How to Ride the Wave in China-s Rapidly Changing Retail Market En

8/13/2019 How to Ride the Wave in China-s Rapidly Changing Retail Market En

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2/22

AGENDA

How are shoppers changing their behviour as growth slows down?

What is the impact of these trends on modern trade retailers?

What can be done to maximize growth in this changing environment?


3/22

HOW ARE SHOPPERS CHANGING

THEIR BEHVIOUR AS GROWTH

SLOWS DOWN?


4/22

The last 12 months has seen slower growth due to lower inflation rate and

shoppers reducing their basket size.

Source: Kantar Worldpanel, National Urban China, Data to 14 thJune 2013

+ 15%Value growth

of total FMCG

market

+ 9%Value growth

of total FMCG

market

Jun 2011 vs Jun 2012

Jun 2012 vs Jun 2013

No. of Shoppers No. of Trips Items per Trip Price per Pack

+13%

-1% +3%-2%

MAT Jun 2012 vs 2013 - Shopper KPIsTotal FMCG

+9%

-5% +3% +4%2012

2013


5/22

Shoppers are becoming smarter

Fewer items but more volume

Visiting Different Channels to

seek better value

and choice


6/22

Most FMCG categories are seeing shoppers upsizing and this is delivering

volume growth for many categories.

Average Pack Size Change

+20%-10%

+20%

-15%

AverageVolumePe

rBuyerChange 13% of categories

18% of categories

44% of categories


28% of categories


7/22

Some categories are more expandable than others so this needs to be

considered before pushing larger packs.

Expandibility(%)

UK Example- but principle true in China


8/22

Shoppers are changing the way they shop

especially in key cities

Fewer TripsHypermarkets

Supermarkets

Traditional Grocery

More TripseCommerce

Personal Care Stores

Department StoresTV Shopping

Overseas Purchase

Drugstores


9/22

Shoppers in the higher tier cities shop across more channels so it is

important to ensure good availability of products outside of modern trade.

6.957.73

7.21 7.10 6.876.23

National Key Cities A Cities B Cities C Cities D Cities

Average Number of Channels ShoppedMAT June 2013

Source: Kantar Worldpanel, National Urban China, Data to 28thDec 2012

Channels Covered: Hypermarkets, Supermarkets/Mini/CVS, Grocery, Department Stores, Free Mart,

Whole Sales, Work Unit, Gift, Direct Sales, Specialist Stores, Shopping On-Line, TV Shopping, Overseas

Purchase, Drugstores, Beauty Salon and Milk Store.


10/22

eCommerce growth shows no sign of slowing and will soon reach 50% in key

cities. Still very personal care focused in lower tier cities.

16

27

Rolling MAT National China Penetration of eCommerce (% HHs)

54 46 40 36 31

5

3 2 2 2

42 51 57 62 67

4 KEY

CITIES

A CITIES B CITIES C CITIES D CITIES

FOOD HOUSEHOLD PERSONAL CARE

eCommerce Share of FMCG Sector (% value)

42

29 27 2619

4 KEY

CITIES

A CITIES B CITIES C CITIES D CITIES

eCommerce Penetration by City Tier

UK22%

South Korea55%



11/22

Chinese shoppers like to visit different stores but why?

The average household in Shanghai buys Shampoo around 5 times a year and will visit more than

3 storesto buy shampoo in the year.

Lian Hua Carrefour Watsons YiHaoDian

Channel Type Small Supermarket Hypermarket Personal Care Store eCommerce

Number of

Shampoo SKUs81 387 200 1023

Prices

(High/Medium/Low)Medium Low High

Medium (but heavy

discounts on large

trips)

Benefits Close to homeLow Price & Good

range

Specialist products

including PL, Expert

Advice, Loyalty Card

Huge range,

convenience of

delivery, attractive

promotions


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WHAT IS THE IMPACT OF THESE

TRENDS ON MODERN TRADE

RETAILERS?


13/22

Penetration is a key driver of value share for retailers but retailers are seeing

less and less penetration as shoppers visit other channels.

R = 0.9328

0

5

10

15

20

25

30

10 20 30 40 50 60 70 80 90

Share(%

value)

Penetration (% HHs)

Wu-Mart Group

Auchan

Carrefour

Wal-Mart Group

Yonghui

Lotus

Lotte Mart Jinkelong

ChaoshifaShuntianfu

82

66

46

23 34 24 25 25 21 25 21 1812

83

64

45

32 31 24 23 23 21 19 19 15 12

WU-MART

GROUP

CARREFOUR JINGKELONG YONGHUI WAL-MART

GROUP

LOTTE MART AUCHAN CHAOSHIFA SHUNTIANFU BEIJING HUA

LIAN

TIANKELONG JIAN MART LOTUS

52 w/e 2012/06/15

52 w/e 2013/06/14

Value Share (%) vs Penetration of Key Retailers in Beijing

Year on Year Penetration

Source: Kantar Worldpanel, Beijing, Data to 14 thJune 2013


14/22

Loyalty also plays a key role in driving retailers share and similarly to

penetration is declining across key modern trade retailers in Beijing.

R = 0.8792

0

5

10

15

20

25

30

4 6 8 10 12 14 16 18

Share(%

value)

Loyalty (% Value)

Wu-Mart Group

Auchan

Carrefour

Wal-Mart GroupYonghui

LotusLotte Mart

Jinkelong

ChaoshifaShuntianfu

17

12

911

9

6

9

7

8

57 7 5

17

11 109 9 9 8 7 7

7 7 64

WU-MART

GROUP

JINGKELONG CARREFOUR AUCHAN CHAOSHIFA YONGHUI SHUNTIANFU WAL-MART

GROUP

LOTTE MART LOTUS JIAN MART TIANKELONG BEIJING HUA

LIAN

52 w/e 2012/06/15

52 w/e 2013/06/14

Value Share (%) vs Loyalty of Key Retailers in Beijing

Year on Year Loyalty within All Channels

Beijing

Hua Lian

Source: Kantar Worldpanel, Beijing, Data to 14 thJune 2013


15/22

Retailers in China see very low levels of loyalty due to the fragmentation of

the retail market. Key challenge is how to grow shopper loyalty.

10

42

25

543

11 Others

Grocery

eCommerce

Work Unit

Gift

Other MT Retailers

Carrefour

Carrefour Shoppers Spend in Other Channels

52 w/e Jun 2013 - Beijing

Carrefour shoppers in Beijing will visit 5

other modern trade retailers and 6

other channelsfor FMCG productsover the year.


16/22

WHAT CAN BE DONE TO

MAXIMIZE GROWTH IN THIS

CHANGING ENVIRONMENT?


17/22

How can retailers drive

Penetration

Open new stores

Have the right store locations

Above the line communication

Becoming more difficult in

current environment

Improve category management

Improve shopping experience

Offer incentive for repeat visits

How can retailers drive

Loyalty

Requires deeper understanding

of shopper behaviour


18/22

3.6millionCarrefour Shoppers

Kantar Worldpanel can identify missed opportunity shoppers who visit the

retailer but do not purchase certain categories in the retailer.

3.2millionCarrefour Shoppers who Buy

Liquid Anywhere

904kCarrefour Shoppers who

Buy Liquid in Carrefour

Only 29%of Carrefour

shoppers who purchase

laundry liquid make theirpurchase in Carrefour. The

remaining 71%purchase from

other modern trade retailers

and is lost spend for Carrefour.


19/22

Compared to other retailers Carrefours closure rate is quite low so there is a

need to convert more of their shoppers to buy laundry liquid in store.

46

31 30 29

54 69 70 71

WU-MART GROUP JINGKELONG AUCHAN CARREFOUR

Missed Opportunity Shoppers

Closed Shoppers

% Retailer Closed vs Missed Opportunity Laundry Liquid Shoppers

Beijing52 w/e Jun 2013

+10%

7 millionRMB size ofprize


20/22

Summary

Insight

Shoppers are becoming smarter visiting

a wide range of channels and retailers

Maximise your distribution in emerging

channels such as eCommerce in order

to grow your brand

Implication

Penetration is a key driver of retailers

value share but this measure is

becoming more challenging to grow

Retaining shoppers and growing their

trip spend will be key to share growth

for modern trade retailers

Shoppers will visit different stores for

the same category meaning there are

missed opportunities for retailers

Use real shopper behaviour insights to

target missed opportunity shoppers and

grow the retailers business


21/22

CatMan On-Line can help you to identify and quantify

opportunities for your brands across different retailers in China.


22/22

Justin Cook

[email protected]

How to Ride the Wave in China-s Rapidly Changing Retail Market En

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