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WHAT CHINESE SHOPPERS REALLY DOBUT 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
Page 1
Contents
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 3
2. Full report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 4
Inside China’s diversifi ed and evolving retail market . . . . . . . . . . . . . . . . . pg. 4
How retail channel dynamics infl uence shopper behavior . . . . . . . . . . . . . . pg. 6
What makes hypermarkets succeed? . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 9
3. Implications for retailers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 14
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 2
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 tohone their strategies.
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 3
In our groundbreaking report “What Chinese
Shoppers Really Do But Will Never Tell You”,
published in June, we helped fi ll 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.
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 signifi cant 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 middle-
class 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.
Figure 1: This research is based on a database of 40,000 households in different city tiers in China
Sources: Kantar Worldpanel; Bain analysis
Coverage
Approach and Methodology
• 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
• 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
Definitions
City tier (based on administrative definition)
Life stage
• 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
• 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
Page 4
In our fourth report, we explore the implications of our
fi ndings 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 confi rmed 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 diversifi ed 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.
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 5
Figure 2: Modern trade’s growth comes mainly from an increase in household spending, while e-commerce is still developing quickly
*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 onNote: Data includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronicitems; supermarket includes CVS and mini-martsSources: Kantar Worldpanel; Bain analysis
0
50
100
150M
Number of urban households* purchasing in the channel at least oncea year (2011 vs. 2012)
0
1,000
2,000
3,000
Annual spending per household (RMB, 2011 vs. 2012)
Household penetration by channel Household annual spending by channel
E-commerce
357 396
+11%
Supermarket
1,4751,639
+11.1%
Hypermarket
1,8712,131
+13.9%
E-commerce
2535
+37.9%
Supermarket
140 141
+0.6%
Hypermarket
117 120
+2.3%
July 2010–June 2011 July 2011–June 2012
Figure 3: Modern trade’s shopping frequency is decreasing, while online shopping prices are much higher but declining
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-martsSources: Kantar Worldpanel; Bain analysis
Shopping frequency Trip size Average price per item
0
10
20
30
Frequency per year per household(Number of times, 2011 vs. 2012)
0
2
4
6
8
10
Number of items per trip (2011 vs. 2012)
0
10
20
30
40
Price per item (RMB, 2011 vs. 2012)
37.935.7
-5.9%
E-commerce
23.725.9
Supermarket
-8.4%
2.6 3.0
E-commerce
+13%
7.68.0
+5.7%
Hypermarket
6.87.2
+6.2%
Supermarket
3.6 3.8
+4.4%
E-commerce
9.1 10.2
+12.3%
Hypermarket
8.4 9.5
+14.2%
Supermarket
July 2010–June 2011 July 2011–June 2012
Hypermarket
27.126.0
-4%
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 6
For its part, e-commerce penetration gained signifi cant
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 infl uenceshopper 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
Note: “Others” includes beauty salons, direct sales, drugstores, milk stores, overseas purchases, wholesale, family shopping, work unit and giftsSources: Kantar Worldpanel; Bain analysis
0
20
40
60
80
100%
Channelpreference
Tota
l FM
CG
Modern trade
Faci
al ti
ssue
Fabr
ic s
ofte
ner
Che
win
g gu
m
Toot
hbru
shes
Toot
hpas
te
Toile
t tis
sue
Insta
nt n
oodl
es
Sham
poo
Fabr
ic d
eter
gent
Bisc
uits
Yogu
rt
Pers
onal
was
h
Hai
r con
ditio
ner
Can
dy
Cho
cola
te
Kitc
hen
clea
ners
Milk
Juic
e
Grocery
CSD
s
RTD
tea
Bottl
ed w
ater
Beer
Specialty storeand e-commerce
Baby
dia
per
Infa
nt fo
rmul
a
Skin
car
e
Col
or c
osm
etic
s
Value share by channel (July 2011 to June 2012)
Grocery E-commerce Other channelsDepartment storesSpecialty storesSupermarket/CVS/miniHypermarket
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
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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 Tier-
1 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 in-
store activation in loyalist categories. So, brands and
retailers may need to reassess the effectiveness of
promotions in loyalist categories.
Another important fi nding 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 fi ve brands of fabric detergent
accounted for 65% of the category’s revenues.
Such fi ndings 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 signifi cant 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, fi lling the space
Figure 5: Modern trade is more prevalent in higher-tier cities
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
Moderntrade
0
20
40
60
80
100%
Tier-1 city Tier-2 city Tier-3 city Tier-4 city Tier-5 city
Super/CVS
Hyper
Traditionaltrade
Others
Market value split by channel in different tier cities (%, July 2010 to June 2011)
Onlineshopping
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 8
Figure 6: Promotions are more active in higher-tier cities for repertoire categories, but loyalist categories are not far behind
Repertoire categories Loyalist categories
More active promotions in higher-tier cities and repertoire categories… …but loyalist categories
are not far behind
Is promotion money invested in loyalist categories well spent?
0
10
20
30
40%
Tier-1
31%
Tier-2
27%
Tier-3
22%
Tier-4
20%
Tier-5
13%
Tier-1
25%
Tier-2
22%
Tier-3
17%
Tier-4
14%
Tier-5
10%
% of revenue from promotions within modern trade by city tier (July 2011 to June 2012)
0
10
20
30
40%
% of revenue from promotions withinmodern trade (July 2011 to June 2012)
Repertoire
23%
Loyalist
18%
Note: Data is based on 26 FMCG categoriesSources: 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)
0
20
40
60
80
100%
Accumulated sales revenue for category X at hypermarket A
% of SKUs
0 25% 50% 75% 100%0
20
40
60
80
100%
Accumulated sales revenue for category Y at hypermarket B
% of SKUs
25% 50% 75% 100%
Bottom 25% of SKUs contribute only ~3% or less of revenues
Source: Bain China experience
Top-quartile SKUscontributed to~70% revenue
Bottom 50% SKUscontributed to only
~10% revenue
Bottom 25% SKUscontributed to only
~3% revenue
Top-quartile SKUscontributed to~75% revenue
Bottom 50% SKUscontributed to only
~7% revenue
Bottom 25% SKUscontributed to only
~2% revenue
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 9
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
0
10
20
30
40
50%
0 20 40 60 80 100
Penetration in Wuhan(Percentage of households that purchased atleast once a year, July 2011 to June 2012)
Market value share of hypermarket in Wuhan (July 2011 to June 2012)
A Best
Beijing HualianLotus
RT-Mart Zhongshang Pingjia
Wal-Mart
CarrefourWushang Liangfan
ZhongbaiR²=0.84
0
5
10
15
0 20 40 60
Auchan
Penetration in Shanghai(Percentage of households that purchased atleast once a year, July 2011 to June 2012)
Market value share of hypermarket in Shanghai (July 2011 to June 2012)
E-MartNGS
Wal-Mart
Century Mart
Hualian GMSLotus
CarrefourRT-Mart
TescoR²=0.62
Note: Data includes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronicitems; Chinese hypermarkets include those headquartered in Taiwan, Hong Kong and MacaoSources: Kantar Worldpanel; Bain analysis
Hypermarkets in Wuhan Hypermarkets in Shanghai
Chinese hypermarkets MNC hypermarkets
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 10
Figure 9: Retailers’ performance is also driven by each player’s ability to translate its footprint advantage into revenues, or “share of wallet”
Zhongbai
46.0%
Carrefour
25.8%
WushangLiangfan
22.3%
Wal-Mart
20.6%
ZhongshangPingjia
18.4%
RT-Mart
14.5%
A Best
10.9%
Lotus
10.2%
BeijingHualian
8.3%
Wuhan retailers in hypermarkets
Average 20%
0
10
20
30
40
50%
Share of wallet comparison across key hypermarkets (July 2011 to June 2012)
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; dataincludes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic itemsSources: Kantar Worldpanel; Bain analysis
Figure 10: “Share of wallet” in Wuhan is mainly driven by the frequency and the number of categories purchased
0
10
20
30
40
50%
0 5 10 15 20
Annual frequency per household at eachhypermarket (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
A Best
Beijing HualianLotus
RT-MartZhongshang Pingjia
Wal-Mart
CarrefourWushang Liangfan
ZhongbaiR²=0.90
0 10 20 30
Number of categories purchased at each hypermarketper household per year (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
Wal-Mart
Lotus
Carrefour
RT-Mart
R²=0.93
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; dataincludes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic itemsSources: Kantar Worldpanel; Bain analysis
Share of wallet driven by frequency… …and number of categories purchased
Chinese hypermarkets MNC hypermarkets
0
10
20
30
40
50%Zhongbai
Wushang LiangfanZhongshang Pingjia
Beijing Hualian
A Best
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 11
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 12
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 success-fully translate that into a higher share of wallet...
Auchan
35.2%
Tesco
29.9%
HualianGMS
27.9%
RT-Mart
26.0%
CenturyMart
22.7%
Lotus
20.7%
Carrefour
20.6%
NGS
18.7%
Wal-Mart
16.5%
E-Mart
16.0%
Shanghai retailers in hypermarkets
Share of wallet comparison across key hypermarkets (%, July 2011 to June 2012)
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; dataincludes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic itemsSources: Kantar Worldpanel; Bain analysis
0
10
20
30
40%
Average 23.2%
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 13
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
0
10
20
30
40%
0 5 10 15 20
Annual frequency per household at eachhypermarket (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
Lotus
RT-Mart
Wal-Mart
Carrefour
R²=0.93
0 10 20 30
Number of categories purchased at each hypermarketper household per year (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
Wal-MartLotus
CarrefourRT-Mart
R²=0.83
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; dataincludes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic itemsSources: Kantar Worldpanel; Bain analysis
Share of wallet driven by frequencywhere Chinese retailers tend to outperform...
…as well as the number of categories purchased
Chinese hypermarkets MNC hypermarkets
0
10
20
30
40%
E-Mart
NGS
Auchan
Century Mart
Hualian GMSTesco
E-Mart
NGS
Auchan
Century Mart
Hualian GMS
Tesco
Figure 13: Overall, by being more locally focused, Chinese retailers seem to outperform MNCs on the frequency and the average number of categories purchased
0
20
40
60%
0 5 10 15 20
Annual frequency per household at eachhypermarket in China (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
R²=0.78
0 10 20 30
Number of categories purchased at each hypermarketper household per year in China (July 2011 to June 2012)
Share of wallet (July 2011 to June 2012)
Wal-Mart
Lotus
R²=0.86
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; dataincludes 106 FMCG categories covering ambient and chilled food and drink, personal care and household products, excluding fresh food, white goods and electronic itemsSources: Kantar Worldpanel; Bain analysis
Share of wallet driven by frequencywhere Chinese retailers tend to outperform...
…as well as the number of categories purchased
Chinese hypermarkets MNC hypermarkets
0
20
40
60%
Auchan
Century Mart
Lotte Mart
Tesco
Carrefour
RT-Mart
Zhongbai
VanguardYonghui
Lotus Auchan
Century Mart
Tesco
Carrefour
RT-Mart
Zhongbai
Wu-Mart
Yonghui
Wu-MartLotte Mart
Wal-MartVanguard
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 14
• Local market share is a major contributor to
retailers’ performance. To expand their share,
retailers should adopt a regional approach and
focus fi rst 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.
Implications for retailers
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 benefi t
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 manage-
ment and increase the rate of sales. When retailers
increase listing fees by adding SKUs—often low-
selling items—the proliferation of brands on the
shelf can confuse shoppers and ultimately have a
detrimental impact on retailers’ performance.
What Chinese Shoppers Really Do But Will Never Tell You, Vol. 4 | Bain & Company, Inc. | Kantar Worldpanel
Page 16
About the authors
Bruno Lannes is a partner in Bain’s Shanghai offi ce and leads the fi rm’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 offi ce. You may contact him by email at kevin.chong@bain.com
Weiwen Han is a partner in Bain’s Shanghai offi ce. You may contact him by email at weiwen.han@bain.com
Philip Leung is a partner in Bain’s Shanghai offi ce. You may contact him by email at philip.leung@bain.com
Fiona Liu is a manager in Bain’s Shanghai offi ce. You may contact her by email at fi ona.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 fi rms across categories
We look forward to continuing our research on Chinese shoppers in 2013.
Shared Ambit ion, True Re sults
Bain & Company is the management consulting fi rm that the world’s business leaders come to when they want results.Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisitions. We develop practical,
customized insights that clients act on and transfer skills that make change stick. Founded in 1973, Bain has 48 offi ces in 31 countries, and
our deep expertise and client roster cross every industry and economic sector. Our clients have outperformed the stock market 4 to 1.
What sets us apartWe believe a consulting fi rm should be more than an adviser. So we put ourselves in our clients’ shoes, selling outcomes, not projects. We
align our incentives with our clients by linking our fees to their results and collaborate to unlock the full potential of their business. Our
Results Delivery® process builds our clients’ capabilities, and our True North values mean we do the right thing for our clients, people and
communities—always.
Bain in Greater ChinaBain was the fi rst strategic consulting fi rm to set up an offi ce in Beijing in 1993. Since then Bain has worked with both multinationals and
local clients across more than 30 industries. We have served our clients in more than 40 cities in China. There are now three offi ces in the
Greater China region, covering Beijing, Shanghai and Hong Kong. There are about 150 consultants currently working in Greater China,
with extensive Chinese and global working experiences.
Kantar Worldpanel—high defi nition inspiration™, a CTR service in China
Kantar Worldpanel is the world leader in continuous consumer panels. Our global team of consultants apply tailored research solutions
and advanced analytics to bring you unrivaled sharpness and clarity of insight to both the big picture and the fi ne detail. We help our
clients understand what people buy, what they use and the attitudes behind shopper and consumer behavior.
We use the latest data collection technologies best matched to the people and the environment we are measuring. Our expertise is rooted
in hard, quantitative evidence—evidence that has become the market currency for local and multinational FMCG brand and private label
manufacturers, fresh food suppliers, retailers, market analysts and government organizations. We are not limited to the grocery sector; we
have a wide range of panels in fi elds as diverse as entertainment, communications, petrol, fashion, personal care, beauty, baby and food-
on-the-go.
It’s what we do with our data that sets us apart. We apply hindsight, insight, foresight and advice to make a real difference to the way you
see your world and inspire the actions you take for a more successful business.
We have more than 40 years' experience in helping companies shape their strategies and manage their tactical decisions; we understand
shopper and retailer dynamics; we explore opportunities for growth in terms of products, categories, regions and within trade
environments. Together with our partner relationships, we are present in more than 50 countries—in most of which we are market
leaders—which means we can deliver inspiring insights on a local, regional and global scale. Kantar Worldpanel was formerly known as
TNS Worldpanel.
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