Magazines Archives - 2007 November

China’s hypermarket sector set for growth
Story 1

THE hypermarkets sector of China’s retail industry can expect growth to about 35% by 2010, with more international retailers looking to Tier II and III cities throughout the country.

According to Taylor Nelson Sofres (TNS) Global, London-based market analysts and information group, reasons cited for the boom in the hypermarkets sector include lower price, convenience of ‘one-stop shopping’, accessibility and integration of various retail facilities like cinemas, coffee houses and restaurants within the premises.

“The one-stop shop philosophy, in particular, is achieving the attention of China’s largest spenders — the middleclass consumer. On average, China’s middle-class consumers visit hypermarkets every 10 days, [creating] a frequent shopping pattern that owners of hypermarket scan bank on for predictable revenue stream,” said Jason Yu, regional account development director or TNS Worldpanel in China.

In a study released by TNS Worldpanel, which analysed household consumption in Beijing, Shanghai and about 20 other Chinese provinces, the country’s hypermarkets sector in about 15 of the largest cities has grown to about 30% in the first half of this year.

By 2010, hypermarkets are expected to account for 35% of the grocery sector.

Yu added that current market leaders, made up mainly of international retailers, hold at most a 5% share in the grocery sector, a reflection of the current “fragmented nature of the grocery trade”.

He said: “At the same time, it points to significant market opportunity arising from future market consolidation, which we believe will be inevitable.”

Meanwhile, the hypermarket share in Tier II and Tier III cities currently stands at 12.9% and 7.6% respectively, an indication of the substantial potential in the sector, Yu suggested. He believes that the market has yet to develop due to the lack of competition in these areas. “However, to gain a profitable share in the hypermarket channel, retailers must act now as local competitors are faster in developing a multi-format portfolio to diversify the business risks and capitalise other development opportunities,” Yu said.