Wal-Mart's lead cut in China

04 March 2011

SHANGHAI: Wal-Mart remains the biggest grocery chain in China by market share, but domestic rivals like CR Vanguard and RT-Mart are gaining ground.

Kantar Worldpanel monitors purchases made by 40,000 Chinese households in product categories from cosmetics, food and beverages to household goods, covering cities such as Beijing and Shanghai, alongside 20 provinces.

It reported that FMCG sales climbed 16% last year on an annual basis, aided by rising demand among shoppers, and by inflation.

Competition in the organised retail sector is increasing rapidly in the country, as multinationals go head to head with indigenous companies.

Wal-Mart commanded a value share of 8% during 2010 as a whole, some 64% of which was attributable to stores operating under its own banner, and 36% to its Trust-Mart division.

However, this combined total declined from 8.2% in the second quarter to 7.5% at the close of December, Kantar Worldpanel found.

Wal-Mart's collective network reaches 18.4% of residences, but although performance levels stayed consistent at Wal-Mart-branded outlets, Trust-Mart saw a slide from 3% to 2.2% between Q3 and Q4 in share terms.

CR Vanguard delivered an improvement from 6.2% to 6.7% in the same timeframe, averaging out at 6.6% across the year.

The firm has been extending the penetration of its high-end Ole fascia in major metropolitan centres, while opening 400 sites overall in 2010.

RT-Mart, headquartered in Taiwan, hit a new peak of 6.2% in the final three months of 2010, measured against 5.6% over January to March, bringing its annual figure to 6.1%.

One of RT-Mart's strengths is its presence in prefecture and county cities, with seven of the company's ten stores unveiled in January 2011 based in these areas.

"As the market attention shifts inland and towards these untapped city tiers, both local and multinational retailers have begun to aggressively focus resources on these territories," Kantar said.

"Whilst RT-Mart holds a clear advantage as number one, the fragmented nature of the market still offers clear opportunities for competitors to enter without the challenge of a significantly dominant retailer."

Carrefour held 5.1% of revenues in 2010, largely constant throughout the assessment period, and has recently started shuttering underperforming lower-tier branches.

Balian Group was similarly static with 4.3%, while Tesco and Wu-Mart were also both flat, claiming 2.1% apiece.

Zhongbai Group, Beijing Hualian and Auchan equally maintained their respective positions year on year, but all took less than 2% of returns.

Data sourced from Kantar Worldpanel; additional content by Warc staff