mt channel china

8/9/2019 MT Channel China

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Copyright 2005 ACNielsena VNU business

China Retail Market DevelopmentChina Retail Market Development


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ObjectivesObjectives

2004 Retail Census Findings Does Retail universe continue to expand?

How big is our key channel (modern trade) as of today?

Any changes to the composition of modern trade

outlet?


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Retail DevelopmentRetail Development

As of 2004 Retail Market Study (Census)As of 2004 Retail Market Study (Census)


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China Retail Market DynamicsChina Retail Market Dynamics

China experienced strong economic growth in

2004 vs. 2003;GDP climbed 9.5%

Retail Sales grew by 10.2%

Retail & ConsumerPrice indices grew at 2.8% & 3.9%

respectively

China fully opened up its retail market on Dec

11th, 2004 in line with the WTO commitmentsvigorous development will continue across 2005


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China MarketChina Market -- SummarySummary

Chinas key economic indicators provide a favorable outlook forthe overall market development, however

Despite strong growth in these indicators there are moresignificant challenges for the retail marketModern Trade continues to grow > 30% in terms of store count, far greater

than the growth in retail sales

This has resulted in further downward pressure in comparable store salesIntensified competition has & will continue to increase pressure on retailer

and manufacturer margins

Implication to Retailers: Now, more than ever it is essential tounderstand your positioning in the marketTo do so means knowing your shoppers needs better than your competitors

todayFurthermore, to keep abreast of their evolving needs is now not nice to

know it is ESSENTIAL TO KNOW

Implication to Manufacturers: High pressure for sales team tocatch up with rapid outlet expansion


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2004 ACNielsen Retail Market Study (Census)2004 ACNielsen Retail Market Study (Census)

The 9th national study

Covered over 1 million FMCG outlets in 165 cities &

236 towns in China (villages excluded)400+ sample points selected out of 20000+ cities & towns based

on stratified, disproportionate, systematic, random method.

Estimate the size, structure and sales turnover in

the universe of outlets


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2004 ACNielsen Retail Market Study2004 ACNielsen Retail Market Study

Key FindingsKey Findings

Transformation from Traditional Trade to Modern

Trade continuousContinuous strong double-digit growth seen in MT

Polarization apparent in MT : Hypermarkets & CVS led the

growth !

Number of Grocery and Kiosk declined !Declining trend consistent across different city types


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Modern Trade Continuously Recorded StrongModern Trade Continuously Recorded Strong

DoubleDouble--digit Growth In Store Count & Turnoverdigit Growth In Store Count & Turnover

While Groc/Kiosk Started to Decline !While Groc/Kiosk Started to Decline !

Modern Trade includes hypermarket, supermarket, minimarket & convenience store

G/K

MT

8 7 7

7 7

8 7

Others

88

# FMCG Stores

+ 44% + 35%

-8%-1%

+2% +4%

-4%0%

87

8

78 7

8 8

Monthly FMCG ACV ( Million RMB)

+5%+6%

+21%+18%

-1%+2%

0%+6%

National


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MT Accounted ForOver 1/3 Of FMCG TurnoverMT Accounted ForOver 1/3 Of FMCG Turnover

Nationally ; Groc/Kiosk Still Sizeable ButNationally ; Groc/Kiosk Still Sizeable But

Declining Trend ApparentDeclining Trend Apparent

Modern Trade includes Hypermarket, supermarket, minimarket & convenience store

G/K

MT

7

7 7

Others

# FMCG Stores (%) FMCG ACV (%)

5

7 5 7 5 7

National


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In A cities, not surprising that MT became evenIn A cities, not surprising that MT became even

more dominantmore dominant


G/K

MT

7

7

8

Others


7

8

8

A Cities


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While in BCD Cities, G/K despite its dominanceWhile in BCD Cities, G/K despite its dominance

also losing ground to MT which accounts for ofalso losing ground to MT which accounts for of

the marketthe market


19 6 2125 6

3 5 1 66 9

6 6 6 5

2002 2003 2004

G/K

MT

0 6 0 1 0

1 0 0 6 6 4

2 5 2 6 31 6

2002 2003 2004

Others


BCD Cities


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In short, MT aggressiveness is continuous even inIn short, MT aggressiveness is continuous even in

pioneer city like SHpioneer city like SH MT would not be saturated (inMT would not be saturated (in

store count) in near futurestore count) in near future

J Z

M o d e r n T r a d e o n t r ib u t i o n

e t a i l e n s u s

J Z

M od e rn T ra d e e e lo e n t

s ( a n e )

tore count

V

V/ tore


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SH & G even outperformed other cities withSH & G even outperformed other cities with

positive growth in per store turnoverpositive growth in per store turnover

odern r de -

SH G

Store ount 1,723 5,036 712 5 1 16,1 5 14,771,150 1,4 395 1 2 6, 44 3,507

/Store ( /Store) 667,27 297,675 554,590 313,015 422,562 237,339

odern r de -

SH GStore ount 2,336 5,746 909 1,22 20,7 7 1 ,649

1,2 9 1,983 645 334 8,360 4,299

/Store ( /Store) 552,012 345,155 709,351 272,166 402,184 230,499


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Modern Trade expanding across regions, whatModern Trade expanding across regions, what

about the store type composition within thisabout the store type composition within this

channel?channel?

Any insights?Any insights?


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Spend Most Money (%)

Use Regularly (P D) (%)

Use P4W (%)

Occasionally Use (%)

Used Past Year (%)

Consider Using (%)

Non considerers (%)

Convenience & Personal Care Leverage 2003 vsConvenience & Personal Care Leverage 2003 vs.. 20042004

Ref: Q3a-d, 5a-b

Spend & Visits grow significantly also impacting theSpend & Visits grow significantly also impacting the

Supermarket format, little change however forSupermarket format, little change however for

Personal Care formatPersonal Care format..

CONVENIENCE STORE

2003 2004

2

4

3

4

PERSONAL CARE

2003 2004

3

0

2

4

22

Base: Random samples - All respondents (n=3372)

2

3

4

4

2

Source: 2004 ShopperTrend


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19

7

45

3

20.63

7.35

5.74 5.67

3.78

Wet Markets Supermarket Hypermarket Traditional Grocery Convenience Stores

2003

2004

Trade SectorAverage Number ofVisitsPer MonthTrade SectorAverage Number ofVisitsPer Month

Base: Visited in Past Year Ref: Q6

Growth in spend translates into increased shoppingGrowth in spend translates into increased shopping

frequency atfrequency at HmktHmkt & CVS.& CVS. SmktSmkt & more traditional& more traditional

channel visits experienced little or no gainchannel visits experienced little or no gain

43.5%26%

Source: 2004 ShopperTrend


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Hypermarkets Continue Playing Crucial RoleHypermarkets Continue Playing Crucial Role

In MT ; Development Of CVS Adversely Impacted NotIn MT ; Development Of CVS Adversely Impacted Not

Only On Traditional G/K But Also MiniOnly On Traditional G/K But Also Mini--marketsmarkets

2 1 2 25 6 1

61 2 56 5

30 9 35 3

2003 2004

31 5 32

1 9 1 2

41 5 40 5

9 2 9 5

2003 2004

Supermarket

Hyperrnarket

Minimarket

# FMCG Stores (% to Total MT ) FMCG ACV (% to Total MT)

National

CVS


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Growt Growt Growt

IO I I I

ot G Handlers 4,661,622 4,480,940 96 38,481 40,620 106 8,263 9,065 110

Modern Trade 40,375 54,471 135 11,202 13,570 121 277,444 249,119 90

Grocery + Kiosk 3,214,610 2,960,426 92 24,382 24,146 99 7,585 8,156 108

Ot er FMCG Handlers 1,406,637 1,466,043 104 2,897 2,904 100 2,060 1,981 96

Cos etic 44 864 57 281 128 168 171 102 7 2 80

eneral store 25 28 86,689 107 1,640 1,655 101 1,772 1,677 95

Cigarette Speciality Store 4,882 4,52 99 12 12 99 ,5 8 ,54 100

ine an Spirits Store ,990 40,218 101 125 127 102 ,1 ,170 101

So t Drinks an ce Crea 56,160 61,98 110 88 2 105 1,56 1,480 95

estern Drug Store 270,956 27 , 67 101 70 714 101 2,618 2,611 100

ra itional Drug Store 15,190 11,982 79 22 22 99 1,451 1,814 125

Traditional Stores Became More SpecializedTraditional Stores Became More Specialized

In Order To Survive UnderSevere Pressure From MTIn Order To Survive UnderSevere Pressure From MT

#FMCG Stores Monthly FMCG ACV FMCG ACV per store


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Loyalty to specific brands remains low or in declineLoyalty to specific brands remains low or in decline

except cigarettesexcept cigarettes

Loo for t e same brand but c oose somet ing slig t ly dif ferent e g dif ferent s i e ariant

uy t e same brand at anot er store

uy an alternati e brand

ait until it was a ailable

igarettes oft drin nstant noodles

Base: Random samples - All who buy the products regularly Ref: Q16, 18, 20, 22, 24, (26, 28, 30)

Purchase Behavior in Event of Unavailability

Q. If you were buying from your usual store and its not available,

would you..

%

Moisturiser Instant Coffee Sanitary Napkins Toothpaste


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ConclusionConclusion

In the recent ACNielsen Retail Market Study, retail universe reported

a marginal decline (-4%) in store count resulted by the shrinkage ofGroc/Kiosk (- %) in which Modern Trade ( 35%) rapid expansion isbelieved to be key drive.

As a result, transformation from Traditional Trade to Modern Tradecontinues. Modern trade accounts for 1% of store count while 33%of total FMCG sales value turnover.

Modern Trade aggressiveness observed across city layers evenShanghai which is perceived as pioneer city, modern tradeexpansion is still evidenced and didnt seem saturated.

At the same time, polarization appears in modern trade:In store count, Hmkt & CVS led the growthConsumer study (2004 ShopperTrend) illustrates the increased frequency of

visits and also tendency to spend most Hmkt/CVS

Lastly, chinese consumers are having lowbrand loyalty thatmajority will switch to otherbrand when the ideal one is out-stock.

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