Shop­pers drop­ping West­ern com­pa­nies

China Daily (Canada) - - FRONT PAGE - ByWANG ZHUO­QIONG

In the battle to grow mar­ket share in China, West­ern re­tail­ers are on the los­ing end, prompt­ing themto de­velop multi-for­mat strate­gies to re­tain cus­tomers.

Last year­wasa trans­for­ma­tional one for all play­ers in the mod­ern re­tail trade, which is de­fined as hy­per­mar­kets, su­per­mar­kets, mini-mar­kets and con­ve­nience stores com­bined.

They have been go­ing through a tremen­dous slow­down in con­sumer de­mand, a sharp rise in op­er­at­ing costs as well as di­rect chal­lenges from e-com­merce play­ers, ac­cord­ing to re­search find­ings re­leased by Kan­tar World­panel, which fo­cuses on fast-mov­ing con­sumer goods.

But in­ter­na­tional re­tail­ers have lost more mar­ket share, with a decline from 20 per­cent in 2013 to 19 per­cent in 2014.

Lo­cal re­tail­ers have been able to bet­ter adapt to the chang­ing mar­ket en­vi­ron­ment and con­tinue to win mar­ket share. The Sun-Art Group re­mained mar­ket leader last year, while Yonghui Group emerged as the fastest-grow­ing player in 2014, achiev­ing a 2.6 per­cent share.

Wal-Mart Stores Inc saw­its mar­ket share fall from 6.9 per­cent to 6.6 per­cent and that of Car­refour SA dropped to 4.7 per­cent from 5 per­cent.

Ja­son Yu, gen­eral manager of Kan­tar, said in­ter­na­tional re­tail­ers are los­ing share from first-tier cities to fourth-tier ones, mainly be­cause of their “sim­ple port­fo­lio”.

Yet their lo­cal com­peti­tors have a good mix of for­mats such as su­per­mar­kets, con­ve­nience stores and hy­per­mar­kets. That mix can meet the de­mand of a dy­namic and com­pli­cat­ed­mixof­con­sumersinChina.

“West­ern re­tail­ers are not as quick to re­spond to the changes in the mar­ket as their lo­cal peers,” said Yu. “It is very hard for them to be­come dom­i­nant lo­cally.”

Lo­cal re­tail­ers are of­ten based at the pro­vin­cial or re­gional level and find it eas­ier and quicker to lever­age their lo­gis­tics and com­mod­ity mix to get closer to con­sumers.

But in­ter­na­tional re­tail­ers last year started to de­velop a multi-for­mat strat­egy.

Wal-Mart has been more ag­gres­sive with its Sam’s Club open­ing plan and Sun-Art tested its con­ve­nience store con­cept by launch­ing its Cloud su­per­mar­ket un­der the ban­ner of C-Store.

Car­refour SA launched its first “Easy Car­refour” branded store in Shang­hai to get closer to the com­mu­nity. They are ex­pected to step into the e-com­merce busi­ness by June this year based on their cur­rent phys­i­cal store net­work.

Ger­many’s re­tailer Metro AG’s sales di­vi­sion, Metro Cash & Carry, an­nounced last year the open­ing of its first food ser­vice de­liv­ery-ded­i­cat­ed­plat­forminChina, in­Qing­dao, Shan­dong prov­ince.

Lower-tier cities will un­doubt­edly be the key driver for China’s growth in 2015 and be­yond. Out of the 24 new Wal-Mart stores that opened in 2014, 16 were de­ployed be­yond key and top-tier cities, ac­cord­ing to Kan­tar.

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