In 2018, China's consumer goods market continued to maintain stable growth with improved quality. Total retail sales of consumer goods reached 38.1 trillion yuan, a year-on-year increase of 9.0%. Although the growth rate fell by 1.2 percentage points, the absolute increment reached 3.2 trillion yuan. Consumption contributed 76.2% to GDP growth, further consolidating and enhancing its role in economic growth.

In 2018, the sales scale of China's top 100 retail enterprises reached 7.35 trillion yuan, a year-on-year increase of 20.5%, down 5.5 percentage points from the previous year. The sales of the top 100 accounted for 19.3% of total retail sales of consumer goods, up 2.7 percentage points from 2017.

The list shows that seven enterprises had sales exceeding 100 billion yuan, namely Tmall, JD.com, Pinduoduo, Suning.com, Dashang Group, Gome, and China Resources Vanguard. As the main format of FMCG retail, large supermarkets generally face difficulties such as declining sales per square meter and weakening profitability, with sluggish growth. In 2018, the average sales growth of top 100 enterprises mainly operating large supermarkets was 2.5%, and the average number of stores increased by 3.6%, a relatively slow growth rate.

At the same time, operating costs of large supermarkets continued to rise, with total employee compensation increasing by 13.0% and rent increasing by 10.6%. The cost-to-sales ratio was at a relatively high level among all formats.

According to data from Kantar Worldpanel, the market share of major retailers in the modern trade channel in the first quarter of 2019 was as follows:

Head retailers are under greater competitive pressure. Sun Art Retail, China Resources Vanguard, and Walmart still maintain their leading positions. In the first quarter, these three companies together held a 20.4% market share in the modern trade channel, but all declined compared with the same period last year.

While continuing to expand their retail territory, these three retailers are also constantly adjusting their formats and regional distribution to optimize their business structures.

China Resources Vanguard chose to close some stores in North China and transferred stores in some regions to other regional retailers, focusing on the development of small-format stores and premium supermarkets.

Walmart recently announced that it will open 40 high-end Sam's Club stores in China by 2020. By deepening cooperation with JD.com, strengthening offline-online integration, and using a mini-program for scan-and-purchase, it aims to provide 30 million users with a better shopping experience.

Although Yonghui's growth rate has also slowed compared with previous years, in terms of market share in the first quarter of 2019, Yonghui is still the best-performing retailer in China.

While boldly acquiring and merging regional retail leaders, Yonghui is also actively adjusting its new retail strategy. Through the dual-engine development of Yonghui Mini and Yonghui Life, it is reaping the benefits of fresh food community commerce.

Market share and average store sales of hypermarkets from 2016 to 2018

From 2016 to 2018, the market share and average store sales (excluding tax) of major hypermarket brands such as China Resources, Walmart, Yonghui, Carrefour, Bailian, and Lotus were as follows.

Sun Art Retail (RT-Mart + Auchan)

According to financial reports, in 2018 Sun Art Retail achieved total sales revenue of 101.315 billion yuan, a year-on-year decrease of 1%; revenue of 99.359 billion yuan, a decrease of 2.9%; operating profit of 4.196 billion yuan, down 6.5%; profit attributable to equity shareholders of 2.588 billion yuan, a year-on-year decrease of 7.3%. It operated a total of 484 comprehensive hypermarkets, and the new format "Hema Xiaoma" had 9 stores.

Walmart

In 2018, Walmart China was still plagued by rumors of store closures, closing 16 stores in half a year. According to Walmart's fourth-quarter results, same-store sales in the Chinese market fell 0.2% year-on-year. Walmart attributed the decline to the Mid-Autumn Festival moving from October in 2017 to September, fierce competition from online and traditional retailers, and the impact of China's macroeconomic environment.

China Resources Vanguard

Wumart

In September 2018, 21 stores of Lotte Mart in North China were confirmed to be integrated into the Wumart system, including 17 stores in Beijing, 2 in Tianjin, 1 in Yanjiao, and 1 in Zhuozhou. According to Wumart Group's bond report for the first half of 2018, Wumart's market share in Beijing and Tianjin was approximately 39.50% and 15.00%, respectively.

Yonghui Superstores

Carrefour

In 2018, Carrefour's Greater China business performed well, driving a significant increase in profits, up 11 times year-on-year to 350 million yuan. Carrefour is innovating with market changes, upgrading stores while enhancing digital capabilities, connecting consumption scenarios, and creating a new shopping experience in the era of consumption upgrade.

Lotus

According to financial reports, Lotus's operating revenue in 2018 was 10.122 billion yuan, a year-on-year increase of 4.84%, and net profit was -288 million yuan, a year-on-year decrease of 261.06%. Lotus suffered losses six times in the past seven years, with losses of 392 million yuan, 96.8 million yuan, 58.4 million yuan, 18 million yuan, and 538 million yuan from 2012 to 2016, respectively. In 2018, Lotus opened 8 new hypermarkets, 2 premium supermarkets, and 1 neighborhood convenience store. By the end of 2018, Lotus had more than 80 stores nationwide, covering four formats: shopping centers, hypermarkets, premium supermarkets, and convenience stores.

Bailian Group

Zhongbai Supermarket

Jingkelong

Better Life

BHG Life Supermarket

SPAR

In 2004, SPAR, which focuses on voluntary retail chain model, entered China at the invitation of the Ministry of Commerce and the China Chain Store & Franchise Association. By 2018, it had 297 stores in 8 provinces and cities in China, with a net operating area of 540,000 square meters and 50,000 employees.

Attached figure:

Notes:

(1) All data for 2016 and 2017 are actual results; figures for 2018 are estimated based on actual results in the first half of 2018; (2) Euromonitor defines hypermarkets as chain or independent retail stores with a selling space of more than 2,500 square meters, mainly selling food and non-food items; (3) In Euromonitor's hypermarket data: Walmart includes Walmart (China) Investment Co., Ltd. and Hymall Supermarket Chain Co., Ltd.; Bailian Group includes Lianhua Supermarket Co., Ltd. and Hualian GMS Shopping Center Co., Ltd.

2018 China FMCG (Supermarket/Convenience Store) Chain Top 100

Source: Retail Circle (ID: retailmaster)

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