P&G, Unilever lead in China

19 January 2012

BEIJING: Procter & Gamble, Unilever and Wal-Mart are among the companies argued to be operating most effectively in China's rapidly-developing retail market, a study has found.

Kantar Retail, the research group, asked 150 brand owners to rate the best firms in areas like strategy, growth, potential and marketing. Procter & Gamble and Unilever were the manufacturers regarded as performing especially well across these core indicators.

Wal-Mart, the US retail giant, and RT-Mart, a unit of Auchan, received similar plaudits when respondents were asked which retailers were leading the way in China.

But some local operators were also credited with making strong progress. Master Kong was perceived to be performing particularly well in fields like consumer insights and demonstrating category leadership.

Bubugao, a retailer based in Hunan, attracted equal praise for having a winning business strategy, according to the study.

For 61.5% of retailers, the best brand owners combined strong growth and profitability. Another 54.8% mentioned providing in-store support, while capable sales and customer teams were cited by 41.7%.

An efficient supply chain scored 41.2%, ahead of owning brands that are able to fuel category growth among shoppers on 38.2%.

Exactly 57% of brand owners agreed it was essential for retailers to have a clear strategy, 55% prioritised the ease of doing business and 48.8% cited good category management and buying teams.

Store branding, by contrast, scored a relatively modest 34.9% and digital marketing capabilities posted 30.1%, although Kantar predicted that these areas would gain greater importance going forward.

The study concluded that China is in the "concentration phase", where retailers improve operating models, boost penetration by opening branches or buying smaller chains, and focus on enhancing loyalty and sales per store.

"In some major Chinese cities, the retail industry is currently in Penetration Phase, which sees a few select stronger retail chains emerging," Kantar added.

Data sourced from Kantar Retail; additional content by Warc staff