with each other. A lot of chains are having to close existing stores and reopen and redevelop new formats,” said Mr Matthew Crabbe, China retail analyst at Mintel.
Solving the cold chain logistics problem is key for online food retailers, he said.
JD.com, a leading mainland e-commerce company, has struck a deal to distribute fresh, chilled and frozen products through convenience stores that either hold them for customer collection or deliver to their homes.
“They are leapfrogging the big chains, which will have to respond in kind to compete,” he added, noting that Walmart and Tesco have been “developing their stores to be more like delivery depots”. THE FINANCIAL TIMES
http://www.todayonline.com/chinaindia/ch...epage=true
Medical and dental businesses are sure beneficiaries of any population growth.