The Chinese grocery market has witnessed a tremendous surge over the past decade, which is believed to be significantly boosted by country’s rapid urbanization, rising middle-class population with higher purchasing power, the development of the retail market and the improving infrastructure of the food and beverage industry. With Chinese consumers’ shopping habits shifting from cheap local food to quality, value-added or imported grocery products, China’s largest grocery stores have all been experiencing surging sales in recent years. Moreover, the emergence of the online grocery shopping has become another major factor that drives growth for the grocery market in China.
According to a recent report from the international grocery research organisation IGD, the Chinese grocery market — currently the world’s second-largest, behind the USA — was valued at around US$1.3 trillion in 2017, and this grocery market size is expected to reach total value of US$1.6 trillion by 2020, registering an impressive GAGR of 5.8% over the next five years. The market growth is mainly driven by the rising population with higher purchasing power in China, resulting in a huge jump in grocery spending among Chinese consumers over the past decade. According to the data from China’s Bureau of Statistics, grocery spending accounted for around 37% of China’s household expenditures, or about RMB 2,900, in 2005. By the year of 2015, the share of grocery spending in household expenditure reduced to 31%, but the spending amount increased to RMB 4,100, meaning that the money spent on grocery shopping for consumers in China grew by 41% in the past ten-year period.
In recent years, Chinese consumers’ shopping habits have become more and more diversified. An increasing numbers of grocery shoppers in China are nowadays putting more focus on the convenience of the shopping channel and the quality of the grocery products, in line with their rising disposable incomes and the fast pace of daily work and life, although most of the consumers in China are still price-sensitive towards their shopping behaviours in China’s grocery market.
Demand for imported food and beverage in China’s grocery market has seen growing at a steady pace over the recent years, as consumers in China often perceive imported products to be safe and of high quality. As a result, imported fresh fruit, seafood, dairy and meat products have all experienced rising popularity and increasing sales in China’s grocery market, especially in China’s major cities like Beijing, Shanghai, Guangzhou, and Chongqing.
Currently, supermarkets and hypermarkets are dominating China’s grocery market in all major regions, and their ongoing expansion to smaller cities is expected to further enhance the competition in the market. Among all the sale channels over the next few years, hypermarkets are expected to achieve the highest growth rate, followed by convenience stores, due to consumers’ rising disposable incomes and preferences for convenience and modernized lifestyles. Distribution infrastructure improvements, as well as support from local governments allowing supermarkets to expand into rural areas, are also contributing the market growth.
China Resources Vanguard (华润万佳) is leading the chart of the top 10 grocery stores in China, with a value share of 4%. The company has a strong position in various channels, such as hypermarkets, supermarkets, and convenience stores, and it is continuously expanding its outlet network across the country. So far, China Resources owns over 5,000 outlets under multiple brands including Vanguard, Tesco China, Suguo, Vivo, Ole’, Legou Express, Vango, BLT, Voi_la, Lenonardo, Huanleshong, Zhongyi, Huarun Tang. Its total sales record at about US$18 billion annually. Expect the biggest supermarket chains in China to continue performing well in the market.
Online grocery shopping is dramatically growing in China in recent years. In 2016, the E-commerce market in China accounted for over 10.7% of the US$480 billion integrated retail sales. IGD also forecasted that China’s online grocery market share will jump from current 3.1% of the country’s total grocery market to 6.6% by 2020, meaning that online Chinese grocery market is likely to grow by almost 32% year on year to 2020. The online grocery market in China is mainly driven by the growth of the internet, greater smartphone usage, more focused investment from retailers and shifting demographics.
IGD suggest that a combination of online marketplaces and bricks and mortar retailers make up China’s leading online grocery players at present. Alibaba’s Tmall and JD.com are the two of the largest online grocery retailers in China. These platforms are a one-stop shop for all domestic and international brands and categories, as well as offering a nationwide logistics network, rapid delivery, innovative and simple payment solutions in China’s grocery market.