China’s regional retail leaders expand their territories

With value sales growth of 5.6%, there was a marked improvement in Mainland China's FMCG market until 2024 compared to the same period the previous year, which was heavily affected by the pandemic. Looking at the year as a whole, a moderate recovery is in evidence, with growth of 1.2%. In terms of categories, fresh produce were not the most dynamic ones. Beverages and household cleaning products maintained significant growth in Q4. Food, dairy products, and personal care showed signs of recovery, although at a slower pace than the market average.

The resurge of modern channels

The performance of modern channels, in particular hypermarkets and large supermarkets, resurged compared to the previous year's downturn. Walmart and Yonghui both increased their share amongst fierce competition, while #1 retail group Sun Art reduced his share from 8,4% to 7,6% between December 2023 and November 2024. However, the total FMCG market share held by the Top 10 modern trade retailers decreased by 1.6% – an indication of fragmentation, and increasingly diversified formats. Membership stores continued to grow in Mainland China in Q4, but more slowly than the first two quarters of 2023, due to saturation in upper-tier cities and intensified competition. This may lead to an emerging trend of membership stores expanding into lower-tier cities. Over 10% of Mainland Chinese households purchased FMCG from membership stores in 2023, with sales increasing 40% compared to 2022.

E-commerce “back to normal”

As life returned to normal since 2023, some consumers reverted to in-person shopping, leading to a nearly 3% decrease in the penetration of e-commerce. However, there was a significant increase in purchase frequency, leading to overall sales growth of 5.3% for the year. As consumers are decreasing their loyalty, platforms must improve supply chain efficiency to reduce fulfilment costs. E-commerce has significantly disrupted traditional shelf-based e-commerce. More than 40% of Mainland Chinese urban households purchased FMCG from the Douyin platform in 2023, and its penetration is expected to surpass Pinduoduo this year.

Discount formats accelerate expansion

Since 2023, the discount store format surged across all categories. Established less than 5 years ago, Hotmaxx now has more than 600 stores, while Hema Outlet opened its inaugural store in 2022 and presently operates over 70 stores. Discounters are improving operational efficiency by engaging in large-scale production and selling their own-brand products. Specialist snack discount stores became popular nationwide in 2023, with more than 7.6% of Chinese urban households purchasing from these in Q4. Source: Kantar. For more information you can write here.