WHAT CHINESE SHOPPERS REALLY DO
BUT WILL NEVER TELL YOU
China Shopper Report 2012, Vol. 4
Copyright © 2012 Bain & Company, Inc. and Kantar Worldpanel
All rights reserved.
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Contents
1.
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 3
2.
Full report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 4
Inside China’s diversified and evolving retail market . . . . . . . . . . . . . . . . . pg. 4
How retail channel dynamics influence shopper behavior . . . . . . . . . . . . . . pg. 6
What makes hypermarkets succeed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 9
3.
Implications for retailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 14
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What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
As China’s market for fast-moving consumer goods grows,
modern retailers are looking for ways to grow too—and outpace
competitors. Our study of real-time shopper behavior provides
important insights into how China’s retail landscape is quickly
evolving, and what separates leading retailers from followers.
These insights allow both domestic and foreign retailers to
hone their strategies.
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Introduction
China’s retail market for fast-moving consumer goods
(FMCG) is evolving as quickly and dramatically as it is
growing. Modern trade, which includes supermarkets
and hypermarkets, is making vast inroads in China’s
biggest cities. It now accounts for more than half of all
urban sales of FMCGs and is growing at 14%—faster
than China’s GDP. At the same time, another channel
is gaining significant ground: e-commerce. While it’s
still a small percentage of overall sales—less than
2%—e-commerce is exploding: It grew 53% last year.
We decided to dig deeper to see what lessons we could
develop for consumer goods makers and retailers
pursuing growth from the rising number of middleclass shoppers. Their expansion has been challenged
by a lack of detailed, real-time data that would enable
retailers to better understand shoppers’ behavior and
fully capture the opportunities before them.
In our groundbreaking report “What Chinese
Shoppers Really Do But Will Never Tell You”,
published in June, we helped fill that void by sharing
real-time shopper data, including the insights gained
from a rare look at what shoppers actually do at the
point of sale as opposed to what they say they do. This
joint study by Bain & Company and Kantar
Worldpanel examined the shopping behavior of
40,000 Chinese households from 373 cities in 20
provinces and four major municipalities, creating a
comprehensive look at how much shoppers spend by
region and by city in 26 important product categories,
ranging from milk to shampoo. We followed up with
a second report that explored shopper behavior in
more depth across three dimensions: city tier,
category nature and development stage, and shoppers’
life stages (see Figure 1). A third report examined
the dynamics between foreign and domestic
consumer goods makers to help both types of
competitors capture their share of China’s growth.
Figure 1: This research is based on a database of 40,000 households in different city tiers in China
Coverage
Definitions
City tier (based on administrative definition)
• Mainland China; urban (not rural) areas
• 1,877 cities covered (373 sample cities) in 20 provinces
and four municipality cities
• 40,000 urban permanent households
• 100-plus consumer product categories
• Tier-1 cities: Beijing, Shanghai, Guangzhou
• Tier-2 cities: 19 provincial capital cities plus
Chongqing, Shenzhen, Qingdao, Dalian, Tianjin
• Tier-3 cities: 228 prefecture cities
• Tier-4 cities: 322 county cities
• Tier-5 cities: 1,300 counties
Approach and Methodology
• Approach
- Household-based shoppers
- Representative sample distribution
- Record purchasing behavior on real-time basis
• Methodology
- Provided scanner to each sample household with
standard scanning process to collect data
- Focused on understanding shopper’s purchasing behavior
Sources: Kantar Worldpanel; Bain analysis
Page 3
Life stage
• Young families: Singles & couples ages 18 to 34,
with or without children younger than 14
• Older families: Families with children ages 14 to 17
• Adult families: Families with all members older than 18,
with at least one member between the ages of 18 to 44
• Older singles & couples: All members older than 45
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
In our fourth report, we explore the implications of our
findings for retailers in modern trade. Our analysis
provides several key insights:
•
Modern trade shoppers make fewer trips to the
store but spend more per trip, with the average
price per item increasing.
•
E-commerce is experiencing rapid development
and explosive growth, although shoppers are
increasingly using online sites to track down
cheaper prices in a few higher-priced categories.
•
As we detailed in our previous reports, China’s
shoppers tend to be repertoire shoppers in most
categories. They prefer to choose from a range of
brands in a particular category for the same need
or occasion instead of being loyal to a brand. The
swift expansion of modern trade is helping to fuel
the trend toward repertoire behavior by offering a
wide variety of brands and promotional activities.
It’s a trend that will favor retailers because
consumer goods companies will be increasing
investments in point-of-sale activation to
encourage new shoppers to choose their brands
over competing brands on the shelf.
•
•
Despite the extensive choices offered by modern
trade, it’s only the top brands and SKUs that
contribute the majority of retail sales, according to
our analysis. That means retailers that strive to
increase listing fees by adding SKUs may actually
be tying up shelf space and working capital with
low-selling SKUs.
Our research also confirmed that grocery retailing
in China still is largely a local, city-based business,
given the vast differences in consumer tastes and
behavior. Leading retailers combine an extensive
local footprint designed to achieve broad
penetration with an effective retail model that
motivates shoppers to make repeat visits and
increase their basket size.
Full report
Inside China’s diversified and evolving
retail market
More than half of all urban FMCG sales in China now
take place within the high-ceilinged walls of modern
trade. Both hypermarket and supermarket formats have
gained ground in China’s major cities, growing 14% last
year. Hypermarkets represent 27.4% of total retail, while
supermarkets represent 24.8%. By comparison, groceries
account for 23.4% of total retail in China’s largest cities.
Last year, hypermarkets experienced 16% growth and
supermarkets grew by 12%. Meanwhile, e-commerce,
also a modern trade format, is exploding, with 53%
growth. However, it represents a fraction of urban FMCG
sales—just 1.5%. Our survey found that young families
make up more than half of all online shoppers.
Household channel penetration—the number of
households purchasing in a particular channel—grew
slightly for hypermarkets and supermarkets this year.
Hypermarket penetration rose by 2.3% and
supermarket penetration by 0.6%. And shoppers are
spending more: Annual household spending increased
in hypermarkets by 13.9% and in supermarkets by
11.1% (see Figure 2).
While shoppers are spending more, they’re making
fewer trips to the store. Purchasing frequency per
household dropped in both of the major modern trade
formats (see Figure 3). Compared with last year,
shoppers visited hypermarkets and supermarkets less
frequently in 2012, down by 4% for hypermarkets and
8.4% for supermarkets. But shoppers purchased
more items per trip in each of the formats. They
bought 5.7% more items per trip in hypermarkets and
6.2% more in supermarkets. And our research has
found that in addition to buying more items, they’re
also paying more per item. The average price per item
in a hypermarket rose 12.3% compared with a 14.2%
rise in supermarkets. This price-per-item increase
appears to be spurred by a number of factors,
including larger package sizes, rising prices and some
trading up to premium products.
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Figure 2: Modern trade’s growth comes mainly from an increase in household spending, while e-commerce
is still developing quickly
Household penetration by channel
Household annual spending by channel
Number of urban households* purchasing in the channel at least once
a year (2011 vs. 2012)
Annual spending per household (RMB, 2011 vs. 2012)
150M
3,000
140
117
141
120
2,131
100
2,000
1,871
1,475
+0.6%
+37.9%
+2.3%
50
1,000
+13.9%
1,639
+11.1%
35
+11%
25
357
0
396
0
Hypermarket
E-commerce
Supermarket
July 2010–June 2011
E-commerce
Supermarket
Hypermarket
July 2011–June 2012
*Total number of urban households in China is estimated at ~160m households in 2012, excluding non-permanent resident households, such as migrant workers, students, military and so on
Note: Data includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic
items; supermarket includes CVS and mini-marts
Sources: Kantar Worldpanel; Bain analysis
Figure 3: Modern trade’s shopping frequency is decreasing, while online shopping prices are much
higher but declining
Shopping frequency
Trip size
Average price per item
Frequency per year per household
(Number of times, 2011 vs. 2012)
Number of items per trip (2011 vs. 2012)
Price per item (RMB, 2011 vs. 2012)
30
10
40
27.1
26.0
25.9
23.7
8
7.6
37.9
35.7
8.0
6.8
7.2
30
20
6
-4%
-8.4%
20
4
+6.2%
+5.7%
10
+13%
3.6 3.8
+4.4%
2
10
2.6 3.0
0
0
Hypermarket
Supermarket
E-commerce
9.1
10.2
8.4
9.5
+12.3%
+14.2%
Hypermarket
Supermarket
-5.9%
0
Hypermarket
Supermarket
July 2010–June 2011
E-commerce
E-commerce
July 2011–June 2012
Note: Data includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items;
supermarket includes CVS and mini-marts
Sources: Kantar Worldpanel; Bain analysis
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For its part, e-commerce penetration gained significant
ground, growing by 37.9% in 2012, as Chinese
consumers discovered online options for purchases.
The increasing penetration of e-commerce was
accompanied by an 11% rise in the amount shoppers
spent online. While shoppers are paying fewer visits to
hypermarkets and supermarkets, they’re visiting
e-commerce retail sites more frequently than they did
last year—by 13%. And while the number of items they
purchased during online visits increased 4.4%, they’re
spending less per item, even though the price per item
for e-commerce is considerably higher than in modern
trade. The likely reason: Shoppers tend to go online in
search of deals, with their spending heavily skewed
toward more expensive categories like baby diapers or
cosmetics, where there is potential for major savings.
Another reason is that e-commerce sites also offer a
broader selection of imported products.
China’s shoppers clearly have a preferred channel for
each category they purchase (see Figure 4). For
example, while 40% of all facial tissue is purchased in
hypermarkets, shoppers buy only 15.8% of their
cosmetics there. Shoppers prefer buying cosmetics,
skin care and baby categories, such as diapers and
infant milk powder, in specialty stores or online. When
combined, these categories represent about 60% of all
online purchases. Shoppers favor the grocery channel
for beer, ready-to-drink (RTD) tea, carbonated soft
drinks (CSDs) and bottled water.
How retail channel dynamics influence
shopper behavior
Our analysis shows that all forms of modern trade
are more common in China’s cities. In fact, more
than half of all modern trade spending takes place in
Tier-1 and Tier-2 cities. Hypermarkets are three times
more prevalent in Tier-1 cities than in Tier-5 cities
(see Figure 5). Because modern trade offers a
wider availability of brands for shoppers, we found a
corresponding increase in repertoire behavior in
Tier-1 and Tier-2 cities. For example, the average Tier-1
household purchased biscuits 21 times last year and
chose 8.4 brands. With fewer brands available to
them, shoppers in Tier-5 cities bought biscuits 10.7
times and chose 4.7 brands.
Figure 4: Channel mix differs across categories; cosmetics and baby categories skew to specialty stores,
while some beverage categories are strong in grocery
Value share by channel (July 2011 to June 2012)
100%
80
60
40
Supermarket/CVS/mini
Grocery
Grocery
E-commerce
Specialty stores
Department stores
Note: “Others” includes beauty salons, direct sales, drugstores, milk stores, overseas purchases, wholesale, family shopping, work unit and gifts
Sources: Kantar Worldpanel; Bain analysis
Page 6
Color cosmetics
Skin care
Baby diaper
Infant formula
Beer
RTD tea
Bottled water
CSDs
Milk
Juice
Kitchen cleaners
Chocolate
Candy
Hair conditioner
Personal wash
Yogurt
Biscuits
Fabric detergent
Modern trade
Channel
preference
Hypermarket
Shampoo
Instant noodles
Toilet tissue
Toothpaste
Toothbrushes
Chewing gum
Fabric softener
Facial tissue
0
Total FMCG
20
Specialty store
and e-commerce
Other channels
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Figure 5: Modern trade is more prevalent in higher-tier cities
Market value split by channel in different tier cities (%, July 2010 to June 2011)
100%
Others
Online
shopping
80
Traditional
trade
60
40
Super/CVS
20
Modern
trade
Hyper
0
Tier-1 city
Tier-2 city
Tier-3 city
Tier-4 city
Tier-5 city
Notes: 1) Aggregation of 24 categories; excludes infant formula and baby diapers, as these two categories came from Kantar Worldpanel Baby, which only covers Tier-1 and Tier-2 cities;
2) Traditional trade includes grocery, specialist stores, free mart and department stores; 3) “Others” includes beauty salons, direct sales, drug stores, milk stores, overseas purchases,
wholesale, family shopping, work unit and gifts.
Sources: Kantar Worldpanel; Bain analysis
Given the prevalence of repertoire shoppers in top-tier
cities, it seems logical that brands and retailers invest
in promotions for repertoire categories at a rate
corresponding with city size. In repertoire categories,
the bigger the city tier, the bigger the investment in
promotions (see Figure 6). Last year, promotions
generated 31% of repertoire category revenues for Tier1 stores, compared with 13% of the repertoire category
revenue in Tier-5 stores. Across all city tiers, retailers
use promotions in loyalist categories almost as much
as in repertoire categories. About 25% of Tier-1 and
10% of Tier-5 modern trade revenues in loyalist
categories come from promotions. But as we
mentioned in our previous reports, Bain research
shows that it is not necessary to constantly rely on instore activation in loyalist categories. So, brands and
retailers may need to reassess the effectiveness of
promotions in loyalist categories.
Another important finding from our survey: Despite
the extensive choices offered by modern trade, just a
few brands deliver the majority of all revenue. A
breakdown shows that among all modern trade players
in China, the top five brands of fabric detergent
accounted for 65% of the category’s revenues.
Such findings suggest that retailers should
aggressively prune their shelves, devoting space only
to top sellers. But across China, modern trade retailers
often depend on the listing fees they receive for selling
multiple SKUs. As a result, many are tying up shelf
space and working capital by selling low-revenue
SKUs (see Figure 7). How significant is the impact?
When we looked at two categories, personal care and
beverages, at two hypermarket retailers in China, we
found that the bottom 25% of SKUs contribute 3% or
less of sales revenues.
When retailers eliminate low-revenue SKUs, they
make it easier for shoppers to choose and often
improve performance. For example, when a retailer
cuts 40% of its low-performing SKUs, filling the space
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Figure 6: Promotions are more active in higher-tier cities for repertoire categories, but loyalist categories
are not far behind
…but loyalist categories
are not far behind
More active promotions in higher-tier cities and repertoire categories…
% of revenue from promotions within modern trade by city tier (July 2011 to June 2012)
% of revenue from promotions within
modern trade (July 2011 to June 2012)
40%
40%
Repertoire categories
Loyalist categories
31%
30
30
27%
25%
22%
20
23%
22%
20%
14%
13%
10%
10
0
Tier-1
Tier-2
Tier-3
Tier-4
18%
20
17%
Tier-5
Tier-1
Tier-2
Tier-3
Tier-4
Tier-5
10
0
Repertoire
Loyalist
Is promotion money invested in loyalist categories well spent?
Note: Data is based on 26 FMCG categories
Sources: Kantar Worldpanel; Bain analysis
Figure 7: Many retailers have a tendency to sell many SKUs that don’t contribute much to revenues but
that tie up shelf space and working capital
China store-level example
(selected personal care category)
China city-level example
(selected beverage category)
Accumulated sales revenue for category X at hypermarket A
Accumulated sales revenue for category Y at hypermarket B
100%
100%
80
Bottom 50% SKUs
contributed to only
~10% revenue
60
Bottom 25% SKUs
contributed to only
~3% revenue
Bottom 50% SKUs
contributed to only
~7% revenue
60
Top-quartile SKUs
contributed to
~70% revenue
40
80
40
Bottom 25% SKUs
contributed to only
~2% revenue
Top-quartile SKUs
contributed to
~75% revenue
20
20
0
0
0
25%
50%
75%
25%
100%
50%
% of SKUs
% of SKUs
Bottom 25% of SKUs contribute only ~3% or less of revenues
Source: Bain China experience
Page 8
75%
100%
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
with fast-moving items, it found that 80% of its
customers saw no difference in the variety and 15%
actually thought there were more items than before.
The move not only improved customers’ perception of
variety but also improved sales by 25%. But eliminating
SKUs requires caution. It’s important to separate the
SKUs that can easily be replaced from those with a
loyal customer following.
What makes hypermarkets succeed?
Based on our retail experience, we’ve learned that
retailers’ performance stems from their local market
share at the city or regional level. To understand what
separates leaders from followers among modern trade
retailers in China, we compared the experiences of
hypermarkets in two important cities: Shanghai and
Wuhan. We’ve found that local market share growth
depends on two factors: 1) a retailer’s expanded store
footprint and sales area, leading to increased
penetration, and 2) the effectiveness of the retail model,
which translates that store’s footprint into revenues. So
it’s no coincidence that in Wuhan, the hypermarket
retailer with the highest revenue share is Zhongbai, the
company with the deepest penetration (see Figure 8).
Part of that successful penetration results from Zhongbai’s
footprint. It has 71 hypermarkets in Wuhan—23 more
than its closest competitor.
But having a big footprint isn’t enough. Retailers need
to take advantage of their footprint by gaining an
increasing “share of wallet,” that is, encouraging more
frequent shopper purchases and in a broader range of
categories. Here, too, Zhongbai comes out on top. The
average household takes 18.6 trips to a Zhongbai store
in Wuhan each year, compared with 11.2 trips for its
closest competitor. Zhongbai leads in the number of
categories purchased. The average household buys 26
categories in one of its stores each year, compared with
16.3 for the runner-up. This success in purchasing
frequency and number of categories has allowed
Zhongbai to capture a high share of wallet that is
nearly twice as much as Carrefour, its nearest
competitor (see Figures 9 to 10).
Figure 8: In each city, penetration is a key driver of retailers’ performance
Hypermarkets in Wuhan
Hypermarkets in Shanghai
Market value share of hypermarket in Wuhan (July 2011 to June 2012)
Market value share of hypermarket in Shanghai (July 2011 to June 2012)
50%
15
R² = 0.84
Tesco
R² = 0.62
Zhongbai
RT-Mart
40
10
30
Lotus
Auchan
Wal-Mart
A Best
Lotus
Beijing Hualian
20
10
0
Carrefour
Hualian GMS
RT-Mart
0
20
Century Mart
Wal-Mart
NGS
E-Mart
5
Wushang Liangfan
Carrefour
Zhongshang Pingjia
40
60
80
100
0
0
Penetration in Wuhan
(Percentage of households that purchased at
least once a year, July 2011 to June 2012)
20
40
60
Penetration in Shanghai
(Percentage of households that purchased at
least once a year, July 2011 to June 2012)
Chinese hypermarkets
MNC hypermarkets
Note: Data includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic
items; Chinese hypermarkets include those headquartered in Taiwan, Hong Kong and Macao
Sources: Kantar Worldpanel; Bain analysis
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Figure 9: Retailers’ performance is also driven by each player’s ability to translate its footprint advantage
into revenues, or “share of wallet”
Share of wallet comparison across key hypermarkets (July 2011 to June 2012)
Wuhan retailers in hypermarkets
50%
46.0%
40
30
25.8%
22.3%
Average 20%
20.6%
18.4%
20
14.5%
10.9%
10.2%
10
0
Zhongbai
Carrefour
Wushang
Liangfan
Wal-Mart
Zhongshang
Pingjia
RT-Mart
A Best
Lotus
8.3%
Beijing
Hualian
Note: “Share of wallet” refers to the percentage of each hypermarket shoppers’ spending in that hypermarket chain vs. his or her total spending in all hypermarket chains; data
includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items
Sources: Kantar Worldpanel; Bain analysis
Figure 10: “Share of wallet” in Wuhan is mainly driven by the frequency and the number of categories
purchased
Share of wallet driven by frequency…
…and number of categories purchased
Share of wallet (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
50%
50%
R² = 0.90
R² = 0.93
Zhongbai
40
Zhongbai
40
30
30
Carrefour
Wushang Liangfan
Zhongshang Pingjia
RT-Mart
Lotus
Wal-Mart
20
A Best
10
20
Zhongshang Pingjia
A Best
10
Lotus
Beijing Hualian
Beijing Hualian
0
0
5
10
15
20
0
0
Carrefour
Wushang Liangfan
Wal-Mart
RT-Mart
10
20
30
Number of categories purchased at each hypermarket
per household per year (July 2011 to June 2012)
Annual frequency per household at each
hypermarket (July 2011 to June 2012)
Chinese hypermarkets
MNC hypermarkets
Note: “Share of wallet” refers to the percentage of each hypermarket shoppers’ spending in that hypermarket chain vs. his or her total spending in all hypermarket chains; data
includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items
Sources: Kantar Worldpanel; Bain analysis
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Zhonghai’s success in Wuhan offers lessons for
retailers like Carrefour and Lotus in Shanghai. Both
have a big footprint in Shanghai—Carrefour has 23
stores and Lotus has 25 stores—but these retailers
haven’t successfully used that advantage to earn a
higher share of wallet. Among the 10 largest
hypermarket retailers in Shanghai, Lotus and Carrefour
rank sixth and seventh, respectively (see Figure 11).
In Shanghai, Auchan is the leading hypermarket
retailer when it comes to share of wallet, which
increases with shopper frequency and the number of
categories purchased. For example, Auchan’s average
shopper household visited the retailer 16.8 times last
year—more than Lotus’s 11 and Carrefour’s 9.7. Also,
Auchan’s shoppers bought an average of 20.5
categories, surpassing Lotus’s 17.2 and Carrefour’s
16.7 (see Figure 12).
At a national level, top Chinese retailers, including
those that originated in Hong Kong, Taiwan and Macau,
enjoy a higher share of wallet than multinational players
(see Figure 13). Consider that Zhongbai, RT-Mart,
Vanguard and Yonghui all achieved share of wallet rates
that are higher than multinationals like Wal-Mart,
Auchan, Lotte Mart and Carrefour. The average Chinese
hypermarket share of wallet is 38%, compared with
26% for multinationals. A major contributing factor to
the success of Chinese hypermarkets is their local
focus, which translates into higher loyalty in terms of
more frequent visits and more categories purchased.
One important note: The 106 FMCG categories we
studied don’t include other key elements that may
contribute to retailers’ success, such as the
competitiveness of fresh produce or shoppers’ overall
price perception of the retailer.
Figure 11: Although Carrefour and Lotus have a footprint advantage in Shanghai, they cannot successfully translate that into a higher share of wallet...
Share of wallet comparison across key hypermarkets (%, July 2011 to June 2012)
Shanghai retailers in hypermarkets
40%
35.2%
29.9%
30
27.9%
26.0%
Average 23.2%
22.7%
20.7%
20.6%
18.7%
20
16.5%
16.0%
Wal-Mart
E-Mart
10
0
Auchan
Tesco
Hualian
GMS
RT-Mart
Century
Mart
Lotus
Carrefour
NGS
Note: “Share of wallet” refers to the percentage of each hypermarket shoppers’ spending in that hypermarket chain vs. his or her total spending in all hypermarket chains; data
includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items
Sources: Kantar Worldpanel; Bain analysis
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Figure 12: …driven in Shanghai by an average frequency and the number of categories purchased
compared with leading retailers, such as Auchan, Tesco, RT-Mart and Hualian GMS
Share of wallet driven by frequency
where Chinese retailers tend to outperform...
…as well as the number of categories purchased
Share of wallet (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
40%
40%
R² = 0.93
Tesco
30
RT-Mart
Lotus
Carrefour
20
Wal-Mart
0
0
Hualian GMS
Century Mart
Century Mart
Carrefour
Lotus
NGS
Wal-Mart
E-Mart
20
NGS
5
Auchan
Hualian GMS
30
E-Mart
10
R² = 0.83
Auchan
Tesco
RT-Mart
10
10
15
20
0
0
10
Annual frequency per household at each
hypermarket (July 2011 to June 2012)
20
30
Number of categories purchased at each hypermarket
per household per year (July 2011 to June 2012)
Chinese hypermarkets
MNC hypermarkets
Note: “Share of wallet” refers to the percentage of each hypermarket shoppers’ spending in that hypermarket chain vs. his or her total spending in all hypermarket chains; data
includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items
Sources: Kantar Worldpanel; Bain analysis
Figure 13: Overall, by being more locally focused, Chinese retailers seem to outperform MNCs on the
frequency and the average number of categories purchased
Share of wallet driven by frequency
where Chinese retailers tend to outperform...
…as well as the number of categories purchased
Share of wallet (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
60%
Vanguard
Wal-Mart
Lotte Mart
40
Carrefour
Lotus
20
0
0
60%
Zhongbai
R² = 0.78
5
Tesco
10
Zhongbai
R² = 0.86
RT-Mart
15
Yonghui
RT-Mart
Vanguard
Wal-Mart
Century Mart
Wu-Mart
Tesco
Auchan
Lotus
Lotte Mart
Carrefour
40
Yonghui
Century Mart
Wu-Mart
Auchan
20
20
0
0
10
20
30
Number of categories purchased at each hypermarket
per household per year in China (July 2011 to June 2012)
Annual frequency per household at each
hypermarket in China (July 2011 to June 2012)
Chinese hypermarkets
MNC hypermarkets
Note: “Share of wallet” refers to the percentage of each hypermarket shoppers’ spending in that hypermarket chain vs. his or her total spending in all hypermarket chains; data
includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic items
Sources: Kantar Worldpanel; Bain analysis
Page 13
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Implications for retailers
•
Local market share is a major contributor to
retailers’ performance. To expand their share,
retailers should adopt a regional approach and
focus first on building local scale in targeted
markets. Winners combine an extensive footprint
designed to achieve broad penetration with an
effective retail model that motivates shoppers to
make repeat visits and increase their basket size.
•
By being more locally focused, local retailers
appear to outperform multinationals in the key
dimensions of shopping frequency and the
number of categories purchased.
What do these insights mean for retailers striving to
grow in China?
•
•
Repertoire behavior will increase as modern trade
expands into lower-tier cities. This will benefit
retailers as brands spend more on in-store
activation in repertoire categories.
Retailers should work with the leading brands in
each category to deliver better category management and increase the rate of sales. When retailers
increase listing fees by adding SKUs—often lowselling items—the proliferation of brands on the
shelf can confuse shoppers and ultimately have a
detrimental impact on retailers’ performance.
Page 14
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
About the authors
Bruno Lannes is a partner in Bain’s Shanghai office and leads the firm’s Consumer Products and Retail practices
for Greater China. You may contact him by email at bruno.lannes@bain.com
Kevin Chong is a partner in Bain’s Shanghai office. You may contact him by email at kevin.chong@bain.com
Weiwen Han is a partner in Bain’s Shanghai office. You may contact him by email at weiwen.han@bain.com
Philip Leung is a partner in Bain’s Shanghai office. You may contact him by email at philip.leung@bain.com
Fiona Liu is a manager in Bain’s Shanghai office. You may contact her by email at fiona.liu@bain.com
Marcy Kou is managing director at Kantar Worldpanel Asia. You may contact her by email at
marcy.kou@kantarworldpanel.com
Jason Yu is general manager at Kantar Worldpanel China. You may contact him by email at jason.yu@ctrchina.cn
Please direct questions and comments about this report via email to the authors.
Acknowledgments
This report is a joint effort between Bain & Company and Kantar Worldpanel. The authors extend gratitude to
all who contributed to this report, in particular Kelly Pu, Agnes Lin, Daniel Pan and Junliang Zhu from Bain &
Company and Justin Cook from Kantar Worldpanel.
This concludes our 2012 series of reports on Chinese shoppers. All four reports
are available in English and Chinese on www.bain.com and www.bain.cn
The previous three reports in this series covered:
•
What Chinese shoppers really do and what this research means for retailers
•
How Chinese shoppers’ behavior varies by city tier, by category type or by life stage
•
The implications for multinational companies and local firms across categories
We look forward to continuing our research on Chinese shoppers in 2013.
Page 16
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