The grocery retail market in China is forecast to grow by 32.6 per cent in four years, ranking as the largest grocery market in Asia and second largest in the world by 2022, according to new data released this week by the international grocery research organisation IGD.
Shirley Zhu, programme director for IGD’s Asia-Pacific research, said:“China continues to be an exciting market to watch with its significant size and rapid growth. Retailers with nationwide networks such as Sun Art, Yonghui, Walmart, CRV and Carrefour will reap rewards from ongoing expansion, partnerships with ecommerce players, improved efficiency and investment in small formats.
“Similarly, eCommerce giants such as Alibaba andJD.comwill see significant growth from both online and offline channels and become the second and third largest grocery retailers in China, respectively. Regional players such as NGS, Wumart and Bailian will continue on their journey of transformation and consolidation and focus on profitability.”
Market share for hypermarkets and supermarkets will remain steady, close to 40 per cent of the market up until 2022, according to the IGD research. However, the supermarket channel will overtake hypermarkets as the largest sales channel with a market share of 20.7 per cent.
“Convenience will be the fastest growing physical store channel”, Zhu told Fruitnet. “This will be driven by Alibaba andJD.comtransforming traditional mom-and-pop stores, retailers opening smaller format stores and both local and overseas players expanding their networks through partnerships. Online and offline integration will drive online growth. As the fastest growing channel, we forecast online to contribute up to 11.1 per cent of sales in 2022.”
Less than half of the grocery sales in China currently go through traditional trade. As the market continues to mature, traditional trade will keep losing share to modern trade, which currently accounts for about 57 per cent of total grocery retail sales and is predicted to grow to 66 per cent by 2022, she said.
As the total market size is expanding, traditional trade will still grow but at a much slower pace over the next five years, with a forecast CAGR of 1 per cent, compared with the growth of modern trade which is forecast a CAGR of 10 per cent, Zhu added. The development of modern trade over the next five years will be largely driven by the strong performance of online and convenience channels.
Ahead of Chinese retail event, Singles Day, IGD findings show that grocery retail sales in China are set to amount to CNY 11.4 trillion this year, up from CNY 8.6tn in 2017 – more than India, Japan and Indonesia combined.
The market is expected to see a CAGR of 5.8 per cent over the next five years, on par with Thailand but slower than markets such as India, Vietnam and Bangladesh, where the economy is growing faster.
Globally, China will remain the second largest grocery market in the world by 2022, behind the US in value terms.
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