Chinese consumers are opting to order food delivery or eat out. Meituan, the largest food delivery platform, has 300 million registered users, nearly the size of the entire US population.
he world’s largest and most ambitious grocery market is undergoing fast and forceful shifts, requiring consumer goods players to move equally fast and forcefully if they hope to grow and maintain their margins.
Physical retailers in China find themselves responding to dizzying consumer trends. There is the relentless rise of online purchasing at the expense of offline. Bain & Company estimates that digital sales will expand by 41 percent annually through 2020, while hypermarket sales will grow by at most 1 percent per year and supermarket sales by 4 percent. There is also the big movement to mobile payments. In 2016, mobile payments by Chinese consumers were more than 50 times greater than those made by United States shoppers.
Other big trends are afoot, too. Chinese consumers are showing a passion for health and wellness (among those who can afford it) and, along with increasing urbanization, a seemingly unending need for convenience. We expect convenience store grocery sales to grow by as much as 13 percent on a compound annual basis through 2025.
Another sign of the appetite for convenience: In huge numbers, Chinese consumers are opting to order food delivery or eat out instead of cooking at home. Meituan, the largest food delivery platform, has 300 million registered users, nearly the size of the entire US population.
These trends are fueling rapid growth in some product categories and retail channels, while China’s less-affluent and older consumers are contributing to tepid growth in other categories and channels. The ultimate result is that China’s consumers have given rise to a two-speed environment that is quickly changing the course for all retailers and brands. It is all happening as China’s multitiered retail distribution model feels the strains of traditional physical retailing ’s slowdown.
These big shifts, combined with new competition from small, challenger brands, are causing many fast-moving consumer goods (FMCG) companies to rethink their business models. Some are redefining their organizations. Others are focusing on building newly critical capabilities like targeted marketing. We have identified seven key steps that can guide these moves and help brands navigate the changes.
Brands can get ahead of these shifts by devising a tailored approach to e-commerce. Consumer goods companies will need to use technology aggressively to collect and act on consumer data. E-commerce provides them with a unique opportunity to learn more about their consumers, instead of flying blind, as many did in the old brick-and-mortar world.
Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.
Thank you for sharing your thoughts. We appreciate your feedback.