Multinational retailers gain ground in China

06 April 2010

BEIJING: Multinational retailers like Carrefour and Wal-Mart enjoyed faster growth than their domestic rivals in China last year, according to the China Chain Store & Franchise Association.

The industry body reported that value  of sales through the 100 biggest retail chains in the country rose by 13.5% on an annual basis in 2009 to 1.36 trillion yuan ($199bn; £131bn; €148bn).

This group of companies ran 137,000 stores between them last year, an uptick of 18.9%, and generated 11% of all consumer goods revenues, a share that was essentially flat year-on-year.

Within this, department stores experienced the most substantial expansion, with revenues climbing by 16.6%, compared to a 12.3% rise among supermarkets. Departments stores also increased their outlets by 19.4%, while supermarkets grew theirs by 22.2%.

More broadly, chains that were primarily based in major urban centres saw their returns increase by 5.3%, compared with the jump of 7.2% in the size of the network of shops run by these organisations.

In contrast, these figures leapt by 19.3% and 14.7% in turn for their counterparts that were mainly focused on small-and-medium-sized cities.

However, while 24 firms recorded an improvement in sales of over 20%, the overall level of growth was the slowest since the CCSFA began collecting data in 1999, a result largely attributed to the global recession.

Suning, the consumer electronics provider, led the rankings in terms of its annual returns, which rose by 14.3% to 117.0bn yuan in 2009.

Gome, in the same sector, took second place on 106.8bn yuan, up by 2.1% when measured against the previous year.

Brilliance Group, a diversified conglomerate, followed on 97.9bn yuan, with Dashang Group, the department store operator, on 70.5bn yuan and the China Resources Vanguard, the supermarket chain, on 68bn yuan.

The 20 multinational corporations featured on the list posted an average increase in sales of 20.4%, having boosted their number of outlets in China by 15.7% over the course of 2009.

Each of these companies was said to have benefitted from a variety of advantages, not least in the form of having established a "relatively homogeneous format" across their operations.

This was particularly true for "foreign-funded" supermarkets, which delivered single-store sales of 220m yuan, well ahead of the total of 170m yuan registered by their domestic competitors.

Carrefour headed the charts among the international retailers, with revenues of 36.6bn yuan, having seen demand improve by 8.2% year-on-year.

Wal-Mart had built 175 hypermarkets in China by the end of last year, nearly 20 more than Carrefour, and saw its sales swell by 22.5% to 34bn yuan in 2009.

Yum Brands, the owner of KFC and Pizza Hut, was on 28.8bn yuan, ahead of McDonald's, its rival in the fast-food category, on 6.5bn yuan.

Looking forward, the CCSFA predicted the top 100 chain store operators in the domestic market would see sales increase by 18% in 2010, with the online channel set to be one key driver of this trend.

Data sourced from CCSFA; additional content by Warc staff