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Grocery Retailing - China - November 2018

“As fundamental as their needs for grocery goods are, grocery shoppers’ habits are changing. Grocery shopping occasions will become more diverse, and consumers are becoming sophisticated and demanding. Rather than being all things for all people and competing with scale, future competition will be about identifying individual market segments and being the ‘big fish in a small pond.’”

- Jaslien Chen, Senior Research Analyst

This report will look at the following areas:

  • Different retailers targeting different consumption occasions
  • Driving consumers’ experience of shopping crucial for retailers
  • “Old style” has not entirely gone out of style for young consumers

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Table of contents

  1. 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

                                                                                                Grocery Retailing - China - November 2018

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