Consumer goods spending up amongst weak market performance

Ding Yining
China's fast moving consumer goods spending rose 4.3 percent in 2018, a steady pace compared to a year ago, as weak market performance dampened growth in the fourth quarter.
Ding Yining

China's fast moving consumer goods spending rose 4.3 percent, a steady pace compared to a year ago, as weak manufacturing activities and slower fixed-asset investment dampened performance in the fourth quarter, Kantar Worldpanel said in a recent report.

Western regions and provincial capital cities reported a more upbeat trend compared with overall market performance.

The combined growth of sales through hypermarkets, supermarkets and convenience stores is relatively low at 2.1 percent, with the majority of sales coming from new retail channels such as online shopping sites.

Six out of the 10 top retailers tracked by Kantar Worldpanel reported stronger performance in 2018, thanks to the opening of new stores, expansion of format portfolios, and digital transformation.

Sun Art Group maintained its leading position with 8.4 percent of market share in modern shopping channels, excluding grocery stores in rural areas.

Vanguard Group and Walmart both lifted their market share by 0.2 percentage points thanks to better performance of supermarkets and convenience stores, while Walmart also diversified offerings with their Sam's Club store and smaller convenience store formats.

Spending through e-commerce channels saw strong growth of 34 percent, with more households favoring online channels and increasing their purchasing frequency.

In Beijing, Shanghai, Guangzhou and Chengdu, an average of 72 percent of households purchased FMCG online in the past year.

Smooth payment and delivery services also pushed up spending, and the average consumer shopped about nine times for daily necessities and household products through e-tailers.

Kantar Worldpanel also pointed out that retail formats will continue to converge as store operators seek to maximize their foot traffic to cater to shoppers' demands.

For example, Walmart and RT-Mart are transforming their traditional hypermarkets to compact mode and adding in-store smart facilities so that they can better complete in the traditional territory of supermarkets and convenience stores.

Another trend in the coming year is that consumers are increasingly seeking superior shopping experiences.

Smart technology will continue to help store operators to win shoppers over, while e-commerce in lower tier cities is a good way for brands to reach more consumers, the study suggests.

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