BEIJING: FMCG spending in China grew at its slowest pace in 25 years in 2015, according to new data, although some retail formats fared rather better than others.

Figures from research firm Kantar Worldpanel indicated that expenditure in this sector increased 3.5% over the year, compared to 5.4% in the preceding 12 months.

There were pronounced differences in the growth rates of bigger and smaller cities, as the latter grew three times as fast.

Modern trade – the combined sales volume at hypermarkets, supermarkets, and convenience stores – rose just 1.4% in first and second-tier cities; the equivalent figure for county-level cities and counties was 4.4%.

At the top level, hypermarket sales were actually down 1.5% but they managed to grow 4.1% nationally as a result of store openings in lower-tier cities.

Smaller formats fared better, with convenience stores registering growth of 13.1% nationally.

And sales of consumer goods through e-commerce surged 37%, with and Tmall investing heavily in shopper promotions.

A consequence of these trends was that international retailers continued to lose share – down 1.1 percentage points to 13.4% – as they struggled to cope with the twin threats of slowing growth in the major conurbations and competition from e-commerce and local retailers in lower tier cities.

In the coming year, Kantar Worldpanel expected that convenience stores would be among the fastest growing sector, as they experimented with various innovations in the search for a differentiated shopping experience; for example, they now typically offer last-mile delivery for e-commerce. There is also scope for expansion in the north and west of the country.

Data sourced from Kantar Worldpanel; additional content by Warc staff