FMCG growth slows in China

25 April 2013

BEIJING: Sales growth in China's fast-moving consumer goods sector has slowed dramatically during the last year, a trend affecting all regions and cities, new figures have revealed.

The increase of 8.4% recorded in the first three months of the year by Kantar Worldpanel, the market research firm, was well down on the comparable period in 2012, which saw 14.7% growth.

Some regions were more affected than others. In the four main cities – Beijing, Shanghai, Guangzhou, Chengdu – growth was below average at just 5.6%, while in the West and North regions, growth was 7.5% and 7.2% respectively.

"The latest grocery numbers show that household spending in China was less resilient than many expected, even if we discount the impact of inflation," said Jason Yu, general manager at Kantar Worldpanel.

He had some recommendations for retailers. "With the rise of ecommerce and growing cost of business, bricks-and-mortar retailers will have to put more effort to grow basket size in existing geographies while expanding cautiously to new locations," he advised.

Some retailers fared well, with the performance of RT-Mart, part of the leading grocery retailer Sun-art Group, being particularly noteworthy, as it grew both store numbers and sales at the same time.

Kantar Worldpanel data suggested that, in the latest 12 months, the average RT-Mart shopper spent RMB 1,087 on FMCG products in the store, which was 28% higher than that spent by the average Wal-mart shopper.

Sun-art continued to head the modern grocery trade, claiming an 8.3% share in the first quarter, ahead of its nearest rival, Walmart, on 6.8%.

Collectively, local retailers accounted for 72.3% of the modern grocery trade, slightly up on the previous year's first quarter.

Yonghui expanded rapidly to reach 4.6% of families in urban China and at the same time claimed a 5.5% growth in spend per family.

Data sourced from Kantar Worldpanel; additional content by Warc staff