China's leading retailers to grow by 10.4% by 2022

Date : 27 April 2018

China’s leading grocery retailers are forecast to grow at nearly double the rate of China’s total grocery retail market by 2022, according to the latest research from international research organisation IGD. Based on a report of the region’s top ten leading retailers, IGD predicts growth of 10.4% by 2022, compared to 5.8% of growth for the overall market, but anticipates this will come through in different forms and at varied speeds.

Shirley Zhu, Programme Director at IGD Asia, said: “The future of grocery shopping is being reinvented in China, where the boundaries between ecommerce, supermarket and restaurants are blurring. Facing rapid changes, the leading retailers are stepping up their efforts to build omnichannel capability, enhance in-store experiences and create differentiation. All these measures will help retailers understand and serve their shoppers better, gain a stronger foothold in the market and tap into a larger customer base in the future.”

Exploring the strategies that keep the leading retailers ahead in a dynamic market, IGD has identified five key drivers of growth for the top ten leading retailers in the region:

1. Accelerating online and offline integration

China’s retail landscape is evolving at a fast pace, with digital savvy customers demanding fast, simple and convenient methods of shopping. The acceleration of online and offline integration has been accentuated by partnerships between retailers.

Shirley Zhu said: “Bricks and mortar retailers in China recognise the importance of providing a seamless experience online to offline as a means of adapting to the needs of consumers, offering greater personalisation and more convenience in shopping.

“Suppliers should look to strengthen their capability and be part of the retailers’ test and learn process while providing excellent and consistent brand experiences across all retail channels.”

2. Stepping up foodservice

IGD’s research highlights retailers in China blending retail with foodservice. Some of the key examples identified in the country allow shoppers to choose live seafood, get it cooked in front of them and eat in the spacious seating area on-site.

Commenting on foodservice, Shirley Zhu said: “The option to shop for groceries and dine in one place plays an important role in driving new customers to the store. Foodservice also increases the number of customer touchpoints, which in turn continues to help engage returning customers.

“Suppliers should experiment more within foodservice. Ensure that your brands are getting involved in foodservice operations and explore how your category can benefit from this growing trend.”

3. Rolling out new store formats

Retailers in China are seeking better ways to accommodate shoppers and maximise space. With shopper preference moving towards online and mobile channels, smaller formats can target specific customer segments more easily. New small formats can also be a more cost-effective option for testing demand when entering a new city.

“We are seeing many different retailers rolling out new small formats across China”, Shirley Zhu comments. “From hypermarket to online operators, these new stores vary in size and purpose, but play an important role in offering something different to what they have already.

“Smaller stores have different demands. Suppliers should design their portfolio for the smaller stores with less shelf space, flexing their offer to different retailers’ needs.”

4. Digitising loyalty schemes

Digital loyalty programs are simple for members to access, easy for retailers to update, and appealing to today’s digital consumers. It gives retailers the means to collect customer data, both online and offline.

Shirley Zhu said: “Many retailers are digitising their operations, and digital loyalty schemes are only part of the process. We expect to see more digitisation in marketing activities, operations and the wider supply chain in the near future.

“Suppliers should think about investing in digital loyalty schemes to get the competitive edge. Design your portfolio for the smaller stores with less shelf space and adapt your offering to different retailers’ needs.”

5. Rethinking private label

In the past, many private brands aimed to be alternatives to main brands. The latest wave of investment in private labels has a different feel, with leading retailers not trying to win purely on price but building trusted consumer brands as a competitive advantage. As retailers successfully build recognised private labels, they will likely extend these brands to more categories.

Shirley Zhu comments, “Fresh food categories are a good starting point. Fruit and vegetables, fish and meat are typical categories that are led by retailers, rather than brands. They are now packaged nicely under the retailers’ own brands, ready to be picked for in-store purchase or online orders.

“Suppliers should focus on working alongside private label; look at this as a collaboration opportunity. Show how your brands can drive category growth and work harmoniously with private label brands to deliver a better experience.”


Notes to editors:

  1. IGD is a training and research charity for the food and grocery industry. Our in-depth understanding of shoppers, retailing and supply chains is supported by our knowledge of broader topics affecting the industry – health, nutrition, sustainability and economics among them. Our reach is global, with experts based in the UK, Singapore and North America. We invest the money we make from selling our expertise into our charitable activities
  2. Retailer sales CAGR growth is calculated based on the performance of leading retailers covered by IGD Datacentre
  3. The figures represent our base scenario and assume a good level of international political and economic stability
  4. All figures correct at time of going to press
  5. Follow IGD’s communications team on Twitter @Comms_IGD

For more information contact:
Alexandra Crisp on: [email protected]