Retail Market in China
September 2013
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Table of Contents
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Executive summary
4
Overview
6
Competitive landscape
13
Key highlights
37
Government initiatives
44
Challenges
48
Conclusions and implications
52
Appendix
55
Retail Market in China, 2013
China is in the course of economic rebalancing, moving towards a consumption-driven
economy. This presents huge opportunities for retailers, with foreign and local firms alike
continuing to expand into the market. As China’s retail sector evolves, market players
are searching for ways to better adapt to a changing landscape. However, competition is
increasingly fierce and some unresolved problems remain.
This report provides an overview of China’s retail market and assesses competitive
prospects, offering key highlights on developments under different retail formats. We also
review the industry’s latest developments and major challenges.
"
Executive summary
China is now the world’s second largest retail market. Total retail sales of consumer
goods doubled to 20.7 trillion yuan in 2012 from 10.8 trillion yuan in 2008. Furthermore,
China is expected to surpass the United States to become the world’s largest consumer
market within five years1.
The country’s retail market is evolving as quickly as it grows. With higher incomes and
increasing affluence, consumers are demanding better quality and unique products and
services. Also, new technologies are revolutionising the way retailers are running their
businesses. Key aspects of this transformative phase include:
Aggressive store expansion is replaced by improving store productivity. Some
domestic retailers used to adopt aggressive expansion strategies to boost brand visibility,
only to find that such disorganised business expansion created many problems. Hence,
a number of brand owners have started to close unprofitable stores and focus on
improving core competencies.
Retailers launch their own private labels or proprietary brands. Amid increasing
competition, retailers are looking for ways to stand out from their competitors.
Launching private labels or proprietary brands is a profitable way for retailers to underline
uniqueness, pushing up margins while improving customer loyalty. Yet, private label
penetration is still at a low level in China. A lack of experience, skills and strategies on
how to launch private labels remain significant challenges.
Mobile-commerce is increasingly popular, as is mobile payment. The mobile sales
channel has become extremely important. Transaction values have seen a tremendous
leap, up 181.0% yoy to reach 37.52 billion yuan in 2Q13. Increasing numbers of
e-payment providers have launched mobile services, making such payments increasingly
easier, safer and more popular.
Digital marketing is ever more prevalent. Social media is having an explosive impact
on consumer purchasing decisions. Influential social media websites are believed to
be increasing the sales conversion rate and encouraging more customers to purchase
goods. Many retailers have been leveraging huge SNS website user databases to
promote products and enhance profitability.
1 http://usa.chinadaily.com.cn/epaper/2013-08/15/content_16896046.htm
#
Retail Market in China, 2013
Improving customer relationship management. An effective customer loyalty
programme is seen as instrumental in attracting and retaining customers. But while
retailers have been running their membership programmes for a significant period, many
simply collect data from customers without fully utilising the information. Also, many
retailers have no centralised customer database for effective management. This is an
area that is receiving increased attention.
The concept of the omni-channel emerges. The concept of the omni-channel is still
very new in China. Offline and online operations of many retailers are often separated,
with limited interaction. However, some retailers are starting to take a closer look at
numerous aspects of omni-channel strategising and their impact on business. Online and
offline integration is expected to become an inevitable industry trend.
Tier 3 and tier 4 cities become the development focus. With ongoing urbanisation
and rising incomes, consumption is growing fast in lower tier cities. Tier 3 and tier 4 cities
are expected to be the key focus for China’s retail business development over the next
few years as competition gets tougher in tier 1 and tier 2 cities.
M&A continues to be an attractive avenue fuelling growth. Mergers and acquisitions
(M&A) provide a fast route to greater market presence and penetration within different
consumer segments. Indeed, several retailers are using this approach to extend their
market presence. As a result, M&A activities are expected to continue pushing China’s
retail market growth.
Such developments paint a rosy picture for the future of China’s retail sector, but
challenges still remain. For one, increased operating costs have squeezed profit margins
for many retailers. At the same time, duplicated investment in some cities, lack of
centralised city planning and mismanagement are all giving rise to such problems as
traffic congestion, tougher competition, poor customer footfall, uneven trade mix, high
vacancies and commercial disputes. Soaring logistics costs and relatively weak transport
infrastructure add further hurdles for retailers and distributors.
Faced with the headwinds of increasing competition and more demanding consumers,
the retail winners are those which constantly innovate and improve their business
practices. Indeed, to succeed, enterprises need to anticipate – or at least keep abreast –
of the latest market developments.
$
Overview
%
Retail Market in China, 2013
China becomes the world’s second largest retail market
The total retail sales of consumer goods in China doubled to 20.7 trillion yuan in 2012,
from 10.8 trillion yuan in 2008 (see Exhibit 1). According to the Ministry of Commerce
(MOFCOM), China is the world’s second largest retail market after the United States.
Exhibit 1: Total retail sales of consumer goods, 2008 - 2012
Source: National Bureau of Statistics
Having said that, retail sales growth has seen some signs of deceleration over recent
years. In 2012, the growth of total retail sales of consumer goods was 14.3% year-onyear (yoy), the lowest since 2007. As to the retail market in 1H13, total retail sales of
consumer goods rose nominally by 12.7% yoy to 11.1 trillion yuan, while the growth rate
was 1.7 percentage points (ppt) lower than in 1H12. However, in real terms, retail sales
increased 11.4% yoy in 1H13, 0.2 ppt higher than in 1H12.
By month, nominal retail sales growth reached 15.2% yoy in December 2012, and then
decelerated significantly to 12.3% yoy in January - February 2013. The growth rate slowly
picked up from March to June 2013 (see Exhibit 2).
&
Exhibit 2: Nominal growth of total retail sales of consumer goods by month,
January 2012 – June 2013
Source: National Bureau of Statistics
Retail sales of consumer goods: mode of sales
Retail sales of commodities reached 9.9 trillion yuan in 1H13, up by 13.2% yoy. Retail
sales for enterprises above a designated size in the catering industry saw a significant
decline by 2.2% yoy in 1H13 to 8.7% yoy (see Exhibit 3). This is mainly attributable to
the new Chinese leadership’s increasing efforts to curb government spending on lavish
banquets.
Exhibit 3: China’s total retail sales by mode, FY12 – 1H13
yoy growth (%)
FY12
1H13
Total retail sales of consumer goods*
14.3
12.7
- Commodities
14.4
13.2
of which: enterprises above a designated size**
14.8
11.7
- Catering
13.6
8.7
of which: enterprises above a designated size
12.9
-2.2
Source: National Bureau of Statistics
* Total retail sales of consumer goods refers to the sum of retail sales of commodities sold by wholesale
retailing, catering, publishing, post and telecommunications and other service industries to urban and rural
households for private consumption, and to social institutions for public consumption.
** Enterprises above a designated size refer to enterprises with annual sales of five million yuan or more and
with an employee strength of 60 or more.
'
Retail Market in China, 2013
Retail sales of consumer goods: commodities
The retail sales of commodities of enterprises above a designed size rose 11.7% yoy to
reach 5.2 trillion yuan in 1H13. Among various types of goods, sales of gold, silver, and
jewellery saw a 29.7% yoy jump in 1H13, driven by a drop in gold prices. Sales of home
appliances and video equipment also achieved growth of 15.3% yoy in 1H13, due partly
to the positive outcome of the government’s energy-saving product promotion project.
By contrast, growth rates for sales of clothing, shoes, hats and textiles, and cosmetics
slowed to 12.5% yoy and 12.7% yoy respectively (see Exhibit 4).
Exhibit 4: China’s nominal retail sales growth of enterprises above a designated
size, by commodity, FY12 – 1H13
yoy growth (%)
FY12
1H13
Change
Grain, oil, food, beverages, tobacco, and liquor
17.9
12.8
5.1 
Clothing, shoes, hats and textiles
18.0
11.9
6.1 
Cosmetics
17.0
12.7
4.3 
Gold, silver, and jewellery
16.0
29.7
13.7 
Daily use products
17.5
14.2
3.3 
Sports and entertainment products
10.5
10.0
0.5 
7.2
15.3
8.1 
Chinese and western medicine
23.0
16.3
6.7 
Stationery and office accessories
17.7
11.0
6.7 
Furniture
27.0
21.3
5.7 
Telecommunications equipment
28.9
14.4
14.5 
Petroleum and related products
16.9
8.8
8.1 
7.3
8.8
1.5 
24.6
18.2
6.4 
Home appliances and video equipment
Automobiles
Building and decoration materials
Source: National Bureau of Statistics
Retail sales of consumer goods: urban vs. rural
Retail sales are primarily driven by the urban population, which accounted for 86.5% of
total retail sales in 1H13; however, rural retail sales grew at a faster pace. Urban retail
sales increased nominally by 12.5% yoy to 9.6 trillion yuan in 1H13, 1.8 ppt lower than
in 1H12; while rural retail sales rose 14.3% yoy to 1.5 trillion yuan in 1H13, 0.2 ppt lower
than in 1H12.
(
The sharp increase in rural incomes has been a positive driver for rural spending. The per
capita net income of rural households has grown steadily since 2010, reaching 7,917
yuan in 2012. The per capita disposable income of urban households increased 9.6%
yoy in 2012 to 24,565 yuan in real terms. However, the per capita disposable income
for urban households was still three times more than for rural households; urbanites still
remain the major contributors to national total retail sales (see Exhibit 5).
Exhibit 5: Urban and rural incomes, 2008 – 2012
Source: National Bureau of Statistics
Consumers and entrepreneurs turn pessimistic due to weaker
economic sentiment
The consumer confidence index has declined since February 2013 and stayed below the
neutral reading of 100 for two consecutive months from May, indicating weaker economic
sentiment over the period to June (see Exhibit 6).
)*
Retail Market in China, 2013
Exhibit 6: China’s consumer confidence index, January 2012 - June 2013
Source: National Bureau of Statistics
Over the same period, the national entrepreneur confidence index also dropped from
125.6 in 1Q13 to 120.6 in 2Q13 (see Exhibit 7), indicating that entrepreneurs in wholesale
and retail trades were less confident about the economy. Industry players became less
optimistic about their businesses, due to weaker market demand.
Exhibit 7: China’s entrepreneur confidence index, 1Q13 - 2Q13
1Q13
2Q13
National
125.6
120.6
Manufacturing
131.7
125.0
Construction
134.4
128.9
Wholesale and retail trades
124.9
121.0
Transport, storage and postal services
113.8
110.7
79.8
82.9
140.6
136.8
Real estate trade
115.3
113.2
Social services
122.6
114.6
Accommodation and catering trades
Information transmission, software and information
technology services
Source: National Bureau of Statistics
73.8% of the enterprises said that profitability in 2Q13 was “normal” or “better than
normal”. The confidence index for large enterprises was higher than for mid-sized and
small enterprises2.
2 http://www.stats.gov.cn/was40/gjtjj_nodate_detail.jsp?channelid=75004&record=31
))
Luxury market slows as anti-gift regulations take root
Luxury goods sales in China were projected to reach Euros 15 billion in 2012. Taking the
Greater China area as a whole, including Hong Kong, Macau and Taiwan, the total size
of the luxury market was expected to reach Euros 27.3 billion, surpassing Japan and
becoming the world’s second largest luxury goods market in 20123. The rapid increase
of household disposable incomes, fast-growing individual wealth, a more affluent middle
class, ongoing urbanisation, and rising demand for luxury goods in smaller cities – along
with a surge in the number of credit card users – all contributed to driving China’s luxury
market.
However, the growth of luxury sales has started to decelerate since 4Q11. Bain &
Company expected 2012 to show 7% yoy luxury consumption growth in China, down
from 30% yoy in 2011 and 27% yoy in 2010. The slowdown was partly attributable to
weak economic growth, as well as the increasing preference of Chinese consumers
to shop for luxury goods abroad. Moreover, the move by China’s new leaders to curb
government spending on luxury items as gifts might also have had a negative impact
on luxury sales. As shown in Exhibit 8, many global luxury brands have slowed their
expansion in China over recent years.
Recently, some luxury retailers have shifted their focus from aggressive store openings
to improving store productivity; others have started to make inroads into lower-tier cities.
In fact, luxury brands no longer see tier 1 cities as a springboard to raise their profile, but
have started to push their sales nationwide.
Exhibit 8: Number of selected luxury brand stores in China, 2011 - 2013
Change in
Change in
2011*
2012**
store numbers
2013***
store numbers
Burberry
49
58
+9
62
+4
Ermenegildo Zegna
60
73
+13
86
+13
Gucci
31
42
+11
58
+16
Louis Vuitton
36
39
+3
42
+3
Prada
15
18
+3
18
–
Source: Company websites; compiled by Fung Business Intelligence Centre
*As of January 2011
**AS of February 2012
***As of February 2013
3 Bain & Company, “2012 Luxury Goods Worldwide Market Study”, October 2012
)!
Retail Market in China, 2013
Competitive landscape
)"
Analysis of the Top 100 retail chain operators
The Top 100s see steady development
Early this year, the China Chain Store and Franchise Association (CCFA) released its
annual list of “the Top 100 Retail Chain Operators in China” (the Top 100s)4. Total sales
of the Top 100s in 2012 were 1,870.0 billion yuan, up 10.8% yoy. It is noteworthy that
total sales of the Top 100s increased at the slowest pace since 2007 and the growth
rate was slower than that of the national total retail sales of consumer goods over two
consecutive years. The significant slowing of Top 100 sales was due to the combined
impact of a gradually diminishing demographic dividend, changing consumer behaviour
and intensified competition from online retailers (see Exhibit 9).
Exhibit 9: Performance of the Top 100 retail chain operators, 2008 - 2012
Year
Retail sales (billion yuan)
yoy growth (%)
2008
1,199.9
18
2009
1,360.0
14
2010
1,660.0
21
2011
1,650.7
20*
2012
1,870.0
11
Source: China Chain Store and Franchise Association, Fung Business Intelligence Centre
*Adjusted growth rate
As shown in Exhibit 10, total sales of the Top 100s accounted for 9.0% of total retail
sales of consumer goods. China’s retail market remains highly fragmented.
Exhibit 10: The Top 100s’ share in national retail sales, 2001-2012
Source: China Chain Store and Franchise Association
4 http://www.ccfa.org.cn/viewArticle.do?method=viewArticle&id=ff8080813e0d6a70013e15f3bfcd0040&publi
shcid=402881e91c59dbcb011c59df8a2b0002
)#
Retail Market in China, 2013
According to the CCFA, the Tops 100s in tier 3 and tier 4 cities have developed and
expanded faster than those in tier 1 and tier 2 cities, mainly due to relatively saturated
retail markets in tier 1 and tier 2 cities. The average sales growth among leading Top 10
enterprises in tier 3 and tier 4 cities was 18% yoy, while the growth rate for store numbers
was 17% yoy. Both figures were higher than for tier 1 and tier 2 cities, at 6% yoy and 2%
yoy respectively.
Exhibit 11 shows the Top 10 retail chain operators ranked by total retail sales in 2012.
Suning Commerce Group (Suning), with total sales of 124 billion yuan, has overtaken
Bailian Group to become China’s number one chain retailer by total sales.
Exhibit 11: The top 10 chain retailers, 2012 (Rank by retail sales)
Sales in 2012
(million yuan,
yoy
pre-tax)
growth (%)
Rank
Name of company
1
Suning Commerce Group Co., Ltd.
124,000.0
12.7
2
Bailian Group
122,052.2
3.3
3
Gome Electrical Appliances Holding Ltd.
117,479.7
6.8
4
China Resource Vanguard Co. Ltd.
94,100.0
13.8
5
RT-Mart Shanghai Ltd.
72,470.0
17.7
6
Wal-Mart (China) Investment Co., Ltd.
58,000.0
3.6
7
Chongqing General Trading (Group) Co., Ltd.
54,494.7
14.0
8
Yum! Brands Inc., China Division
52,200.0
30.5
9
Lushang Group
49,380.7
21.4
10
Carrefour China Inc.
45,273.9
0.2
Source: China Chain Store and Franchise Association
Amid intensifying competition from online retailers, many traditional retailers have set up
their own online platforms. 62 of the Top 100s have their own online stores in 2012, up
from 31 in 2009 (see Appendix 1).
Foreign retailers in the Top 100s outperform domestic players
Among the Top 100s, foreign players generally perform better than domestic players in
terms of operating efficiency and gross profit margins. In 2012, there were 20 foreign
enterprises in the Top 100 list, of which RT-Mart continued to hold the top spot, followed
by Wal-Mart and Yum!Brands (see Exhibit 12).
)$
Exhibit 12: Foreign retail chains among the Top 100s in China, 2012
2012 sales
Rank
Rank
(million
yoy
No. of
yoy
in 2012 in 2011 Enterprise
yuan)
change (%) stores change (%)
1
1
RT-Mart Shanghai
72,470
17.7
219
18.4
2
4
Wal-Mart (China) Investment
58,000 *
3.6
395
6.8
52,200
30.5
5,200
16.9
Co., Ltd.
3
3
Yum! Brands Inc., China
Division
4
2
Carrefour China Inc.
45,274
0.2
218
7.4
5
5
Best Buy Co., Inc.
24,185
-12.0
252
-9.7
6
6
Tesco China
20,000 *
11.1
111
8.8
7
7
Parkson Retail Group Ltd.
19,724
20.1
48
4.3
8
10
Metro Jinjiang Cash & Carry
17,900
29.7
64
18.5
Co., Ltd.
9
9
Lotte Mart
16,318
6.7
99
8.8
10
12
Auchan (China) investment
16,305
28.4
54
20.0
16,000 *
3.2
39
0.0
Co., Ltd.
11
8
New World Department
Store China Limited
12
14
C.P. Lotus Corporation
12,493 *
6.6
57
9.6
13
13
Zhengzhou Dennis
12,200
13.0
144
45.5
12,000 *
20.0
1,500
36.4
9,000 *
11.1
1,500
7.1
Department Store Co., Ltd.
14
15
A.S. Watson & Co., Ltd.
(Guangzhou)
15
16
McDonald’s Corporation
(China)
16
18
AEON Co., Ltd.
8,083
21.3
36
20.0
17
19
IKEA China
7,634
21.2
11
22.2
18
17
Ito-Yokado Co., Ltd
7,487
0.0
13
0.0
19
20
Park’n Shop (China)
4,077
-5.1
51
10.9
20
21
Emart China
2,400 *
0.0
16
0.0
11.3
10,027
16.2
Total
433,748.53
Source: China Chain Store and Franchise Association
*Note: Estimated value
Also, the gross profit margins for foreign players are usually higher than for domestic
players and the differences are becoming more significant each year. Exhibit 13 compares
the gross profit margins of domestic and foreign retailers.
)%
Retail Market in China, 2013
Exhibit 13: A comparison of gross profit margins for domestic and foreign
retailers, 2010-2012
Gross profit margin
2010
2011
2012
Domestic players
14.3%
15.9%
15.9%
Foreign players
14.7%
16.7%
16.8%
Source: Deloitte, China Chain Store and Franchise Association
A comparison of domestic and foreign retailers
Domestic retailers: eager to extend their national footprint
Most domestic retailers are regionally focused, except for some consumer electronics
appliance specialty retailers such as Suning and Gome. In fact, most domestic retailers,
including Dalian Dashang Group, Wuhan Wushang Group and Shandong Yinzuo Group,
focus their operations on respective regional markets due to huge regional differences
in consumer tastes across the country, supply chain complexities and strong local
networks. This is especially true for convenience store and department store operators in
China.
Some domestic players have started to expand their footprint nationwide through
mergers and acquisitions (M&A). For instant, Wangfujing Department Store acquired
a majority stake in PCD Stores with a view to expanding its overall market share and
geographical coverage across China, while diversifying its business scope.
Then again, domestic players are making efforts to differentiate themselves from
aggressive competitors. Major initiatives include conducting market studies to understand
consumer needs; specialising in certain merchandise categories; improving supply chain
management and better engaging consumers through various social network channels.
Foreign retailers: shifting from scale expansion to improving core
competitiveness
Over recent years, foreign retailers in China have encountered numerous challenges (see
Box 1). Many are reportedly losing money in the market and have slowed expansion
(see Exhibit 14). As seen in Exhibit 15, a number of renowned foreign players have even
closed some stores.
)&
Exhibit 14: New store openings for selected major foreign retailers, 2011 - 2012
Source: China National Commercial Information Centre
Exhibit 15: Selected examples of foreign retail store closures
Closing
Opening
date
date
Store location
City
Zhenning branch
Shanghai
May-13
Jun-05
Hugeo City branch
Taizhou, Jiangsu
Aug-12
Jan-11
Guangyu branch
Tieling, Liaoning
Sep-12
Feb-09
Tushan branch
Bengbu, Anhui
Aug-12
Jan-10
Huaihe branch
Changzhou, Jiangsu
Aug-12
Jan-10
Lotte Mart
Binzhou branch
Binzhou, Shandong
Aug-12
Dec-07
Wal-Mart
Huangshan branch
Hefei, Anhui
Jul-13
Jun-11
Apr-13
Apr-03
Times Square branch
Xiamen, Fujian
May-12
Sep-05
Westgate Mall branch
Shanghai
May-12
1998
Supermarket
Tesco
Yuanling branch Shenzhen, Guangdong
Park’n Shop
Department stores
Isetan
Taiyuan Street branch
Shenyang
Jun-13
2008
Ito-Yokado
Wangfujing branch
Beijing
Jan-13
Nov-05
New World
Taizhou branch
Taizhou, Jiangsu
Nov-12
Jan-09
Ningbo branch
Ningbo, Jiangsu
Feb-12
Nov-04
AEON
Chaoyang branch
Beijing
Mar-12
Jun-10
Parkson
Shijiazhuang branch
Shijiazhuang, Hebei
Aug-13
2008
Dashizi branch
Guiyang
Jun-13
2000
Jinfenghuang branch
Guiyang
Dec-12
2008
Hongqiao branch
Shanghai
Aug-12
Dec-02
Source: China National Commercial Information Centre; compiled by Fung Business Intelligence Centre
)'
Retail Market in China, 2013
Box 1: Major challenges encountered by foreign retailers in China
Some major hurdles facing foreign retailers:
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at favourable prices to establish new stores.
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retailers.
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regional retailers have usually increased synergies when negotiating with regional
distributors. Also, operating in multi-format mode provides greater flexibility. So if
hypermarket growth slows a retailer can shift focus to opening more convenience
stores.
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differ significantly from their original operations, a strategy which may not suit the
needs of the China market.
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Facing unfavourable market conditions, foreign enterprises have adapted their China
strategies by shifting from large-scale expansion to improving core competencies.
For instance, Wal-Mart announced in April 2013 that it would invest 5 billion yuan on
revamping and upgrading 50 of its existing stores. Other foreign retailers are actively
seeking partnerships with local players. In August 2013, Tesco confirmed that it will team
up with China Resources Enterprise Ltd (CRE) to set up a joint venture in China.
Analysis of major retail formats
Overview
Among all major retail formats, Internet retailing recorded the highest sales growth for
2012. As to traditional channels, specialty stores in general saw higher growth than
grocery retailers such as hypermarkets and supermarkets (see Exhibit 16).
)(
Exhibit 16: Yoy sales growth in retailing, by retail format, 2012
yoy growth (%)
Total
12.8
Store-based retailing
10.8
5
Grocery retailers
8.2
Non-grocery retailers
12.7
6
Apparel specialist retailers
16.7
Electronics and appliance specialist retailers
6.8
Health and beauty specialist retailers
12.3
Home and garden specialist retailers
13.6
Leisure and personal goods specialist retailers
14.8
7
Mixed retailers
14.8
Other non-grocery retailers
12.1
Non-store retailing
65.2
Direct selling
20.0
Home shopping
24.0
Internet retailing
84.4
Vending
11.5
Source: Euromonitor
In terms of gross profit, all retail formats except convenience stores witnessed negative
yoy growth in 2012. Convenience stores’ gross profits increased slightly by 0.8 ppt
compared with 2011 (see Exhibit 17).
Exhibit 17: Gross profit margin, by retail format, 2011 - 2012
2012 (%)
2011 (%)
yoy change in ppt
Convenience stores
17.3
16.5
0.8
Supermarkets
14.5
15.4
-0.9
Hypermarkets
12.4
13.1
-0.7
Professional stores
13.1
14.2
-1.1
Specialty stores
17.0
18.3
-1.3
Department stores
17.5
18.6
-1.1
Average
15.6
16.8
-1.2
Source: China Chain Store and Franchise Association
5 Grocery retailers: convenience stores, discounters, forecourt retailers, hypermarkets, supermarkets,
independent small grocers
6 Specialist retailers: specialty stores, professional stores
7 Mixed retailers: department stores, variety stores, mass merchandisers, warehouse clubs
!*
Retail Market in China, 2013
As shown in Exhibit 18, specialty stores recorded the highest net profit margin of 4.15%
in 2012, and professional stores the lowest net profit margin of 1.30%. The net profit
margin for supermarkets dropped by as much as 1.05 ppt to 2.45% last year.
Exhibit 18: Net profit margin, by retail format, 2011 - 2012
2012 (%)
2011 (%)
yoy change in ppt
Convenience stores
3.35
3.65
-0.30
Supermarkets
2.45
3.50
-1.05
Hypermarkets
2.00
2.40
-0.40
Professional stores
1.30
1.50
-0.20
Specialty stores
4.15
4.35
0.20
Department stores
2.15
2.50
-0.35
Average
2.46
2.66
-0.19
Source: China Chain Store and Franchise Association
Exhibit 19 and 20 show the selected retail performance indicators of sample stores by
retail format8. Department stores led in terms of operating area, number of employees,
retail sales, average sales per sqm and average customer spending. Convenience stores
had an edge in gross margin.
Exhibit 19: Performance of selected sample store by retail format, 2012
Department
Convenience
store
Hypermarket
Supermarket
42,038
11,863
2,315
144
Number of employees
1,421
327
74
8
Retail sales (million yuan)
1,139
285
41
5
28,000
26,000
20,000
42,000
337
81
58
21
14.3
13.7
13.4
17.2
Operating area (m²)
store
Average sales per m²
(yuan/ m²)
Average customer
spending (yuan/ visit)
Gross margin (%)
Source: China Chain Store and Franchise Association
8 Sample stores are the stores with operational areas within 25% of the industry average; excluding outliners
!)
Exhibit 20: Performance of selected sample store by retail format, a yoy
comparison with 2011
yoy change
in 2012
Department
stores
Convenience
Hypermarkets
Supermarkets
stores
Operating segment
7.6%
17.8%
-5.4%
33.3%
Number of employees
5.7%
-1.5%
-10.8%
-14.0%
-7.0%
-3.8%
-9.5%
5.9%
-10.5%
-11.6%
8.1%
-1.6%
spending
-12.5%
3.8%
-6.5%
28.0%
Gross margin
0.3 ppt
0.8 ppt
0.4 ppt
-1.9 ppt
Retail sales
Average sales per m²
Average customer
Source: China Chain Store and Franchise Association
It is worth noting that the performance of sampled department stores showed a marked
deterioration in 2012, with retail sales, average sales per sqm and average customer
spending falling by 7%, 10.5%, and 12.5% respectively.
Department stores
China’s department store sector is heavily dominated by regional players, and the market
is highly fragmented. Many players have struggled over recent years. As well as facing
fierce competition from shopping malls, specialty stores, and online retailers, they have
also been undermined by their commission-based, concessionary model. As shown in
Exhibit 17, department stores’ gross profits from sales last year dropped by 1.1 ppt to
17.5%; the net profit margin from sales decelerated to 2.15% and was below the industry
average of 2.46%.
Exhibit 21 shows the top 10 department store operators by sales.
!!
Retail Market in China, 2013
Exhibit 21: Top 10 department store operators by sales, 2012
Country
Rank Enterprise
of origin
1
Shanghai Friendship
China
Group Incorporated
(Shanghai)
Sales
yoy
No. of
yoy
(million yuan) growth (%) stores growth (%)
570,000.0
3.6
49
14.0
372,750.0
4.7
170
0.0
333,996.5
11.5
286
5.5
320,311.5
16.3
104
15.6
China (Jilin)
241,449.8
21.3
58
16.0
Beijing Wangfujing
China
215,743.9
7.4
28
12.0
Department Store
(Beijing)
203,734.6
7.5
59
15.7
Company
2
3
4
Dalian Dashang
China
Group Co., Ltd.
(Dalian)
Chongqing Department
China
Store Co., Ltd.
(Chongqing)
Yinzuo Group Co., Ltd.
China
(Shandong)
5
Changchun Eurasia
Group Co., Ltd.
6
(Group) Co., Ltd.
7
8
Rainbow Department
China
Store Co., Ltd.
(Shenzhen)
Parkson Retail Group
Malaysia
197,235.8
20.1
48
4.3
Wenfeng Great World
China
194,905.9
0.8
995
0.5
Chain Development
(Jiangsu)
186,691.9
13.6
28
7.7
Ltd.
9
Corporation
10
Golden Eagle Retail
China
Group Ltd.
(Nanjing)
Source: China Chain Store and Franchise Association; modified by Fung Business Intelligence Centre
*Note: Estimated value
Major trends
i.
Integration of online and offline channels
To extend customer reach and further penetrate the market, many department stores
have launched online platforms. Currently, most department store operators outsource
their online operations to third parties. They are running at a loss. Some operators are
actively working on integrating their online and offline channels.
!"
Case: Intime Retail Group
Intime was one of the first China department store operators to set up an online virtual
store. Its online store, Yintai.com, started in late 2010. Yintai.com is operated by Zhejiang
Intime Electronic Commerce Co., Ltd. (while Intime owns 40% of the company). Yintai.
com showed a 100 million yuan loss in 2012 despite reporting a stunning yoy sales
growth of 380%. Intime’s online and offline channels target different customer groups.
The online platform targets the mass market, while the offline stores target mid- and highend consumers. Products offered by the online and offline platforms are not the same,
with overlapping rate lower than 50%.
Going forward, Intime is set to fully integrate its online and offline channels. It intends
to create a unified client database and offer the same merchandise and shopping
experience to its customers across all sales channels.
ii.
Department store operators refine market strategies and strengthen
merchandise categories
Competition is fierce in the department store segment. To distinguish themselves against
competitors, some department store operators have started to revamp stores to target
the premium segment. Wangfujing Department Store has introduced its sub-brand
hQ to target the high-end market; Dalian Dashang has opened its Mykal Department
Store to cater to higher-end consumers, while Kingson Department Store targets
trendy youngsters. Some department store operators have started to focus on certain
merchandise categories. Realising that consumers pay more attention to home products,
Wuhan Zhongbai Commercial Group has teamed up with home product designers from
Japan, Taiwan and Hong Kong to offer unique collections.
iii.
Players strive to enhance customer experience
To survive the highly competitive marketplace, some department store operators
differentiate themselves by incorporating more entertainment elements and catering
services. The “department store plus shopping mall” business model is becoming more
popular. This allows operators to offer a better shopping experience and diversify income
streams.
Shopping malls
Shopping malls continue to gain in popularity. Consumers can enjoy one-stop shopping
conveniently under one roof. According to a report by Deloitte and CCFA, as at the
end of 2011 China had a total of 2,812 shopping centres open for business, with an
aggregate total commercial building floor space of 177 million sqm. It is estimated that
new commercial building floor space for China’s shopping centres will surpass 35 million
!#
Retail Market in China, 2013
and 44 million sqm in 2012 and 2013 respectively; by the end of 2013, China’s shopping
inventory will occupy 250 million sqm. Exhibit 22 shows the number of newly-opened
shopping centres in China over recent years.
Exhibit 22: Number of newly opened shopping centres in China, 2002 - 2012
(estimates)
Source: Mall China Information Centre, Deloitte, China Chain Store and Franchise Association
Major trends
i.
Shopping malls spring up in key city suburb areas
Suburb areas of tier 1 cities are becoming new development targets due to highdensity shopping malls and rising rents in city centres. Also, the growth of inter-city
transportation and the popularity of automobiles make it possible to travel conveniently.
As a consequence, shopping centres in suburban areas have larger floor areas than
those in city centres.
ii.
Oversupply of shopping malls is common
Due to stringent measures imposed by the government to cool the residential property
market, many property developers have diverted their attention to the commercial
property market. Local governments have offered incentives to support shopping centre
development. These policies have led to an oversupply of shopping malls. According
to Knight Frank9, the average vacancy level for tier 1 cities in China was 8.1% in 2H12,
while the average vacancy rate for tier 2 cities over the same period was 9.5%. Exhibit 23
shows the vacancy rates of prime shopping centres in selected cities.
9 http://www.knightfrank.com.hk/content/upload/files/Reports/Research_retail/Holdways_retail_2h2012.pdf
!$
Exhibit 23: Vacancy rates of prime shopping centres, 2H12
Source: Knight Frank
iii.
Shopping malls scale up in size
Shopping malls are becoming larger in scale and have more extensive floor spaces to
incorporate differentiated merchandise and services. Jones Lang LaSalle expected that
the average mall size would increase from 710,418 square feet in 2005 to over 947,224
square feet in 201310.
iv.
Catering and entertainment elements prevail
To enhance the consumer experience and
prolong the time customers spend in the
shopping malls, many malls have expanded
their catering and entertainment services.
For instance, Popark in Guangzhou has
undertaken extensive renovation and the mall
now features a large food court hosting some
well-known restaurants. Other shopping malls
such as Saiho Plaza and CapitaMall Jinniu
Phase II in Chengdu have invited cinema
operators to open theatres.
10 http://www.cnbc.com/id/100865667
!%
Retail Market in China, 2013
Hypermarkets and supermarkets
Intensified competition, surging rentals and labour costs and increasingly saturated
markets have all seen hypermarkets and supermarkets margins narrowed. Planet Retail
forecasts hypermarket and supermarket sales growth to fall from 16% yoy in 2012 to
12% yoy in 2013 and store number growth to drop from 11% yoy in 2012 to 10% yoy in
2013 (see Exhibit 24).
Exhibit 24: Sales growth and store number growth for hypermarkets and
supermarkets, 2009 - 2013 (estimates)
Source: Planet Retail, Deloitte
Exhibit 25 shows the top 10 hypermarket and supermarket operators by sales in 2012.
China Resource Vanguard topped the list with total sales of 941 billion yuan in 2012,
followed by RT-Mart and Lianhua Supermarket.
!&
Exhibit 25: Top 10 hypermarkets and supermarkets operators by sales, 2012
Rank Enterprise
Sales
yoy
No. of
yoy
(million yuan)
growth(%)
stores
growth (%)
1
China Resource Vanguard Co., Ltd.
941,000
13.80
4,423
11.2
2
RT-Mart Shanghai Ltd.
724,700
17.70
219
18.4
3
Lianhua Supermarket Holdings
657,302
-3.40
4,762
-8.8
Co., Ltd.
580,000
3.6
395
6.8
5
Carrefour China Inc.
452,739
0.20
218
7.4
6
Nonggongshang Supermarket
(Group) Co., Ltd.
303,028
0.20
2,734
-19.0
7
Yonghui Superstores Co., Ltd.
279,300
37.00
249
22.1
8
TESCO China
200,000
11.10
111
8.8
9
Shandong Jiajiayue Group
181,880*
12.00
595
3.8
10
A-Best Supermarket Co., Ltd
180,000*
2.70
116
0.0
Co., Ltd.
4
Wal-Mart (China) Investment
Source: China Chain Store and Franchise Association
*Note: Estimated value
Major trends
i.
Direct farm sourcing continues
An increasing number of hypermarket and supermarket operators source directly from
farmers to lower distribution costs. They can also provide cheaper, fresher and better
quality agricultural produce to consumers. A typical example is Carrefour. In the vanguard
of direct farm sourcing, the retailer has partnered with over 460 farm cooperatives since
2007. Other hypermarket operators such as Wal-Mart, RT-Mart, Tesco, Metro AG,
Wumart and China Resources Vanguard have undertaken similar initiatives and achieved
remarkable successes in direct farm sourcing. This has in turn also helped farmers
increase their annual incomes and improve the rural retailing landscape.
Exhibit 26 depicts some specific ways that hypermarket operators engage in direct-farm
sourcing.
!'
Retail Market in China, 2013
Exhibit 26: How hypermarket operators engage in direct-farm sourcing
Invest directly in planting
Work with farmers’ cooperatives to
and production bases
handle transportation and logistics needs
Work with agricultural production
Line up with other retailers to
and processing firms
source food products together
Source: Fung Business Intelligence Centre
ii.
Players keen to introduce high-quality imported foods
With higher household incomes and increasing food safety concerns, many middle class
consumers are willing to pay a premium for high-quality, authentic, imported foods.
Eyeing such large opportunities, some supermarket and hypermarket operators have
opened high-end stores which specialise in selling imported foods. For example, China
Resources Vanguard launched Ole, a high-end supermarket chain to cater to the growing
demand for fresh, organic and natural products. It plans to expand the brand to cities
such as Chengdu, Nanning, Xi’an, Shenyang and Zhongshan. The accumulated store
number is expected to reach 50 by 201611.
iii.
Private brands become increasingly common in hypermarkets and
supermarkets
For many Chinese consumers, private brands are usually associated with low pricing and
value for money. Many hypermarket and supermarket operators have launched their own
private labels in categories such as household products and packaged foods.
However, there are already a huge number of low priced brands available at hypermarkets
and supermarkets. So, many Chinese consumers prefer to purchase branded products
that are sold at similar or slightly higher prices. To sustain their competitive advantage, it
is essential for private labels to improve on perceived quality and safety standards.
11 http://news.winshang.com/news-127181.html
!(
Convenience stores
The development of convenience stores in China is somewhat unbalanced. In some
cities such as Shanghai and Guangzhou, competition is extremely fierce. But in other
cities, especially the lower-tier ones, development is lagging to a greater extent. Exhibit
27 maps out the competitive landscape of China’s convenience stores.
The leading players by number of stores are shown in Exhibit 28. For most convenience
store players, ever-increasing rental and labour costs remain major challenges.
Exhibit 27: Competitive landscape of convenience stores in China, 2012
Source: Kantar Retail
!"
Retail Market in China, 2013
Exhibit 28: Top 10 convenience store operators by number of stores, 2012
Convenience
Country of
No. of stores
Ranking
Enterprise
store brand
origin
in 2012
1
Sinopec Group
Easy Joy
China (Beijing)
20,891
2
PetroChina Co., Ltd.
uSmile
China (Beijing)
13,000
3
Dongguan Sugar &
Meiyijia
China (Dongguan)
4,650
Zhejiang Gongxiao
Gongxiao;
China (Zhejiang)
2,115
Supermarket Ltd.
Jialian
Shanghai Liuhua Quik
Quik
China (Shanghai)
2,031
Liquor Group Meiyijia
Convenience Store
Co., Ltd.
4
5
Convenience Stores
Co, Ltd.
6
Nonggongshang Group
Kedi; Alldays
China (Shanghai)
1,780*
7
7-Eleven
7-Eleven
United States
1,732*
8
China Resource Suguo
Suguo
China (Nanjing)
1,694
9
Guangdong Sun-high
Sun-high
China (Guangdong)
1,559
Hongqi
China (Chengdu)
1,336
Convenience Store
Co., Ltd.
10
Chengdu Hongqi Chain
Co., Ltd.
Source: China Chain Store and Franchise Association, modified by Fung Business Intelligence Centre
*Note: Estimated value
Major trends
i.
Convenience store players extend valueadded services
To differentiate from competitors, convenience store operators increasingly focus on
offering value added services. These include selling admission tickets for specific shows
or tourist sites, top-up services for mobile phone users and bill payment schemes.
Although the profit margins are slim, many convenience store players view these as
effective in increase consumer traffic and driving impulse buying, particularly at the
checkout counter.
")
ii.
More on-the-go meal services available
Convenience stores have been offering fresh, prepared foods for years, but the trend has
become more pronounced as increasing numbers of time-conscious consumers look for
on-the-go meals. Some retailers have revamped their conveniences stores and added
on-site catering to provide hot and cold food and drink. For example, some Circle K
outlets provide in-store catering to offer meals and drinks under its own Hot & In brand.
Circle K believes its Hot & In service is the main revenue driver in the Guangzhou market,
contributing approximately 40% of the sales mix in FY201212. 7-Eleven has also launched
foods under its “7-Fresh” brand13, while Family Mart has established its own store brand
“Fami”14. In general, profit margins for catering services are higher than for many other
categories of merchandise.
iii.
Partnerships with online retailers for pick-up services
Given the vast network of convenience stores, more online retailers are considering
adapting their stores as pick-up points, so consumers can collect products they order
online. For example, Amazon China has teamed up with Family Mart since last March
to offer pick-up services at the latter’s outlets in Shanghai. Consumers can pick up their
online orders in designated convenience stores within a specific period of time. They can
choose to pay by cash, credit card or debit card at the store.
Specialty stores
Specialty stores are expanding aggressively, driven by both the rapid expansion of local
specialty retailers and the increasing number of international players that have entered
the China market. Some examples include Topshop, Forever 21, and Hollister.
As illustration, Exhibit 29 shows the pace of expansion for apparel specialist retailers. The
compound annual growth rate for total sales, numbers of outlets and size of sales space
have increased by 17.8% yoy, 10.6% yoy and 12.5% yoy respectively between 2007 and
2012.
12 http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0816/LTN20130816253.pdf
13 http://www.7-11.cn/cn/exclusive_fastfood.aspx?catid=8|28
14 http://www.familymart.com.cn/shfm/product/productlist.aspx?nodeid=52
"!
Retail Market in China, 2013
Exhibit 29: Apparel specialist retailers: value sales, outlets and sales space,
2007-2012
2007
2008
2009
2010
2011
2012
Value sales (billion yuan)
214.8
257.3
292.5
354.0
417.8
487.5
Outlets (thousands)
309.5
341.3
369.7
421.4
467.9
512.8
28.6
31.9
35.1
40.9
46.2
51.5
Sales space (million sqm)
Source: Euromonitor
Exhibit 30 depicts the number of stores established by selected major fast fashion
specialty retailers over recent years. All such retailers have accelerated their expansion in
China.
Exhibit 30: Store count of fast fashion specialty retailers in China, 2010-2012
Source: China National Commercial Information Centre, Company websites
Having said that, specialty store profitability has suffered a significant slowdown over
recent years. According to CCFA, gross profits were down by 1.3 ppt to 17.0% in
2012 and net profits for specialty stores were down by 0.2 ppt to 1.3%. Specialty
store operators, similar to their counterparts in other retail format segments, are facing
increasing competition from online retailers. Also, after years of rapid expansion, many
specialty store operators, particularly in the apparel and sports specialty segment, are
now facing the challenge of holding large inventories along with higher operational, rental
and labour costs.
""
In order to cut costs and jettison excessive inventory, some apparel retailers are closing
existing stores and opening factory outlets. For instance, Puma has announced that it will
close 90 stores in China as part of its global cost-cutting measures. Meanwhile, Nike is to
open between 40 and 50 factory outlets in China this year, with discounts of up to 70%
to clear inventory.
Similarly, despite their national presence, many 3C specialty stores remain unprofitable.
Some players are looking for ways to transform. Suning and Gome, for instance, are
gradually shifting from solely consumer electronics sales to offering a larger range of
other products such as apparel, cosmetics, books and household products. Suning’s
offline stores are set to carry more categories; the firm is introducing virtual displays of
online categories through iPad and other mobile devices. The idea is to introduce a “shop
anywhere, buy anywhere” experience.
Discount outlets
The discount outlet format continues to gain popularity among both retailers and
consumers. It is estimated that China has more than 400 discount outlets 15 , far
exceeding the total number in the United States.
Eyeing the booming market, more domestic and foreigner retailers are opening stores
in discount outlets. For example, Shanghai Bailian Group opened its third discount
outlet, Wuxi Mall, at the end of June this year after successfully opening two other
discount outlets since 2006. Value Retail, the European discount luxury outlet chain, is
reportedly to open its first store in a discount outlet in Suzhou in early 2014. Shopin,
China’s discount outlet chain with the majority of its stores in Beijing, has branched out
to Hangzhou, and the retailer plans to roll out its outlet stores in Eastern and Southern
China. Hunan Friendship & Apollo Commercial Co., Ltd. expects to open its second
discount outlet in 2014. Exhibit 31 lists out some major discount outlets that have
opened in 2013.
Exhibit 31: Major discount outlets open in 2013
Name of discount outlet
City
Megamills
Shanghai
Beijing Capital Outlets (Fangshan branch)
Beijing
Changsha Globe Outlets
Changsha
Tianjin Yansha Outlets
Tianjin
Florentia Village
Tianjin
Source: China Commerce Association for General Merchandise, “Commerce” Magazine, May 2013
15 http://www.zgswcn.com/2013/0815/217882.shtml
"#
Retail Market in China, 2013
For retailers, discount outlets are possibly the best channel to offload stale inventory
without slashing prices in retail stores. Consumers can buy their desired brands at a
discount. The government’s anti-corruption campaign, which may lead to an increase
in inventory for luxury brands, could further boost the outlet business, as many luxury
retailers sell off-season products through them.
On the other hand, discount outlets in China are not as mature channels as those in
many other countries where consumers can easily find first-tier brands at big bargains.
Many outlets in China can only attract lesser-known brands. Also, the problem of
counterfeit products undermines the image that discount outlets would prefer to project.
Online Retailing
Online shopping’s popularity continues to power ahead in China. According to
iResearch16, the transaction value of the online retail market increased by 66.2% yoy to
reach 1,304.0 billion yuan in 2012, accounting for 6.2% of the country’s total retail sales.
China has become the world’s second largest online market. Exhibit 32 shows total
transactions in the country’s online retailing sector by quarter.
Exhibit 32: Total transactions for online retailing, 1Q11 - 2Q13 (estimates)
Source: National Bureau of Statistics, iResearch
With Chinese consumers increasingly used to shopping online, the retail market’s growth
momentum is set to be sustainable for a number of years. iResearch expects total online
sales to reach 3,600 billion yuan in 2016 and account for 10.8% of total retail sales.
China is expected to overtake the United States for online sales in 2014.
16 http://www.iresearch.com.cn/coredata/2012q4.shtml
"$
Major trends
i.
More B2C players operate as open platforms
The B2C segment is highly competitive, so many B2C retailers are transforming
themselves into open platforms in order to expand the scope of their business and
become more profitable. Third parties can sell goods on their platforms and online
tenants are usually charged various types of fees, such as credit deposits, entry fees,
annual fees, commissions, advertising and transaction fees. The platform owners provide
logistics, warehousing and after-sales services for these tenants. Hence, B2C players can
expand their product categories without needing to make a significant investment.
ii.
Online retailers enrich product offerings
Many online retailers have been actively increasing their product offerings by either
adding new categories or forming partnerships with other brands on their open platforms.
Reasons for expanding product offerings are threefold: (1) to enhance consumers’
“stickiness” and cross-selling opportunities; (2) to improve overall margins and turnover;
and (3) to expand market share.
iii.
Price competition is common
Competing on price to build market share remains the number one marketing strategy
in China’s online retail market, as most Chinese consumers remain largely price focused.
Many retailers have tried to squeeze out competition and increase market share by
adopting a low price strategy.
The price wars have made it difficult for smaller online retailers to compete with giant
operators. Many lack the scale and resources to provide a wide range of products
through efficient logistics, and they are also less competitive in terms of pricing and
reputation. So, for these smaller players, focusing on a specific category can help them
to secure a foothold in the market. It seems they should actively seek better ways to
differentiate themselves from competitors.
For detailed information on online retailing in China, please refer to our Online retailing in
China report published in June 2013.
(http://www.funggroup.com/eng/knowledge/research/china_dis_issue111.pdf)
"%
Retail Market in China, 2013
Key highlights
"&
From aggressive store expansion to improved store productivity
Some retail players adopted aggressive expansion strategies in the past to boost brand
visibility, but they now find that many stores undertaking this approach are unprofitable.
Faced with slowing growth in the market, some retailers have started to close unprofitable
stores and focus on improving core competencies.
Retailers are adopting various methods to do so and achieve operational excellence.
Some significant approaches include greater investment in R&D, the launch of longerterm brand marketing campaigns, introduction of new store brands and retail concepts.
Other strategies include the launch of differentiated merchandise assortments,
accelerated format revamps and innovative schemes.
Poorly-managed business expansion by some domestic players, particularly sportswear
and fast fashion retailers, has sparked considerable concern. Many have opened too
many store outlets, causing overstocking of often obsolete inventory. As a result, some
sportswear companies have suffered a considerable slowdown in sales growth. For
instance, domestic players such as Li Ning, Anta, 361 Degree, Xtep, and Peak suffered
yoy sales declines of minus 17%, minus 18%, minus 15%, minus 12% and minus 29%
respectively in 2012.
Retailers launch own private labels or proprietary brands
Launching private labels or proprietary brands appears a feasible way for retailers to
build core competencies. Private labels or proprietary brands can also increase profit
margins and improve customer loyalty. Yet, penetration by private labels is low in China.
According to a report by Rabobank, sales of private labels account for only about 3% of
total sales17. But the share of private labels in China is expected to rise between 25%
and 30% by 2030, as Chinese consumers increasingly buy private label products and
retailers become more familiar with launching house brands18.
In the meantime, more retailers now realise the importance of direct sales. Department store
operators, in particular, are stepping up efforts to develop private brands. For instance, Intime
has increased its proportion of direct sales; total sales proceeds from direct sales increased
by 29.7% to 921.3 million yuan in 1H1319. The company also set up its own direct sales
17 http://finance.eastmoney.com/news/1355,20130820316235017.html
18 https://www.rabobank.com/en/press/search/2013/20130812_Rabobank_Report-Private_Label_Goes_to_
Asia_Share_in_India_and_China_expected_to_hit_25-30_by_2030.html
19 http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0819/LTN20130819383.pdf
"'
Retail Market in China, 2013
department in 2012, recruiting buyers to handle their own private label businesses20. At the
same time, Hola, the Taiwan-based home furnishing store, launched kitchenware under its
own brand last July21. Zhongnan Commercial (Group) Co., Ltd. announced the launch of a
department store stocking solely self-sourced merchandise.
Launching private labels indeed seems to be an attractive strategy for retailers seeking
differentiation; yet, there are many challenges. Private labels in China are not particularly
successful in terms of revenue generation and popularity among consumers. Many
local department store operators believe they lack professional and experienced buyers
to select appropriate products. It normally takes more than three years to nurture a
professional buyer and the turnover rate is high.
In addition, many retailers do not possess appropriate knowledge to manufacture
and market their in-house product lines. The operating model is completely different,
requiring a new range of management skills. Retailers have to hold inventory and be
prepared to incur additional risk in contrast to when they are operating under the familiar
concessionary model. Given the huge capital investment needed, many retailers are
reluctant to launch their own products.
Mobile-commerce is increasingly popular, as is mobile payment
The mobile platform has become a highly significant sales channel. According to
iResearch, in 2Q1322, the transaction value of mobile shopping reached 37.52 billion
yuan, up 181.0% yoy (see Exhibit 33).
Exhibit 33: Transaction value via mobile, 1Q11 - 2Q13 (estimates)
Source: iResearch
20 http://www.takungpao.com.hk/house/content/2012-09/26/content_1166712.htm
21 http://money.chinatimes.com/news/news-content.aspx?id=20130717002036
22 http://www.iresearch.com.cn/coredata/2013q2_7.shtml
"(
Increasing numbers of telecommunications and network operators have launched
mobile payment services. A typical example is Tencent. Tencent rolled out its mobile
payment service for Chinese users on WeChat, a smartphone text and voice messaging
communication service developed by the company. Bank accounts can be bundled on a
WeChat account23.
Another example is China Unicom. The mobile operator partnered with Agricultural Bank of
China to provide mobile banking and payments services to the latter’s customers24. HTC
(Beijing) has signed a strategic deal with China Merchants Bank to offer its “Mobile Wallet”
service to Chinese consumers25. Alipay, China’s largest e-payments provider, launched its
Alipay Wallet mobile app which, apart from providing online payments, also allows offline
payments at points of sales using barcodes and QR codes26 to settle payments.
The prevalence of digital marketing
As Chinese consumers become more affluent and digital savvy, retailers are starting
to recognise the importance of developing digital marketing and sales channels.
Social media is having an explosive impact on consumer purchasing decisions.
This is particularly the case in China since shoppers generally engage more
actively on social media platforms than their overseas counterparts. According to a
PricewaterhouseCoopers survey 27, 57% of surveyed respondents follow brands or
retailers on social media, compared to 38% in the global sample.
The belief is that influential social media websites can increase the conversion rate and
encourage more customers to purchase goods. Many retailers have tried to leverage the
huge user databases of SNS websites to promote their products and enhance profitability.
Sina Weibo, with more than 500 million registered users, is one of the most popular SNS
websites in China. WeChat, the instant messenger with more than 400 million registered
users, is another tool for brands to interact with consumers. Many department stores also
develop mobile apps equipped with interactive features, such as QR code. App users can
download exclusive coupons by simply scanning the QR code with their smartphones and
tablets. Retailers hope they can generate more sales via such e-initiatives.
However, the majority of companies still believe that they are not yet adequately prepared
to convert growing online interactions into a sales advantage28.
23 http://thenextweb.com/asia/2013/08/05/tencents-wechat-mobile-messaging-app-gets-payments-gamecenter-and-stickers-in-long-awaited-update/
24 http://www.mobilepaymentsworld.com/china-unicom-partners-agricultural-bank-of-china-for-m-banking/
25 http://english.cmbchina.com/CmbInfo/News/DetailInfo.aspx?guid=6d7584f3-1023-43d6-9e3dd9e3e6652df2
26 http://www.alizila.com/alipay-introduces-mobile-wallet-app#sthash.9ekNbwiR.dpuf
27 PWC, "Demystifying the online shopper. 10 Myths of multichannel retailing", January 2013
28 http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/Template/Content.
aspx?Type=32&Guid={EDFDF671-E699-42E8-AF46-7F99B6C51793}
#*
Retail Market in China, 2013
Improving customer relationship management
Although many retailers in China have been running their membership programmes
for a long time, most simply collect data from customers but do not fully utilise the
information. It is common that members of a particular branch of a department store
cannot enjoy membership discounts in other branches. This is attributable to the fact
that many retailers do not have a centralised customer database for effective customer
management.
An effective customer loyalty programme is considered instrumental in attracting and
retaining customers. Retailers now realise the need for creating a centralised database
for ease of data analysis and customer management. For example, Joycity is trying
to combine the membership programmes of its five shopping malls to allow members
to accumulate “points” when they purchase in any malls owned by the same group.
They can enjoy the same discounts in each mall using the same card29. Meanwhile, as
mentioned earlier, many retailers use various types of social media to reach out to their
members30.
The concept of the omni-channel emerges
The omni-channel is a seamless approach to providing customer experience through
different shopping channels. Retailers seek to pull together multi- and cross-channel
offerings, including physical stores, online platforms and social media, to create a highly
convenient and impactful shopping experience.
The concept of the omni-channel is still very new in China. The offline and online
operations of many retailers are often separate. Retailers usually target different consumer
segments online and offline, while their online and offline pricing strategies do no match.
Also, distribution centres for online and offline markets are usually different; customers
can only return products to the channel where they purchased them. Also, many
retailers have separate customer databases for offline and online purchases. In short, the
interaction between online and offline businesses is very limited.
At the moment, there is no fully integrated onmi-channel player in China. However, some
retailers are starting to take a closer look at various aspects of omni-channel strategies
and the impact on their businesses.
29 http://www.bbtnews.com.cn/news/2013-08/16000000153923.shtml
30 http://economists-pick-research.hktdc.com/business-news/article/%E5%9C%8B%E9%9A%9B%E5%B8
%82%E5%A0%B4%E7%B0%A1%E8%A8%8A/%E5%85%A7%E5%9C%B0%E7%99%BE%E8%B2%A8
%E6%A5%AD%E7%86%B1%E8%A1%B7%E5%BE%AE%E4%BF%A1%E8%A1%8C%E9%8A%B7/imn/
tc/1/1X000000/1X09U8LR.htm
#)
For example, in February 2013, Suning announced the change of the company’s name
from Suning Appliance Co., Ltd. to Suning Commerce Group Co., Ltd.; its future retail
business model in China is described as “physical stores, e-commerce, plus retail service
provider”31. From a long-term perspective, the company has the opportunity to make a
transition from a conventional retail channel of household appliance and 3C to a “WalMart + Amazon” model which runs an all-category and all-form business both online
and offline, providing consumers with a “shop anywhere, buy anywhere” omni-channel
experience. Since June 2013, Suning has also unified its online and offline pricing
strategy. Intime Department Store has also been striving to offer a multi-channel shopping
experience by building an interactive online platform. For example, this offers free instore WiFi services. Another example is the footwear company, Belle. The company
is reportedly to launch in-store pick up services within two years aimed at consumers
purchasing from its online platform, yougou.com32.
Industry experts believe that online and offline integration will become an inevitable retail
trend.
Tier 3 and tier 4 cities become the focus for development
Thanks to ongoing urbanisation and rising incomes, consumption in lower tier cities is
growing fast. Tier 3 and tier 4 cities will be the key focus for development of China’s retail
business over the next few years as competition gets tougher in tier 1 and tier 2 cities.
Many hypermarkets have already shifted focus to lower-tier cities. For instance, Sun Art
Retail Group, the owner of RT-Mart and Auchan, has approximately 10.9% of its stores
located in tier 1 cities, 18.7% in tier 2 cities, but with 43.7% in tier 3 cities, 20.0% in tier 4
cities and 6.7% in tier 5 cities, as of 30 June 201333.
M&A continues to be an opportune avenue fueling growth
M&A is a fast way to expand market presence and penetrate different consumer
segments. One prominent case recently was the partnership between China Resources
Enterprise (CRE) and Tesco. CRE announced that it will team with Tesco to establish a
joint venture (JV) for the food retail business on the Chinese mainland, in Hong Kong and
Macau34. CRE will own an 80% stake in the JV with the remaining 20% owned by Tesco.
31
32
33
34
#!
http://www.cnsuning.com/snsite/sn_contentFront.do?method=contentDetail&id=2206
http://www.chinawuliu.com.cn/zixun/201308/19/248576.shtml
http://www.hkexnews.hk/listedco/listconews/SEHK/2013/0814/LTN20130814323.pdf
http://www.cre.com.hk/announ/e-20130809A-1.pdf
Retail Market in China, 2013
Another case was the acquisition of PCD Stores by Wangfujing Department Store (WFJ)
last January. WFJ acquired PCD Stores, which operates 18 department stores and three
outlets in China, with a view to expanding market share and geographical coverage
on the mainland, diversify its retail business activities by engaging in discount outlet
businesses, and increasing the proportion of self-owned properties.
Exhibit 34 shows some recent M&A cases in China’s retail sector.
Exhibit 34: Selected M&A cases in China’s retail sector, July 2012 - August 2013
Announced
Amount
Company
Target
date
(million USD)
Shandong Commercial
Yinzou Group Co.,
30-Mar-13
40
Group Co., Ltd.
Ltd.
Beijing Wangfujing
PCD Stores Ltd.
24-Jan-13
257
Mianyang Yaoda
Taiyuan Tianlong
6-Jan-13
32
Investment Co., Ltd.
Group Co., Ltd.
Xizi UHC
Baida Group Co., Ltd.
30-Aug-12
6
Taubman-TCBL Xian
Xi’an Wangfujing
29-Aug-12
51
(Hong Kong) Ltd.
Department Store
Baoji Store Co., Ltd.
Hanzhong Century
28-Aug-12
21
International Commercial
Development Co., Ltd.
Sunshine Building
Co., Ltd.
Parkson Retail Group Ltd.
Qingdao Parkson
27-Aug-12
54
Xiamen ITG Holding
Xinda Duty-free
10-Jul-12
9
Co., Ltd.
Department Store
Source: China Venture
#"
Government initiatives
##
Retail Market in China, 2013
The Chinese government has been very supportive in promoting the development of the
retail sector. Exhibit 35 lists some major initiatives launched by the government recently.
Exhibit 35: Major government initiatives related to the retail sector, July 2012 –
August 2013
Government
policy/ initiative
Opinions on
Promoting
Information
œ˜ÃՓ«Ìˆœ˜Ê>˜`ÊÊ
Boosting Domestic
Demand35Ê
Launched by
The State
Council
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Opinions on
Accelerating the
Development of
the Distribution
Sector36
Plan for Specifying
the Division of
Work for
Deepening the
Reform of the
Distribution System
and Accelerating
the Development of
the Distribution
Industry37
State
Administration
for Industry
and Commerce
The State
Council
Release date Details
August 2013
In the Opinions, the main tasks for
promoting information consumption are
put forward in the following aspects:
Ê
UÊ VViiÀ>ÌiÊ̅iÊiۜṎœ˜Ê>˜`ÊÕ«}À>`ˆ˜}Ê
of information infrastructure
Ê
UÊ -ÌÀi˜}̅i˜Ê̅iÊÃÕ««ÞÊV>«>VˆÌÞʜvÊ
information products
Ê
UÊ œÃÌiÀÊ̅iÊ`i“>˜`ʜvʈ˜vœÀ“>̈œ˜Ê
consumption
Ê
UÊ `Û>˜ViÊ̅iʈ˜vœÀ“>̈Ã>̈œ˜ÊœvÊ«ÕLˆVÊ
services
Ê
UÊ -ÌÀi˜}̅i˜Ê̅iÊi˜ÛˆÀœ˜“i˜ÌÊvœÀÊ
construction of information consumption
August 2013
The Opinions aim to strengthen the
enforcement of market supervision and
create a sound market environment a
sound market environment for the healthy
development of the distribution sector.
May 2013
The Plan delegates specific tasks to
various departments for implementing
reform of the distribution system and
accelerating the development of the
distribution industry. It ensures better
division of labour, promotes collaboration
and strengthens coordination between
different departments. The plan points
out the need to optimise supply chain
management, accelerate the development
of e-commerce, foster the core
competitiveness of enterprises, reduce
distribution costs and strengthen the
protection of intellectual property rights,
among other measures. The Plan also
calls for reducing the burden of the
distribution sector by offering favourable
fiscal and financial policies and preferential
land policies.
35 http://hk.lexiscn.com/latest_message.php?id=86984
http://www.gov.cn/zwgk/2013-08/14/content_2466856.htm
36 http://www.saic.gov.cn/zwgk/zyfb/zjwj/scgfgls/201308/t20130802_136982.html
37 http://www.gov.cn/zwgk/2013-06/05/content_2419964.htm
#$
Government
policy/ initiative
NDRC to deepen
economic reform38
Launched by
The National
Development
and Reform
Commission
Draft Amendment
to the Consumer
Protection Law39
National
People’s
Congress
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Ê
Measures for the
Management of
Online Invoices40
Circular on Further
Promoting the
Sound and Rapid
Development of
E-Commerce41
State
Administration
of Taxation
National
Development
and Reform
Commission
with 12 other
government
departments
Comprehensive
The State
Work Plan regarding Council
Cutting Distribution
Expenses and
Improving
Distribution
Efficiency42
38
39
40
41
Release date Details
May 2013
The Opinions aim to promote economic
restructuring and transformation. A total
of 22 major tasks in seven fields were set
as priorities in 2013, including delegation
of the approval authority, fiscal and
financial reforms to stimulate the
economy, expansion of the VAT pilot
programme to lower the tax burden on
companies and formulation of a
development plan to promote urbanisation.
April 2013
The Draft aims to further protect
consumer rights and boost domestic
demand in the country, and has made
revisions to the current Consumer
Protection Law in the following five areas:
Ê
UÊ ˜…>˜ViÊÀՏiÃÊVœ˜ViÀ˜ˆ˜}ÊVœ˜ÃՓiÀÊ
rights protection
Ê
UÊ -ÌÀi˜}̅i˜Ê̅iʜLˆ}>̈œ˜ÃÊ>˜`Ê`ṎiÃÊ
of business operators
Ê
UÊ ,i}Տ>ÌiÊ̅iÊi‡Vœ““iÀViʈ˜`ÕÃÌÀÞ
Ê
UÊ >ÀˆvÞÊ̅iÊÀՏiÃʜvÊVœ˜ÃՓiÀÊ
associations
Ê
UÊ >ÀˆvÞÊ̅iÊÀi}Տ>̜ÀÞÊÀi뜘ÈLˆˆÌˆiÃʜvÊ
administrative authorities
April 2013
The Measures stipulate that merchants
on online retail platforms are required to
issue office invoices with each purchase.
April 2013
The Circular aims to further improve the
trans-departmental working coordination
mechanism, boost innovation in the
e-commerce sector, and promote a safe
and credible environment for
e-commerce transactions.
January 2013
The Work Plan aims to reduce distrubution
costs, improve distribution efficiency, and
establish a comprehensive system for
collecting data and statistics.
http://www.gov.cn/zwgk/2013-05/24/content_2410444.htm
http://www.china-briefing.com/news/category/legal/page/12#sthash.Z1Hvu7ua.dpuf
http://www.chinatax.gov.cn/n8136506/n8136593/n8137537/n8138502/12236582.html
http://www.china-briefing.com/news/2013/06/11/china-further-promotes-e-commerce-development.
html#sthash.cRCsrlkY.dpuf
42 http://www.gov.cn/zwgk/2013-01/15/content_2312686.htm
#%
Retail Market in China, 2013
Government
policy/ initiative
Launched by
Guiding Opinions on Ministry of
Promoting Brand
Commerce
Consumption in
China43
12th Five-Year Plan
for Domestic Trade
Development44
The State
Council
Ê
Ê
Ê
Ê
Opinions of the
State Council on
Further Reformation
of the Distribution
Sector and
Acceleration of the
Development of the
Distribution Sector45
Regulations on the
Affairs and
Administration of
Government
Agencies46
The State
Council
The State
Council
Release date Details
December
The Opinions emphasise the importance
2012
of brand building and encourages
enterprises to develop and cultivate
Chinese brands. Chinese enterprises are
encouraged to expand their sales
networks domestically, as well as consider
acquiring foreign brands and sales
channels to expand into overseas
markets. The Opinions also call for
commerce departments at all levels to
work together to promote consumption of
branded products domestically, as well as
formulate regulations to provide better
legal protection for brands.
September
The government set the following targets
2012
during the 12th FYP period:
UÊ /œÌ>ÊÀiÌ>ˆÊÃ>iÃʜvÊVœ˜ÃՓiÀÊ}œœ`ÃÊ̜Ê
reach 32 trillion yuan, with an annual
growth rate of 15%
Ê
UÊ 6>Õi‡>``i`ʜvÊ̅iÊ܅œiÃ>i]ÊÀiÌ>ˆ]Ê
accommodation and catering sectors to
reach 7 trillion yuan, with an annual
growth rate of 11%
Ê
UÊ /œÌ>ÊÌÀ>˜Ã>V̈œ˜ÃÊ܈̅ˆ˜Ê̅iÊ
e-commerce market to reach 18 trillion
yuan, with an annual growth rate of 30%
August
The Opinions aim to establish a modern
2012
distribution system, reduce the ratio of
total logistics cost to GDP, enhance the
competencies of large-sized distribution
enterprises, adopt modern information
technology, and improve the market
environment.
July 2012
As part of the anti-corruption campaign,
the government promulgated the
regulations effective October 2012.
According to the regulations, government
agencies are prohibited from purchasing
luxury goods.
Source: Government websites
43
44
45
46
http://www.mofcom.gov.cn/aarticle/b/d/201301/20130108511628.html
http://www.gov.cn/zwgk/2012-09/10/content_2220743.htm
http://www.gov.cn/zwgk/2012-08/07/content_2199496.htm
http://www.gov.cn/zwgk/2012-07/09/content_2179100.htm
#&
Challenges
#'
Retail Market in China, 2013
Significant increase in operating costs
Increased operating costs in China have squeezed profit margins for many retailers. The
ever-escalating rental and labour costs have particularly troubled many retailers over
recent years. Rental costs have been debilitating particular for retailers whose contracts
ended in 2012. On average, rental costs increased by between 3% and 5% yoy in
201247. For leading retailers, average rental costs in prime locations increased by 21%
yoy in 2012.
At the same time, labour costs have increased by between 5% and 10% since 2012 due
to rising minimum wages across the country in the wake of labour shortages and surging
inflation. Some 13 cities and provinces have raised their minimum wage levels this year,
with an average increase of around 17% (see Exhibit 36).
Exhibit 36: Minimum wage levels in 13 cities and provinces that raised the
minimum wage in 2013*
Minimum wage
Minimum wage
after increase
before increase
yoy
Effective
(yuan/month)
(yuan/month)
change (%)
date
Shanghai
1,620
1,450
11.7
1 Apr 2013
Shenzhen
1,600
1,500
6.7
1 Mar 2013
Guangdong
1,550
1,300
19.2
1 May 2013
Tianjin
1,500
1,310
14.5
1 Apr 2013
Zhejiang
1,470
1,310
12.2
1 Jan 2013
Beijing
1,400
1,260
11.1
1 Jan 2013
Shanxi
1,290
1,125
14.7
1 Apr 2013
Henan
1,240
1,080
14.8
1 Jan 2013
Jiangxi
1,230
870
41.4
1 Apr 2013
Guangxi
1,200
1,000
20.0
7 Feb 2013
Gansu
1,200
980
22.4
1 Apr 2013
Shaanxi
1,150
1,000
15.0
1 Jan 2013
Guizhou
1,030
930
10.8
1 Jan 2013
City
Source: China Briefing
* Amounts are based on minimum wage levels in Class A Districts.
47 Deloitte, "China power of retailing 2013", August 2013
#(
Unstructured development of retail properties and lack of
centralised city planning
China’s commercial property sector has experienced significant growth over the past
decade. In some key cities, duplicated investment, lack of centralised city planning
and mismanagement are giving rise to problems such as traffic congestion, increased
competition, poor customer footfall, an uneven trade mix, high vacancy levels and
commercial disputes.
On the other hand, the development of large-scale retailers is seen as more rapid than of
smaller retailers mainly serving local neighborhoods. There is also a lack of large-scale,
modern retailers in smaller cities and local communities. So, China’s retail scene remains
unbalanced.
Logistics bottlenecks are here to stay
As China’s retail market continues to become increasingly sophisticated, the efficient
movement of goods is proving to be a key success factor for retailers. However, China’s
logistics sector is less efficient than in many other developed countries, reflecting
the relatively higher ratio of total logistics cost to GDP. High logistics costs and weak
transport infrastructure pose hurdles for both retail and distribution companies.
Furthermore, in many lower-tier cities, there are a lack of logistics and distribution
centres. The technology for distribution is often not advanced enough to support China’s
rapidly developing retail market.
To better control logistics costs and enhance competitiveness, some large-scale
retailers have put greater emphasis on retail logistics management. One key approach
is to partner with reliable and capable logistics service providers to improve delivery
capabilities and enhance customer experience and satisfaction.
For detailed information on retail logistics in China, please refer to our Retail logistics in
China report published in April 2013.
(http://www.funggroup.com/eng/knowledge/research/china_dis_issue110.pdf)
$*
Retail Market in China, 2013
Integrating online and offline businesses remains a challenge
Online retailers offering low priced products and convenient shopping have posed
increasing challenges to traditional retailers. Seeing the huge growth potential of the
online market, an increasing number of traditional retailers have started to go online too.
However, as mentioned, the operating models for online and physical stores are very
different. Supply chains for online stores are generally more complicated than for physical
stores. The lack of qualified staff to operate the online business is another key challenge.
$)
Conclusions and implications
$!
Retail Market in China, 2013
Facing the headwinds of an increasingly competitive retail landscape, together with the
growing affluence and sophistication of Chinese consumers, the real retail winners are
those which constantly innovate and improve business practices. To succeed in China’s
rapidly evolving retail market, enterprises need to keep abreast of the latest developments
in the market.
Understand the paradigm shifts in consumer behaviour
With increasing wealth and rising consumer sophistication, the consumer market in China
is undergoing fundamental changes. Most significant is their abiding interest in trading
up – more Chinese consumers are willing to pay a premium for higher quality products
and services. These consumers also demand unique products and services. To win in
the market, retailers need to understand the changing needs of consumers and take
appropriate action. At the same time, changing shopping preferences have transformed
the competitive landscape. In particular, the prevalent of online shopping has forced
retailers to rethink their strategies in response to the new retail environment.
Seamless cross-channel experience
Chinese consumers today are becoming accustomed to optimising their shopping
experience across different channels, including physical stores, online platforms and
social media. More retailers are stepping up efforts to pull together multi- and crosschannel offerings, and explore various aspects of omni-channel strategies in the hope of
enhancing customer experience. The challenge for retailers is to ensure that all channels
complement one another and provide accurate, consistent and current information.
From Big Data to actionable insight
Advances in information technology and increasing access to information through
the Internet and mobile connectivity, have impacted consumers’ buying habits and
preferences across all channels. The appropriate use of Big Data allows retailers to
spot trends and better adapt to consumers’ changing needs. The key is to successfully
transform all such customer information and business intelligence into actionable insight,
and to adjust product and service offerings to suit the changing needs of customers.
$"
New technologies revolutionise the future of retail
Retailers need to closely monitor the development of new technologies such as data
analytics and 3D printing, which may have a revolutionising impact on how a business is
run; they should embrace change accordingly. Optimising performance and improving
competitiveness are crucial factors leading to success in China’s highly competitive
marketplace.
Unique brand positioning
In today’s competitive world, uniqueness is the key to standing out from the competition.
Retailers and brand owners need to develop strategic brand positioning, based on
the company’s value proposition. They have to take account of the rapidly evolving
retail landscape and consumer preferences. Differentiated positioning and continuous
improvements of products and services are needed for an enterprise to stay ahead of
its competitors. Moreover, Chinese consumers are becoming increasingly brand loyal,
making it essential for retailers to establish and maintain a strong brand image.
Sustainable development
China is stepping up efforts to develop a sustainable economy. Likewise, an increasing
number of retailers are pursuing green initiatives as a means of building a socially
responsible corporate image. A number of global retailers, such as Wal-Mart and Tesco,
are stepping up efforts to be more eco-friendly by focusing on sustainable procurement
and opening “green stores” with low power lightning systems. With sustainability
increasingly perceived as a competitive factor, retailers should take account of green
issues when formulating their business strategies.
$#
Retail Market in China, 2013
Appendix
Appendix 1: List of enterprises among the top 100s that have launched their own
online purchasing platforms, as of April 2013
1
Enterprise
Suning Commerce Group
2
Gome Electrical Appliance Group
3
Wal-Mart (China) Investment Co., Ltd.
4
5
Intime Retail (Group) Co., Ltd.
Yum! Brands Inc., China Division
6
7
McDonald’s (China) Co., Ltd.
Bailian Group Co., Ltd.
8
9
Lianhua Supermarket Holdings Co., Ltd.
ShenZhen Nepstar Chain Drugstore Ltd.
Guangzhou Watson’s. Food & Beverage Co., Ltd.
10
11
12
13
14
15
Metro Group Co., Ltd. (China)
Beijing Wangfujing Department Store (Group) Co., Ltd.
Carrefour China Inc.
Rainbow Department Store Co., Ltd.
New World Department Store China Ltd.
Liqun Group Shareholding Co., Ltd.
16
17
18
19
20
21
22
23
24
25
26
27
28
PCD Stores (Group) Ltd.
Shandong Commercial Group Corporation (Yinzuo Group)
Wuhan Zhongbai Group Co., Ltd.
Guangzhou Grandbuy Co., Ltd.
Ito-Yokado Co., Ltd.
Hisap High Technology Corporation
Nonggongshang Supermarket (Group) Co., Ltd.
Dalian Dashang Group Co., Ltd.
Easy Joy Convenience Store of SINOPEC
Auchan (China) Investment Co., Ltd.
Liaoning Xinglong Happy Family Business Group
Beijing D-phone Commercial & Trade Co., Ltd.
Parkson Retail Group Ltd.
29
30
31
Chengdu Hongqi Chain Co.,Ltd.
Hefei Department Store Group Co., Ltd.
Shijiazhuang Beiguo Renbai Group Co., Ltd.
Website
http://www.suning.com
http://redbaby.suning.com/
http://binggo.suning.com/
http://www.gome.com.cn/
http://www.dzelec.com/
http://www.coo8.com/
http://www.yihaodian.com/
http://www.samsclub.cn
http://www.yintai.com/
http://www.4008823823.com.cn/kfcios/
index.htm
http://www.4008123123.com
https://www.4008-517-517.cn/
http://www.blemall.com/
http://www.jaja123.com
http://www.lhok.com/index.html
http://www.star365.com/
http://www.watsons.com.cn/
http://watsons.tmall.com/
http://www.metromall.com.cn/
http://www.wangfujing.com/
http://www.carrefour.com.cn
http://www.myrainbow.cn/
http://www.xinbaigo.com/
http://www.liqunshop.com/
http://www.lqyaopin.com/
http://www.saite.com/
http://www.yinzuo100.com
http://www.zon100.com/
http://www.igrandbuy.com/
http://www.yiteng365.com/
http://huimai100.com/
http://www.chblt.com/
http://www.66buy.cn/
http://www.ejoy365.com/
http://www.auchan.com.cn/
http://www.xlgoo.net
http://shop.dixintong.com/
http://www.parkson.com.cn/emall/
index.html
http://www.hqwg.net/
http://www.bdemall.com/
http://www.ruyigou.cn/
32
33
34
Guandong Jiarong Supermarket (SPAR Guangdong)
Renrenle Commercial Group Co., Ltd.
AEON Group
http://www.sparlala.com
http://www.rrlgou.com/
http://eshop.qdaeon.com/
$$
35
36
37
Enterprise
Qingdao Weekly Group Co.
Sanjiang Shopping Club Co., Ltd.
Shandong Weifang Department Store Group Co., Ltd.
38
39
40
41
Chongqing Peace Chain Drugstore Co., Ltd.
China Zhenhua Group Science & Technology Co., Ltd.
Guangzhou Friendship Group Co., Ltd.
Hunan Friendship & Apollo Holding Co., Ltd.
42
A-Best Supermarket Co., Ltd.
43
44
Changchun Eurasia Group Co., Ltd.
Chongqing New Century Department Store Co., Ltd.
45
46
47
48
49
Eading Group Co., Ltd.
Changsha Tongcheng Holdings Co., Ltd.
Jiangsu Wenfeng Great World Chain Development
Corporation
Beijing Capital Retailing Group Co., Ltd.
Anhui Huishang Group Co., Ltd.
50
51
52
53
54
55
56
57
C & U Group Co., Ltd.
Wuhan Wushang Group Co., Ltd.
China Resources Vanguard Co., Ltd.
Shandong Newstar Group Co., Ltd.
Qingdao Likelai Co.,Ltd.
New Cooperation Joint-Stock Trade Chain Co., Ltd.
Wuhan Zhongnan Commercial Group Co., Ltd.
Handan Sunshine Department Store. (Group) Co. Ltd.
58
Shandong Quanfuyuan Commercial Group Co., Ltd
59
Beijing Funtalk Century Telecommunications Equipment
Retail Chain Co., Ltd.
Xiongfeng Group
Nanjing Central Emporium Co., Ltd.
Guangdong Dashenlin Chain Drugstore Co., Ltd.
60
61
62
Source: China Chain Store and Franchise Association
$%
Website
http://www.diandian.com/
http://www.sanjiang.com
http://www.92xmf.com/
http://www.zbasw.com/
http://www.hp1997.com/
http://eshop.zhenshang.com/
http://121.8.125.2:6080/
http://www.9448.com.cn/newjrdshop/
index.php
http://www.xyj-shop.com/
http://huichaoshi.taobao.com
http://www.oysd.cn/
http://www.sjgo365.com/
http://www.cbmall.cn/
http://www.itu4.com/
http://www.dolton.cn/
http://www.wfdsj.com.cn/shop
http://www.igo5.com/
http://www.hsnjf.com/
http://www.hzsmall.com/
http://www.rbcs.cn/
http://www.wssmgc.com
http://www.crvmore.com
http://www.xinxing001.com/
http://www.shoplikelai.com/index.html
http://www.csckl.com/
http://www.aizsw.com/zs/default.html
http://www.ygttg.com/
http://hdyg.taobao.com/
http://www.sgbhdl.com:8080/ehdshop/
webshop/index/index.jsp
http://funtalk.tmall.com/
http://hopeful.tmall.com
http://njzysc.tmall.com
http://www.800pharm.com/
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