Study shows Chinese consumers have become more savvy
Fresh food and fast moving consumer goods retail sales on the Chinese mainland are expected to add up to 5 percent growth in the next five years, and major structural changes are expected due to the latest market trends and consumption sentiment.
Consumers have become more savvy and pragmatic, as they tend to seek bargains while also paying attention to quality, thus giving rise to new retail formats and opportunities for online vendors and brick-and-mortar stores, according to a recent joint study by Bain & Company and the China Chain Store & Franchise Association.
Overall, fresh food and FMCG sales at discount stores and membership warehouse retailers are forecast to grow much more rapidly than the market average level due to their distinctive features and shifts in consumer behavior, while the size of traditional supermarket chains is expected to shrink.
Membership exclusive stores have been booming in recent years.
In the new social economic landscape, discount stores have seen booming sales as consumers seek budget shopping options for daily food and grocery items, the report said.
Membership exclusive stores could reach an annual market value of 300 billion yuan (US$41 billion) in five years thanks to higher-tier cities' rising dispensable incomes and more affluent families.
The discount community store market value is expected to reach 200 billion yuan annually by 2028, and overseas retailers should localize their operations and dig deeper to cater local demands instead of just copying a similar model to China, the report said.
Han Weiwen, managing partner of Bain's China offices, said that community group-buying and social commerce have boomed in recent years due to the higher e-commerce penetration rate in China compared to other markets in the world.
In addition, live-streaming and social commerce shopping has played a monumental role in pushing up overall online sales, especially during promotional periods such as Singles Day shopping events.
China Chain Store & Franchise Association general secretary Peng Jianzhen said that retailers need to seek organic growth by responding to new consumption trends and market sentiment.
Home brands are expected to make up about 30 percent at leading supermarket chain stores in the next three to five years, and the study suggested retailers find the most suitable categories to maximize supply chain advantages to differentiate from other players.
