This report looks at the following areas:
- Consumer spending on fresh groceries
- Offline and online channels for purchasing fresh groceries
- Motivations and barriers for consumers purchasing fresh groceries from warehouse clubs
- Consumer attitudes towards retailers’ private label fresh groceries
Consumers' focus on the safety and quality of fresh food has fuelled the rise of membership store models, while retailers' private label products are gaining market favour thanks to their cost-effectiveness and value for money. In the future, more thoroughly exploring and satisfying the needs of small households and older consumers and providing a high-quality fresh grocery shopping experience through new ecommerce models will mean new industry opportunities.
Diana Shao, Director, China Insights
Market Definitions
Fresh groceries include fresh vegetables, fresh fruit, meat, seafood, pre-processed foods (including ready meals and semi-finished products), fresh baked goods, deli foods and other categories with a short shelf life. It excludes packaged foods and drinks with a long shelf life.
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Executive summary
- Key issues covered in this Report
- Definition
- What you need to know
- The market
- Consumers’ essential spending remains stable, fresh food spending rises steadily
- Market highlights
- Marketing activities
- The consumer
- Consumer spending on fresh groceries nudges up
- Graph 1: monthly household spending on fresh groceries, 2024
- Supermarkets remain the primary offline purchase channel, major platforms dominate online purchases
- Graph 2: offline purchase channels for fresh groceries, 2024
- Graph 3: online purchase channels for fresh groceries, 2024
- Fresh grocery quality and safety assurances represent the core competitiveness of warehouse clubs
- Fresh grocery quality and safety assurances form the core competitiveness of warehouse clubs
- Graph 4: factors attracting consumers to buy fresh groceries at membership-based supermarkets, 2024
- Store location, price and membership fee are the main barriers for warehouse clubs
- Graph 5: reasons for not buying fresh groceries in paid membership supermarkets, 2024
- Fresh ingredients are the cornerstone of private labels, ready-to-eat foods are key differentiators
- Graph 6: private label fresh groceries purchased, 2024
- Consumers recognise the quality and value of private label fresh groceries, want more distinctive and premium fresh products
- Graph 7: attitudes towards private label fresh groceries, 2024
- Issues and insights
- What we think
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The market
- Market overview
- Fresh produce spending is steadily increasing
- Graph 8: growth of residents’ per capita spending on food, tobacco, and alcohol, 2019-24
- Market factors
- Residents’ income continues to grow, consumer confidence stabilises
- Graph 9: confidence in their future financial situation in the next three months, 2023-24
- Graph 10: residents’ per capita disposable income growth (excluding price effects), 2019-24
- Fresh grocery prices decline, the supply-demand imbalance remains stark
- Graph 11: price changes of the main fresh grocery categories, Jan-Jul 2024
- Policy support for ready meals moves the sector into a high-quality growth phase, helping grow spending
- Offline supermarkets continue to promote online business
- Market highlights
- Supermarkets invite Pangdonglai to initiate a radical transformation
- Community fresh grocery chains develop rapidly
- Fresh grocery outlets expand and shift to a ‘hard discount’ model
- Marketing activities
- Everyday life and art collide
- Sustainability in fresh grocery retail
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The consumer
- Spending on fresh groceries
- The supply of high-quality fresh products gradually increases, consumer spending nudges up
- Graph 12: spending on fresh groceries, 2022-24
- Fresh grocery spending increases significantly among 25-39s
- Graph 13: average monthly household fresh grocery spending over RMB3,000, by age group, 2022-24
- Fresh grocery purchase channels
- Supermarkets remain the primary offline purchase channel, community fresh food chains show great potential, and warehouse club are on the rise
- Graph 14: offline purchase channels for fresh groceries, 2024
- Major platforms dominate online purchase channels, and the digitalisation of offline supermarkets is producing results
- Graph 15: online purchase channels for fresh groceries, 2024
- Female consumers focus more on one-stop shopping and cost-effectiveness when buying fresh groceries
- Graph 16: offline purchase channels for fresh groceries, by gender, 2024
- Graph 17: online purchase channels for fresh groceries, by gender, 2024
- Younger consumers prefer channels that offer immediacy and cost-effective options
- Graph 18: purchase channels for fresh groceries, by age group, 2024
- Large families use a wider variety of online channels, with cost-effective channels preferred offline
- Graph 19: purchase channels for fresh groceries, by living situation, 2024
- Motivations and barriers for buying fresh groceries at warehouse clubs
- Fresh grocery quality and safety assurances form the core competitiveness of warehouse clubs
- Graph 20: factors attracting consumers to buy fresh groceries at membership-based supermarkets, 2024
- Consumers come for high-quality affordable products, stay for exclusive products and variety
- Graph 21: factors attracting consumers to buy fresh groceries at membership-based supermarkets, by consumers having shopped at membership-based supermarkets in the last three months, 2024
- Strengthen fresh product quality and food safety and improve delivery services to more effectively attract target groups
- Graph 22: factors attracting consumers to buy fresh groceries at membership-based supermarkets, high-income households in Tier 1/2 cities* vs overall, 2024, 2024
- Graph 23: average monthly spending on fresh groceries, high-income households in Tier 1/2 cities* vs overall, 2024
- Store location, price and membership fees are the main barriers for consumers
- Graph 24: reasons for not buying fresh groceries in paid membership supermarkets, 2024
- Delivery capabilities and product diversification will be competitive differentiators for warehouse clubs
- Graph 25: reasons for not buying fresh groceries in paid membership supermarkets, * high-income households in Tier 1/2 cities vs overall, 2024
- Attitudes towards retailers’ private label fresh groceries
- Fresh ingredients are the cornerstone, ready-to-eat foods are key differentiators
- Graph 26: private label fresh groceries purchased, 2024
- High-quality fresh ingredients attract core consumer groups, deli and ‘indulgent’ foods appeal to younger people
- Graph 27: private label fresh groceries purchased, by age group, 2024
- Transparent information on fresh groceries further consolidates trust in private label brands
- Graph 28: trust in private label fresh groceries, 2024
- Retailers can enrich and differentiate private label fresh grocery through specialty flavour products
- Graph 29: expectations for private label fresh groceries, 2024
- The value for money of retailers’ private label fresh food is recognised, opportunities for premiumisation emerge
- Graph 30: views on the price/value for money of private label fresh groceries, 2024
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Issues and insights
- Paid membership stores can tap into the blue ocean of one/two-person households
- Firmly control the quality of fresh groceries to build an economic moat around warehouse clubs
- Single and two-person households are potential members of warehouse clubs in addition to families
- Graph 31: bought fresh groceries from paid membership supermarkets in the last three months, by living situation, 2024
- Strengthen exclusive products, the online shopping experience and delivery services and appropriately lower the membership fee threshold to attract small households
- Graph 32: factors attracting customers to buy fresh groceries at paid membership supermarkets, by living situation, 2024
- Graph 33: reasons for not buying fresh groceries in paid membership supermarkets, by living situation, 2024
- Retailers’ private label fresh groceries have great potential
- Retailers’ private label fresh groceries are recognised by the market
- Middle-aged and older consumers have future potential for private labels
- Graph 34: agree with the statement, by generation, 2024
- Graph 35: private label fresh groceries purchased by post-1960s consumers*, 2024
- Private label fresh groceries can cut ahead in the health and wellness market
- Direct from farm to consumer: short videos and live streams bring new opportunities
- Short-form video platforms hold potential in the fresh food category
- Mainstream short-form video platforms actively enter the fresh food retail market
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Appendix – methodology and abbreviations
- Methodology
- Abbreviations
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