RETAILING IN CHINA

Euromonitor International January 2013

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LIST OF CONTENTS AND TABLES

Executive Summary ..................................................................................................................... 1 Overall Vigorous Growth for Retailing in China ........................................................................ 1 Growth Slows Due To Decelerating Local Economy ................................................................ 1 Non-grocery Retailing Leads Value Growth .............................................................................. 1 the Rise of Internet Retailers in the Fragmented Retailing Market ........................................... 1 Forecast Value Growth Is Expected To Remain Strong ........................................................... 1 Key Trends and Developments .................................................................................................... 1 Decelerating Economy in China in 2012 ................................................................................... 2 Strong Growth in Internet Retailing ........................................................................................... 3 Government-initiated Programmes To Stimulate Buying and Transactions.............................. 4 Steady Development for Private Label ..................................................................................... 6 Customer-centric Strategy on the Rise ..................................................................................... 7 Market Indicators .......................................................................................................................... 8 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Table 16 Table 17 Table 18 Table 19 Table 20 Table 21 Table 22 Table 23 Table 24 Table 25 Table 26 Table 27 Table 28 Employment in Retailing 2007-2012............................................................. 8 Sales in Retailing by Channel: Value 2007-2012 ......................................... 9 Sales in Retailing by Channel: % Value Growth 2007-2012......................... 9 Sales in Store-Based Retailing by Channel: Value 2007-2012 .................... 9 Store-Based Retailing Outlets by Channel: Units 2007-2012 ....................... 9 Sales in Store-Based Retailing by Channel: % Value Growth 20072012 ........................................................................................................... 10 Store-Based Retailing Outlets by Channel: % Unit Growth 2007-2012 ...... 10 Sales in Non-store Retailing by Channel: Value 2007-2012....................... 10 Sales in Non-store Retailing by Channel: % Value Growth 2007-2012 ...... 10 Sales in Retailing by Grocery vs Non-Grocery: 2007-2012 ........................ 11 Sales in Non-Grocery Retailers by Channel: Value 2007-2012 .................. 11 Non-Grocery Retailers Outlets by Channel: Units 2007-2012 .................... 11 Sales in Non-Grocery Retailers by Channel: % Value Growth 20072012 ........................................................................................................... 12 Non-Grocery Retailers Outlets by Channel: % Unit Growth 2007-2012 ..... 12 Retailing Company Shares: % Value 2008-2012 ....................................... 12 Retailing Brand Shares: % Value 2009-2012 ............................................. 13 Store-Based Retailing Company Shares: % Value 2008-2012 .................. 14 Store-Based Retailing Brand Shares: % Value 2009-2012 ........................ 15 Store-Based Retailing Brand Shares: Outlets 2009-2012 .......................... 15 Non-store Retailing Company Shares: % Value 2008-2012....................... 16 Non-store Retailing Brand Shares: % Value 2009-2012 ............................ 17 Non-Grocery Retailers Company Shares: % Value 2008-2012.................. 18 Non-Grocery Retailers Brand Shares: % Value 2009-2012 ....................... 18 Non-Grocery Retailers Brand Shares: Outlets 2009-2012 ......................... 19 Forecast Sales in Retailing by Channel: Value 2012-2017 ........................ 20 Forecast Sales in Retailing by Channel: % Value Growth 2012-2017 ........ 20 Forecast Sales in Store-Based Retailing by Channel: Value 20122017 ........................................................................................................... 20 Forecast Store-Based Retailing Outlets by Channel: Units 2012-2017 ...... 21 Market Data .................................................................................................................................. 9

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II

Table 29 Table 30 Table 31 Table 32 Table 33 Table 34 Table 35 Table 36

Forecast Sales in Store-Based Retailing by Channel: % Value Growth 2012-2017 .................................................................................................. 21 Forecast Store-Based Retailing Outlets by Channel: % Unit Growth 2012-2017 .................................................................................................. 21 Forecast Sales in Non-store Retailing by Channel: Value 2012-2017 ........ 21 Forecast Sales in Non-store Retailing by Channel: % Value Growth 2012-2017 .................................................................................................. 22 Forecast Sales in Non-Grocery Retailers by Channel: Value 20122017 ........................................................................................................... 22 Forecast Non-Grocery Retailers Outlets by Channel: Units 2012-2017 ..... 22 Forecast Sales in Non-Grocery Retailers by Channel: % Value Growth 2012-2017 ..................................................................................... 23 Forecast Non-Grocery Retailers Outlets by Channel: % Unit Growth 2012-2017 .................................................................................................. 23

Appendix .................................................................................................................................... 23 Operating Environment ........................................................................................................... 24 Cash and Carry....................................................................................................................... 25 Table 37 Cash and Carry: Number of Outlets by National Brand Owner 20092012 ........................................................................................................... 25

Definitions................................................................................................................................... 25 Sources ...................................................................................................................................... 26 Summary 1 Research Sources ...................................................................................... 27

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RETAILING IN CHINA
EXECUTIVE SUMMARY Overall Vigorous Growth for Retailing in China
Overall, retailing in China remained vigorous in 2012, with double-digit current value growth. The central governments emphasis on domestic demand to boost the economy through stimulus packages has been translated into dynamic retailing market movement, particularly explosive growth in internet retailing, as well as buoyant homeshopping, direct selling and mixed retailing, in addition to the steady development of grocery retailers.

Growth Slows Due To Decelerating Local Economy

Growth in retailing slowed slightly in 2012, mainly thanks to the decelerating economy in China amid the uncertain global economic outlook, particularly the worsening Europe sovereign debt crisis. Categories which particularly suffered included electronics and appliance specialist retailers, whose growth halved in 2012 compared to 2011. This category has also faced the end of two household appliance subsidy programmes, which previously contributed significantly to its robust growth.

Non-grocery Retailing Leads Value Growth

Compared with the relatively mature grocery retailing, non-grocery retailing seems to have greater market potential, with its current value growth outperforming grocery retailing significantly in 2012 over 2011. Many non-grocery retailing channels are comparatively underdeveloped in China with less presence of multinational players in the market. Internet retailing and homeshopping both registered dynamic current value growth in 2012.

the Rise of Internet Retailers in the Fragmented Retailing Market

The retailing market in China is highly fragmented. Owing to the boom in internet retailing, leading internet retailers, such as taobao.com and 360buy.com, have experienced explosive growth in sales revenue and quickly risen to the top 10 position in the retailing market over the review period. An extensive range of products for sale, convenient home delivery service with efficient logistics facilities and extremely competitive prices are key factors in their rocketing growth.

Forecast Value Growth Is Expected To Remain Strong

Value growth of retailing in the forecast period is expected to remain strong over the forecast period, driven mainly by the governments strategic focus on boosting domestic demand as the major growth engine for the Chinese economy. Stimulus packages are expected to continue to be launched to promote consumption and support the healthy growth of retailing. Rising disposable incomes and the pursuit of better lifestyles among Chinese consumers are also expected to underpin the strong forecast value growth of retailing.

KEY TRENDS AND DEVELOPMENTS

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Decelerating Economy in China in 2012

Amid the gloomy global economic development, especially the Europes sovereign debt crisis, as well as the uncertain outlook, the economic development in China has been decelerating in 2012, with the real GDP growth amounting to around 8.2% in 2012, compared with 10.5% and 9.2%, respectively, in 2010 and 2011. However, in 2008, the central government began to emphasise boosting domestic demand as the major growth engine for the Chinese economy, instead of export and investment, owing to the global economic downturn, which led to a slowdown in exports and investment. The State Council has implemented 10 measures to boost domestic demand, including the acceleration of infrastructural construction, the development of medical services and education, as well as the improving of disposable income for urban and rural residents. Current impact The governments emphasis on domestic demand to boost economic growth has turned out to provide a favourable macro environment for the overall development of retailing in China, which experienced a current value CAGR of over 12% between 2007 and 2012, and current value growth of 13% in 2012. Many retailing channels have benefited from rising household incomes, particularly those related to the basic needs of average consumers, that is, food, clothing and shelter. The dominant retailing channel, grocery retailers, which accounted for 38% of total retailing value sales in 2012, recorded healthy current value growth of 8% in that year, while apparel specialist retailers registered impressive double-digit current value growth of 17%. Home improvement and gardening stores, and furniture and homewares stores both experienced double-digit current value growth in 2012. In spite of the strong retailing value growth in China in 2012, growth was actually slower than in 2011, mainly owing to the decelerating local economy amid the unfavourable global macro environment. Electronics and appliance specialist retailers, for instance, were severely affected, with current value growth in 2012 only about half that in 2011. Suning Appliance Co Ltd, a leading player in this category, closed 133 underperforming outlets in the first three quarters of 2012. Outlook With Chinas economy showing signs of picking up in late 2012, the outlook is expected to be upbeat over the forecast period, but growth is expected to be steady in the forecast period instead of robust as in the review period, with real GDP growth likely to remain at around 9% between 2012 and 2017. The central government is likely to introduce more measures, such as enhancing the salary scheme, to promote consumption, which is expected to be the major growth engine for Chinas economy. The Organisation for Economic Co-operation and Development (OECD) estimates that total GDP in China is likely to surpass that in the US by 2016, to make China the largest economy in the world. China aims to double its GDP in 2020 as compared to that in 2010, with balanced and sustainable economic growth, according to the 18th National Peoples Congress of the Communist Party of China held in November 2012. Future impact With the optimistic outlook for Chinas economy in the forecast period, household income among locals is expected to continue its steady growth, resulting in higher disposable incomes and greater purchasing power. Retailing is expected to be benefit from growing incomes, registering a healthy value CAGR of 9% between 2012 and 2017.

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Food, clothing and shelter-related retailing channels are expected to continue to perform well in the forecast period. Grocery retailers, apparel specialist retailers, and furniture and homewares stores are expected to experience value CAGRs of 6%, 11%, and 9%, respectively. The growing pursuit of better quality in these daily necessities will contribute to strong value growth, with more frequent purchases as well as the upgrading of existing products. Many non-traditional retailing channels are likely to take off and demonstrate dynamic value growth in the forecast period, with internet retailing growing at a CAGR of 29% in constant value terms, and homeshopping at 17% annually. With the rising number of internet users and improving internet security in China, more consumers are expected to purchase on-line, thanks to its convenience and competitive prices. With just a few clicks, ordered items can be delivered to ones doorstep. Those who are not internet-savvy have the alternative retailing channel of homeshopping, through which consumers can make purchases via telephone or mail order.

Strong Growth in Internet Retailing

According to CNNIC (China Internet Network Information Centre), internet users in China amounted to 538 million in June 2012, up by almost 5% over December 2011. The internet penetration rate across China reached almost 40% in 2012, up from 23% in 2008. In addition, on-line shoppers amounted to 210 million in June 2012, up by more than 8% over December 2011, outperforming the growth of internet users in China. The buoyant growth in internet users in China has resulted in a substantial increase in internet retailing, aided by the increasing security of on-line payment modes. 24-hour product availability, with home delivery service, in addition to competitive prices, is very appealing to time-pressed consumers, who can complete their shopping for household essentials, from food to personal and home care products, with just a few clicks. Current impact Internet retailing has seen substantial growth in China, with current value growth of 84% in 2012 and a current value CAGR of over 108% between 2007 and 2012, the strongest among all channels. In view of its considerable market potential, many traditional retailers, ranging from grocery to mixed retailers, ventured into internet retailing over the review period, either by setting up their own business-to-consumer (B2C) platforms, or via third-party B2C platforms, such as Tmall.com, the largest B2C platform in China. Even though internet retailing only represented 4% of total retailing in 2012, it has become a highly influential retailing format in China, with an impact on the value growth of other retailing channels, mostly in a negative way. Given the convenience and competitive prices, many consumers chose to purchase on-line instead of going to retail outlets in the review period. The items purchased from on-line stores cover a wide range, from grocery products and apparel to skin care products and even furniture. Quite a number of retailers have been affected. Those that have suffered most include media products stores, which registered current value growth of just 2% in 2012. Some retailing channels, such as home improvement and gardening stores, and furniture and homewares stores are, however, affected in a relatively mild way by internet retailing, as most local consumers still prefer to go to retailing outlets to check and compare products, or even consult on-the-site salespersons, before making any purchase decision, especially when the budget for the purchase tends to be fairly big. few operators of these stores have established their on-line platforms, compared to the higher penetration of internet retailing among grocery retailers, apparel specialist retailers and mixed retailers. Pure e-commerce companies dominated internet retailing in the review period, with years of experience in running on-line platforms and established logistics system covering the whole nation. Four out of the top five players in value terms in 2012 were pure e-commerce

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companies. Suning Appliance Co Ltd is the only exception, having developed from a traditional electronics and appliance specialist retailer into a leading internet retailer via huge investment and a series of mergers and acquisitions over the review period. Outlook With the gradual penetration of the internet into more remote areas and the increasing availability of fibre optic broadband, the number of internet users in China is expected to continue to see strong growth in the forecast period, to reach over 800 million by 2015, according to CNNIC, with one quarter of new internet users located in rural areas. With the rising ownership of smartphones among Chinese consumers, more internet users are expected to surf with their mobile phones, which will greatly facilitate on-the-go consumption, for instance, shopping while commuting to work. Overall, the steadily growing number of internet users in China will form a solid consumer base for internet retailing over the forecast period. Future impact With the rise in internet users and on-line shoppers in China, internet retailing is expected to continue its buoyant value growth, with a CAGR of 29% in constant value terms over the forecast period, the highest among all retail channels. Many pure e-commerce companies, such as 360buy.com and Joyo.com, will continue to open their platforms to third-party sellers, in order to enrich the product portfolio and attract a wider range of consumers. These pure e-commerce companies have been making efforts to establish nationwide logistics facilities, to accelerate delivery services and to enhance customers shopping experience. More retailers are likely to make debut in the internet retailing market, including the number one player in direct selling, Amway China. Many traditional retailers are expected to strengthen their on-line presence, but still prioritise the sales of their retailing outlets, so as to secure their market share. Their major aim is to complement the sales of their retail stores with internet sales. However, some may apply a totally different internet strategy. Suning Appliance Co Ltd, for instance, will adopt a dual operational strategy by simultaneously emphasising flagship retailing stores and internet retailing. Parkson Retail Group Ltd will adopt a similar strategy, and new products are expected to be launched at the same time via its on-line platform and via retail outlets. In spite of the vigorous growth of internet retailing in China, store-based retailing will maintain healthy growth in the forecast period. This is mainly because consumers are still expected to rely on retailing outlets for many daily necessities, such as fresh produce. In-store comparison and quality checks for such bulk items such as furniture are also deemed indispensable for many consumers. Overall, store-based retailing is expected to grow by a value CAGR of 8% in the forecast period. Most Chinese consumers will remain price-sensitive, owing to their relatively low purchasing power. They are expected to maintain the habit of checking prices before making any purchase, using comparisons among various B2C on-line platforms as well as between on-line and storebased retail outlets. Many price-comparison websites emerged in the review period, including etao.com, manmanbuy.com and bbbao.com. Such websites are likely to become more sophisticated in the forecast period, with consumers likely to rely more on them when submerged in a sea of on-line shopping platforms.

Government-initiated Programmes To Stimulate Buying and Transactions

To stimulate domestic demand and boost consumption, the government introduced an array of programmes and policies in the review period, among which the Household Appliances

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Trade-In Subsidy Programme and the Rural Household Appliances Subsidy Programme had a significant impact on consumers. Following the end of the above mentioned two programmes, the relevant authorities introduced the Green Household Appliances Subsidy Programme in June 2012, in an attempt to boost sales of inverter technology in consumer appliances such as fridge freezers, automatic washing machines and air conditioners, with subsidies of up to RMB400 per unit. To improve incomes for rural residents, the Ministry of Commerce initiated the Nong Chao Dui Jie Programme, (Linking Farms to Supermarkets Programme) in 2008, to strengthen links between farmers and retailers via direct procurement, in order to cut out middlemen and benefit farmers and local consumers. Current impact The Household Appliances Trade-In Subsidy Programme and the Rural Household Appliances Subsidy Programme greatly boosted the sales of electronics and appliances in the review period, thanks to the subsidies for household appliances on the approved list, like washing machines and refrigerators, which are regarded as necessities for an average family. Overall, electronics and appliance specialist retailers saw a value CAGR of 12% between 2007 and 2012, with particularly robust growth for chained operations in this category. However, the end of these two programmes by the end of 2011 had a negative impact on the electronics and appliance specialist retailers, which suffered a drastic value sales growth drop in 2012 compared to that in 2011. Following the success of these two programmes, the Ministry of Commerce launched the Green Household Appliance Subsidy Programme in June 2012, but the new programme, which so far has relatively low awareness among consumers, has not yet taken full effect. By the end of 2011, the central government had spent RMB00 million in supporting the Nong Chao Dui Jie Programme, with over 1,000 ongoing projects in 19 provinces and around 800 chained retailers involved in the programme. Many international and domestic players have been engaged in it, including Wal-Mart (China), Wumart, Tesco China, Shenzhen A-Best, Lianhua Supermarket, and China Resources. With direct procurement from farmers through this programme, products are fresher and cheaper, especially for fresh produce, including vegetables and fruit. With many grocery retailers increasing the portion of fresh produce in their total product portfolio, in line with the local consumer preference for such products, the Nong Chao Dui Jie Programme has benefited not only farmers but also helped boost the value sales growth of retailers. Outlook The Green Household Appliance Subsidy Programme is expected to enhance its awareness among locals with the stepping up consumer education and to take full effect in boosting value sales of electronics and appliance specialist retailing over the forecast period. According to the Ministry of Commerce, the Nong Chao Dui Jie Programme is still at the pilot stage. The authorities are expected to enhance the programme over the forecast period by strengthening the infrastructure for the distribution of agricultural products and optimising the operation of production bases for farmers. To further improve incomes for farmers, the Ministry of Commerce plans to extend the Nong Chao Dui Jie Programme to supermarket chains located overseas, to enable more overseas consumers to purchase local agricultural products, particularly fruit. Farmers with higher incomes will have higher budgets for consumption, which should contribute to the domestic retailing market.

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Future impact With the stimulus of the Green Household Appliance Subsidy Programme, more consumers are expected to trade up to the more energy-efficient products approved under this scheme, supported by rising disposable incomes and growing awareness of environmental issues. The value CAGR of electronics and appliance specialist retailers is expected to be 8% over the forecast period outperforming the constant value growth in 2012. Enhanced profit margins for electronics and appliances manufacturers, through rising sales of high-tech products such as electronics appliances with inverter technology, will enable manufacturers to spend more on R&D of more high-tech and user-friendly products, which will add dynamism to the category over the forecast period. With more chained grocery retailers likely to be involved in the Nong Chao Dui Jie Programme, direct procurement of daily necessities such as rice, vegetables and fruit is expected to increase further, to represent a greater proportion of the total product portfolio for retailers, particularly for fresh produce, which is highly favoured by local consumers. The increased supply of fresh produce in supermarkets is likely to witness more purchases from customers, further boosting value sales of grocery retailers. According to the Ministry of Commerce, directly procured agricultural products are expected to double in value sales in the upcoming five years, with more chained operators involved in the programme. In addition to the increase in direct procurement, the product portfolio is also expected to be further enriched to cater to consumers changing needs. This increasingly sophisticated programme is expected to be a positive factor in the healthy growth of grocery retailers in the forecast period.

Steady Development for Private Label

Representing a small percentage of the total, private label is still in its infancy in China, with many private label lines targeting the budget price range. Private label is mainly concentrated in grocery retailing in China, but penetrated into more retailing channels in the review period, including mixed retailers and internet retailing. Many retailers realise that private label lines may bring about higher gross profit margins, to become a stable source of revenue amid increasingly fierce competition. Private label experienced polarised development trend among retailers in China over the review period, with some retailers aggressively promoting the sales of their private label lines, while some showed decreased interest due to dwindling sales. Current impact As the majority of private label lines in the retailing market in China target the budget range, with average product quality, Chinese consumers have gradually formed the perception that private label offers inferior quality, albeit at lower prices. With branded products sold at similar or slightly higher prices, many people prefer to purchase branded products instead of private label lines. Declining sales of some private label lines have forced retailers to restrict the sales of such products to limited product categories, mainly essential household products, like disposable paper products and selected packaged food. Shenzhen A-Best Supermarket, for instance, is among the retailers with shrinking sales of private label. With rising brand awareness and loyalty among consumers, private labels price advantage is no longer significant. Furthermore, there could be higher risks involved for private label food, for example. If there is a quality issue with private label food products, the reputation of the whole supermarket/hypermarket chain could be affected. Conversely, many retailers have sought to develop private label and aim to enhance its proportion of total sales revenue, given the intensifying market competition. As well as grocery retailers such as Wal-Mart and Lianhua Supermarket, other non-grocery retailers have also

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been active in developing private label. Shanghai Bailian, after the successful launch of its private label jewellery with the brand name Yong An in 2011, is planning to introduce more private label lines, which are viewed as a new source of corporate revenue. Belle International launched a new fast fashion private label, 15 MINS, in 2012, adding to its range of private labels, so as to cater to a wide range of consumers, from mass to premium. Furthermore, some internet retailers ventured into the potentially lucrative private label niche by launching new brands. Pure e-commerce operator dangdang.com introduced an apparel private label line, Dangdang Baby, in 2012, priced at 30-50% lower than similar branded products. Outlook Overall, private label is expected to experience steady growth over the forecast period, thanks to the continuous efforts on the part of retailers to enrich their product portfolios and to cater to a wider range of consumers. Grocery retailing is expected to continue to account for the majority of value sales of private label, while non-grocery retailing is expected to further tap into private label as a steady source of sales revenue and higher gross profit margins, especially for mixed retailers. Instead of concentrating on budget ranges, private label lines are expected to be more diversified in market positioning, with more mid-range and even premium brands making their debut in the market, to meet diversified consumer needs for such products. Future impact For grocery retailers, fresh produce may be the next key product category for further development in private label. retailers are likely to upgrade the packaging for private label to change consumers persistent association of private label with inferior products. Lianhua Supermarket, for example, plans to upgrade the packaging of its private label lines to change the brand image among local consumers. The new packaging of its private label lines is likely to premiere in the market in early 2013. In addition to improving packaging, retailers are expected to launch more non-budget range private labels, similar to Seven Premium, by Seven & I, targeting the premium range. These mid-range and high-end private label lines are likely to be carefully marketed and well packaged, with some consumers not being aware that they are actually private labels from retailers. There could be more new market entrants in the forecast period, particularly non-grocery retailers. Pure e-commerce internet retailer 360buy.com is said to be likely to launch private label apparel during the forecast period, in view of the success of its rival dangdang.com, which launched private label apparel in the review period.

Customer-centric Strategy on the Rise

With the increasingly competitive retailing environment, a rising number of retailers, both grocery and non-grocery, adopted a customer-centric strategy in the review period, aiming to facilitate consumers shopping experience. Retailers have also been making efforts to enhance customers shopping experience by strengthening the logistics system or by enriching their product portfolios. Current impact Some internet retailers, such as the pure e-commerce operators dangdang.com and Joyo.com, have opened their on-line platforms to third-party sellers in order to enrich the product portfolio so as to meet customers rising demand for one-stop shopping in a single online store. Mixed retailers, led by department stores, have also been busy revamping their

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existing outlets, to cater to consumers need to shop in a specialist department store or in a shopping mall with many foodservice outlets. Parkson Retail Group, for example, is revamping its flagship department store in Shanghai and Beijing to incorporate more foodservice outlets. Grocery retailers, on the other hand, have endeavoured to improve their on-line stores by providing a range of consumer-friendly services, including home delivery and self pick-up in nearby outlets. To cater to the local consumer preference for fresh produce, grocery retailers have increased the proportion of such products in the total portfolio and have sourced products directly from producing areas to ensure freshness and quality. Many grocery retailers are constantly optimising the merchandise mix in their outlets to cater to consumers changing needs. For convenience store chains, operators may increase the proportion of ready-to-serve meals in outlets near office buildings, and even add coffee machines to serve freshly brewed coffee at competitive prices. Outlook To survive and stay competitive, more retailers are expected to adopt customer-centric strategies, focusing on meeting consumers various needs and enhancing their shopping experience over the forecast period. This trend may be particularly apparent in internet retailing, which is currently characterised by extremely fierce competition. Other retailers will also optimise their operations and management, in order to provide service of the highest standard to customers. Future impact Retailers are expected to come up with new solutions to provide as much convenience as possible to local consumers. In the latter part of the review period, 360buy.com launched a 24hour self pick-up locker service in Beijing, through which consumers can collect their orders via the locker service with the locker number and password sent to them by SMS via mobile phone. Furthermore, in late 2012, the company also cooperated with the convenience store chain Hi-24 in Beijing to provide a self pick-up service for on-line orders. Such creative customer-friendly services are expected to boost sales and will be more commonly adopted by internet retailers over the forecast period. Logistics, which are key to satisfactory customer service, are expected to be further strengthened over the forecast period. The number one player in internet retailing, taobao.com, has just started to work with local logistics companies to build warehouses in seven cities in China, mainly to ease logistics pressure, especially during the November 11th Shopping Spree Festival period in 2012. After obtaining an express delivery licence from the State Post Bureau of China in September 2012, 360buy.com will continue to accelerate its order delivery service, to maintain its competitive edge over rivals. Grocery retailers are also expected to enlarge their logistics capacity in order to better serve customers. China Resources plans to establish a new flagship logistics centre in Fenggang Town, Dongguan, Guangdong province, to further upgrade its logistics system. The largest logistics centre yet for Lianhua Supermarket is currently under construction, to be completed by 2014. With investment of RMB800 million, this centre is located in the suburban area of Shanghai, to serve Lianhuas outlets located in the Yangtze River Delta in a more efficient way.

MARKET INDICATORS
Table 1 Employment in Retailing 2007-2012 2007 2008 2009 2010 2011 2012

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Total employment ('000 people) Employment in retailing ('000 people) Employment in retailing (%) (% of total employment)
Source:

750,849.3 28,828.8 3.8

753,419.1 28,900.0 3.8

763,800.8 29,041.0 3.8

774,781.6 29,165.3 3.8

780,145.6 29,282.0 3.8

780,513.4 29,399.1 3.8

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews

MARKET DATA
Table 2 Sales in Retailing by Channel: Value 2007-2012

RMB bn, retail value rsp excl sales tax 2007 Store-based Retailing Non-Store Retailing Retailing
Source:

2008 6,093.3 69.1 6,162.3

2009 6,646.6 83.3 6,729.9

2010 7,497.8 153.5 7,651.4

2011 8,443.7 314.8 8,758.6

2012 9,359.8 520.0 9,879.8

5,440.6 60.7 5,501.3

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 3

Sales in Retailing by Channel: % Value Growth 2007-2012

% current value growth, retail value rsp excl sales tax 2011/12 Store-based Retailing Non-Store Retailing Retailing
Source:

2007-12 CAGR 11.5 53.7 12.4

2007/12 Total 72.0 756.4 79.6

10.8 65.2 12.8

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 4

Sales in Store-Based Retailing by Channel: Value 2007-2012

RMB bn, retail value rsp excl sales tax 2007 Grocery Retailers Non-Grocery Retailers Store-based Retailing
Source:

2008 2,737.8 3,355.5 6,093.3

2009 2,920.2 3,726.4 6,646.6

2010 3,205.4 4,292.4 7,497.8

2011 3,516.6 4,927.1 8,443.7

2012 3,805.8 5,554.0 9,359.8

2,466.6 2,974.0 5,440.6

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 5 outlets

Store-Based Retailing Outlets by Channel: Units 2007-2012

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10

2007 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2008 3,689,379 1,610,083 5,299,462

2009 3,685,535 1,721,536 5,407,071

2010 3,706,385 1,870,238 5,576,623

2011 3,717,990 2,016,112 5,734,102

2012 3,774,125 2,154,768 5,928,893

3,695,419 1,499,473 5,194,892

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 6

Sales in Store-Based Retailing by Channel: % Value Growth 2007-2012

% current value growth, retail value rsp excl sales tax 2011/12 Grocery Retailers Non-Grocery Retailers Store-based Retailing
Source:

2007-12 CAGR 9.1 13.3 11.5

2007/12 Total 54.3 86.7 72.0

8.2 12.7 10.8

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 7 % unit growth

Store-Based Retailing Outlets by Channel: % Unit Growth 2007-2012

2011/12 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2007-12 CAGR 0.4 7.5 2.7

2007/12 Total 2.1 43.7 14.1

1.5 6.9 3.4

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 8

Sales in Non-store Retailing by Channel: Value 2007-2012

RMB bn, retail value rsp excl sales tax 2007 Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing
Source: Note:

2008 42.1 10.1 12.8 4.1 69.1

2009 45.9 12.9 20.2 4.2 83.3

2010 52.0 16.9 80.1 4.6 153.5

2011 66.2 23.4 220.2 5.0 314.8

2012 79.4 29.1 405.9 5.6 520.0

37.7 8.9 10.4 3.7 60.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 9

Sales in Non-store Retailing by Channel: % Value Growth 2007-2012

% current value growth, retail value rsp excl sales tax 2011/12 Direct Selling 20.0 2007-12 CAGR 16.1 2007/12 Total 110.5

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11

Homeshopping Internet Retailing Vending Non-Store Retailing

Source: Note:

24.0 84.4 11.5 65.2

26.7 108.1 8.8 53.7

226.4 3,806.0 52.4 756.4

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 10

Sales in Retailing by Grocery vs Non-Grocery: 2007-2012

% retail value rsp excl sales tax 2007 Grocery Non-Grocery Total
Source:

2008 42.0 58.0 100.0

2009 41.8 58.2 100.0

2010 41.7 58.3 100.0

2011 41.6 58.4 100.0

2012 41.4 58.6 100.0

42.3 57.7 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 11

Sales in Non-Grocery Retailers by Channel: Value 2007-2012

RMB bn, retail value rsp excl sales tax 2007 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2008 257.3 559.5

2009 292.5 609.9

2010 354.0 701.4

2011 417.8 800.9

2012 487.5 855.3

214.8 486.6

462.5 531.2 357.0

513.2 565.8 403.8

563.1 648.0 449.4

640.9 745.9 510.9

724.5 855.7 589.6

813.4 972.2 677.2

498.6 423.4 2,974.0

571.3 484.5 3,355.5

636.5 526.9 3,726.4

748.7 590.6 4,292.4

868.3 670.4 4,927.1

996.8 751.5 5,554.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 12 outlets

Non-Grocery Retailers Outlets by Channel: Units 2007-2012

2007 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers 309,460 28,191

2008 341,334 34,393

2009 369,665 38,692

2010 421,418 44,573

2011 467,858 50,715

2012 512,773 53,951

Euromonitor International

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12

Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

394,937 255,586 234,347

424,637 267,595 252,398

452,735 288,611 271,966

485,038 312,505 295,169

517,281 335,241 320,794

549,261 357,081 345,896

6,139 270,813 1,499,473

6,354 283,372 1,610,083

6,558 293,309 1,721,536

7,084 304,451 1,870,238

7,594 316,629 2,016,112

8,095 327,711 2,154,768

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 13

Sales in Non-Grocery Retailers by Channel: % Value Growth 2007-2012

% current value growth, retail value rsp excl sales tax 2011/12 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2007-12 CAGR 17.8 11.9 12.0 12.8 13.7 14.9 12.2 13.3

2007/12 Total 127.0 75.8 75.9 83.0 89.7 99.9 77.5 86.7

16.7 6.8 12.3 13.6 14.8 14.8 12.1 12.7

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 14 % unit growth

Non-Grocery Retailers Outlets by Channel: % Unit Growth 2007-2012

2011/12 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2007-12 CAGR 10.6 13.9 6.8 6.9 8.1 5.7 3.9 7.5

2007/12 Total 65.7 91.4 39.1 39.7 47.6 31.9 21.0 43.7

9.6 6.4 6.2 6.5 7.8 6.6 3.5 6.9

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 15

Retailing Company Shares: % Value 2008-2012

% retail value rsp excl sales tax Company

2008

2009

2010

2011

2012

Euromonitor International

RETAILING IN CHINA

PASSPORT

13

Taobao.com China Resources Enterprise Co Ltd Suning Appliance Co Ltd Sun Art Retail Group Ltd GOME Electrical Appliances Holding Ltd Wal-Mart (China) Investment Co Ltd Lianhua Supermarket Holdings Co Ltd 360buy.com Dashang Group Carrefour (China) Hypermarket Co Ltd Belle International Holdings Ltd Amway (China) Co Ltd Shanghai Nong Gong Shang Supermarket Co Ltd Chongqing Department Store Co Ltd Hisap High Technology Corp Yonghui Superstores Co Ltd Shenzhen A-Best Supermarket Co Ltd Parkson Retail Group Ltd Watson (Group) HK Ltd, AS Beijing Wangfujing Department Store Co Ltd Trust-Mart Co Ltd Auchan China Others Total
Source:

0.9 0.8 0.9 0.4 0.5 0.0 0.4 0.5 0.3 0.3 0.4 0.1 0.3 0.1 0.3 0.2 0.1 0.2 0.2 0.6 92.4 100.0

0.9 0.9 0.8 0.5 0.6 0.1 0.4 0.5 0.3 0.3 0.4 0.1 0.2 0.1 0.3 0.2 0.1 0.2 0.2 0.7 92.3 100.0

0.4 1.0 1.0 0.9 0.5 0.6 0.1 0.4 0.5 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.7 91.5 100.0

1.1 1.0 1.0 0.8 0.9 0.6 0.6 0.3 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 90.4 100.0

2.1 1.1 1.0 0.8 0.7 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 89.3 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 16

Retailing Brand Shares: % Value 2009-2012

% retail value rsp excl sales tax Brand Company Tmall Suning Gome RT Mart Walmart 360buy CR Vanguard Hypermarket CR Sugo Carrefour Taobao.com Suning Appliance Co Ltd GOME Electrical Appliances Holding Ltd Sun Art Retail Group Ltd Wal-Mart (China) Investment Co Ltd 360buy.com China Resources Enterprise Co Ltd China Resources Enterprise Co Ltd Carrefour (China) Hypermarket Co Ltd

2009 0.9 0.8 0.4 0.1 0.3 0.4 0.5

2010 0.4 1.0 0.9 0.5 0.1 0.4 0.4 0.5

2011 1.1 1.0 0.9 0.6 0.6 0.3 0.4 0.4 0.4

2012 2.1 1.0 0.7 0.7 0.6 0.5 0.4 0.4 0.4

Euromonitor International

RETAILING IN CHINA

PASSPORT

14

Amway Lianhua Supermarket Hisap Dashang, Newmart Yonghui NGS-mart CR Vanguard Supermarket Century Mart A-Best Parkson Wangfujing Trust-Mart RT Mart Others Total
Source:

Amway (China) Co Ltd Lianhua Supermarket Holdings Co Ltd Hisap High Technology Corp Dashang Group Yonghui Superstores Co Ltd Shanghai Nong Gong Shang Supermarket Co Ltd China Resources Enterprise Co Ltd Lianhua Supermarket Holdings Co Ltd Shenzhen A-Best Supermarket Co Ltd Parkson Retail Group Ltd Beijing Wangfujing Department Store Co Ltd Trust-Mart Co Ltd Auchan China

0.3 0.3 0.2 0.2 0.1 0.3 0.1 0.2 0.3 0.2 0.2 0.2 0.5 93.5 100.0

0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.6 92.8 100.0

0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 91.6 100.0

0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 90.6 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 17

Store-Based Retailing Company Shares: % Value 2008-2012

% retail value rsp excl sales tax Company China Resources Enterprise Co Ltd Suning Appliance Co Ltd Sun Art Retail Group Ltd GOME Electrical Appliances Holding Ltd Wal-Mart (China) Investment Co Ltd Lianhua Supermarket Holdings Co Ltd Dashang Group Carrefour (China) Hypermarket Co Ltd Belle International Holdings Ltd Shanghai Nong Gong Shang Supermarket Co Ltd Chongqing Department Store Co Ltd Hisap High Technology Corp Yonghui Superstores Co Ltd Shenzhen A-Best Supermarket Co Ltd Parkson Retail Group Ltd Watson (Group) HK Ltd, AS Beijing Wangfujing Department Store Co Ltd Wumart Stores Inc

2008 0.9 0.8 0.9 0.4 0.5 0.4 0.5 0.3 0.4 0.1 0.3 0.1 0.3 0.2 0.1 0.2 0.1

2009 0.9 0.9 0.8 0.5 0.6 0.4 0.5 0.3 0.4 0.1 0.2 0.1 0.3 0.2 0.1 0.2 0.2

2010 1.0 1.0 0.9 0.5 0.6 0.4 0.5 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2

2011 1.0 1.0 0.8 1.0 0.6 0.6 0.4 0.5 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2

2012 1.1 1.0 0.8 0.8 0.7 0.6 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2

Euromonitor International

RETAILING IN CHINA

PASSPORT

15

Golden Eagle Retail Group Ltd Wuhan Zhongbai Group Co Ltd Trust-Mart Co Ltd Auchan China Others Total
Source:

0.1 0.2 0.2 0.6 92.2 100.0

0.1 0.2 0.2 0.7 92.1 100.0

0.1 0.2 0.2 0.7 91.7 100.0

0.2 0.2 0.1 91.4 100.0

0.2 0.2 91.4 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 18

Store-Based Retailing Brand Shares: % Value 2009-2012

% retail value rsp excl sales tax Brand Company Suning Gome RT Mart Walmart CR Vanguard Hypermarket CR Sugo Carrefour Lianhua Supermarket Hisap Dashang, Newmart Yonghui NGS-mart CR Vanguard Supermarket Century Mart A-Best Parkson Wangfujing Wumart Golden Eagle Wuhan Zhongbai Trust-Mart RT Mart Others Total
Source:

2009 0.9 0.8 0.5 0.3 0.4 0.5 0.3 0.2 0.2 0.1 0.3 0.1 0.2 0.3 0.2 0.2 0.2 0.1 0.2 0.2 0.5 93.3 100.0

2010 1.0 0.9 0.5 0.4 0.4 0.5 0.3 0.3 0.2 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.6 93.0 100.0

2011 1.0 1.0 0.7 0.6 0.4 0.4 0.5 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 92.7 100.0

2012 1.0 0.8 0.7 0.7 0.4 0.4 0.4 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 92.8 100.0

Suning Appliance Co Ltd GOME Electrical Appliances Holding Ltd Sun Art Retail Group Ltd Wal-Mart (China) Investment Co Ltd China Resources Enterprise Co Ltd China Resources Enterprise Co Ltd Carrefour (China) Hypermarket Co Ltd Lianhua Supermarket Holdings Co Ltd Hisap High Technology Corp Dashang Group Yonghui Superstores Co Ltd Shanghai Nong Gong Shang Supermarket Co Ltd China Resources Enterprise Co Ltd Lianhua Supermarket Holdings Co Ltd Shenzhen A-Best Supermarket Co Ltd Parkson Retail Group Ltd Beijing Wangfujing Department Store Co Ltd Wumart Stores Inc Golden Eagle Retail Group Ltd Wuhan Zhongbai Group Co Ltd Trust-Mart Co Ltd Auchan China

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 19

Store-Based Retailing Brand Shares: Outlets 2009-2012

Euromonitor International

RETAILING IN CHINA

PASSPORT

16

sites/outlets Brand Easy Joy uSmile 361 Degrees Tong-Jun-Ge Peak Anta Xtep Li Ning Septwolves Lianhua Supermarket Suning Gome Laomiao, First Asia CR Sugo Watson's Your Personal Store Hualian CR Vanguard Supermarket Wuhan Zhongbai Liqun Wenfeng Avon Others Total
Source:

Company China Petroleum & Chemical Corp China National Petroleum Corp 361 Degrees International Ltd Chongqing Tongjunge Drugstores Co Ltd Peak Sport Products Co Ltd Anta (China) Co Ltd Xtep International Holdings Ltd Li Ning Co Ltd Fujian Septwolves Industry Co Ltd Lianhua Supermarket Holdings Co Ltd Suning Appliance Co Ltd GOME Electrical Appliances Holding Ltd Shanghai Yuyuan Tourist Mart Co Ltd China Resources Enterprise Co Ltd Watson (Group) HK Ltd, AS Lianhua Supermarket Holdings Co Ltd China Resources Enterprise Co Ltd Wuhan Zhongbai Group Co Ltd Liqun Group Wenfeng Great World Chain Development Corp Avon (China) Co Ltd

2009 12,400 8,800 6,693 7,102 6,206 6,591 6,103 7,249 3,249 1,668 941 944 1,100 1,419 550 1,150 586 676 882 642 6,000 5,326,120 5,407,071

2010 16,000 11,176 7,263 7,506 7,224 7,549 7,031 7,915 3,525 1,906 1,311 1,113 1,341 1,255 800 1,108 700 713 830 682 2,100 5,487,575 5,576,623

2011 19,200 14,500 7,865 7,955 7,806 7,778 7,596 8,255 3,976 1,941 1,684 1,461 1,395 1,277 1,000 1,043 825 788 831 740 5,636,186 5,734,102

2012 22,200 16,574 8,425 8,365 8,206 7,988 7,946 7,280 4,376 2,121 1,665 1,472 1,450 1,308 1,220 1,023 974 850 812 810 5,823,828 5,928,893

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 20

Non-store Retailing Company Shares: % Value 2008-2012

% retail value rsp excl sales tax Company Taobao.com 360buy.com Amway (China) Co Ltd Suning Appliance Co Ltd Infinitus (China) Co Ltd VANCL Chengpin (Beijing) Technology Co Ltd Joyo.com

2008 1.9 25.3 0.3 0.5

2009 4.8 24.1 0.5 3.1 0.6

2010 18.3 6.6 14.7 1.1 2.5 1.2

2011 30.3 9.7 8.0 1.9 2.1 1.2

2012 39.5 9.9 5.6 2.4 1.7 1.4

1.4

2.0

1.9

1.5

1.3

Euromonitor International

RETAILING IN CHINA

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17

Hangzhou Mary Kay Cosmetics Co Shanghai SMG-CJ Homeshopping Co Ltd Dangdang.com yihaodian.com Happigo Co Ltd Dell (China) Co Ltd New Era Health Industry (Group) Co Ltd Icson E-commerce Development Co Ltd Tianjin Tianshi Biological Development Co Ltd Hao Xiang Go Co Ltd Perfect (China) Co Ltd Jiayou Homeshopping Co Ltd lafaso.com Nanfang Lee Kum Kee Co Ltd Others Total
Source: Note:

4.8 2.1 1.1 2.0 3.0 2.3 2.4

5.1 3.2 1.7 0.1 2.4 2.8 2.2 0.3 2.0

3.1 2.5 1.5 0.5 1.8 1.8 1.7 0.4 1.3

1.8 1.6 1.1 0.9 1.3 1.5 1.1 0.6 0.9

1.2 1.2 1.1 1.0 1.0 0.9 0.8 0.8 0.7

0.3 2.8 0.3 0.0 3.1 46.3 100.0

0.6 2.4 0.6 0.1 41.3 100.0

0.7 1.7 0.6 0.2 36.0 100.0

0.7 0.9 0.6 0.3 32.2 100.0

0.7 0.6 0.5 0.4 27.3 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 21

Non-store Retailing Brand Shares: % Value 2009-2012

% retail value rsp excl sales tax Brand Company Tmall 360buy Amway Suning Infinitus Vancl Taobao.com 360buy.com Amway (China) Co Ltd Suning Appliance Co Ltd Infinitus (China) Co Ltd VANCL Chengpin (Beijing) Technology Co Ltd Joyo.com Hangzhou Mary Kay Cosmetics Co Shanghai SMG-CJ Homeshopping Co Ltd Dangdang.com yihaodian.com Happigo Co Ltd Dell (China) Co Ltd New Era Health Industry (Group) Co Ltd Icson E-commerce Development Co Ltd Tianjin Tianshi Biological Development Co Ltd Hao Xiang Go Co Ltd

2009 4.8 24.1 0.5 3.1 0.6

2010 18.3 6.6 14.7 1.1 2.5 1.2

2011 30.3 9.7 8.0 1.9 2.1 1.2

2012 39.5 9.9 5.6 2.4 1.7 1.4

Joyo Mary Kay OCJ Dangdang Yihaodian Happigo Dell Guozhen icson Tiens

2.0 5.1 3.2 1.7 0.1 2.4 2.8 2.2 0.3 2.0

1.9 3.1 2.5 1.5 0.5 1.8 1.8 1.7 0.4 1.3

1.5 1.8 1.6 1.1 0.9 1.3 1.5 1.1 0.6 0.9

1.3 1.2 1.2 1.1 1.0 1.0 0.9 0.8 0.8 0.7

Enjoy Shopping

0.6

0.7

0.7

0.7

Euromonitor International

RETAILING IN CHINA

PASSPORT

18

Perfect Jiayougou LaFaSo Others Total

Source: Note:

Perfect (China) Co Ltd Jiayou Homeshopping Co Ltd lafaso.com

2.4 0.6 0.1 41.3 100.0

1.7 0.6 0.2 36.0 100.0

0.9 0.6 0.3 32.2 100.0

0.6 0.5 0.4 27.3 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 22

Non-Grocery Retailers Company Shares: % Value 2008-2012

% retail value rsp excl sales tax Company Suning Appliance Co Ltd GOME Electrical Appliances Holding Ltd Dashang Group Belle International Holdings Ltd Hisap High Technology Corp Parkson Retail Group Ltd Beijing Wangfujing Department Store Co Ltd Golden Eagle Retail Group Ltd Chongqing Department Store Co Ltd Jiangsu Five Star Appliance Co Ltd Shanghai Bailian Group Co Ltd Intime Department Store (Group) Co Ltd Watson (Group) HK Ltd, AS Shanghai Yuyuan Tourist Mart Co Ltd New World Department Store China Ltd Chow Tai Fook Jewellery Group Ltd Maoye International Holdings Ltd Bestseller Fashion Group (TianJin) Co Ltd Van's Department Store Co Ltd Silver Plaza Group Co Ltd Sanlian Group Others Total
Source:

2008 1.5 1.7 0.6 0.5 0.5 0.3 0.3 0.2 0.2 0.3 0.3 0.1 0.1 0.1 0.2 0.2 0.1 0.1 0.0 0.1 0.2 92.2 100.0

2009 1.6 1.5 0.6 0.5 0.4 0.3 0.3 0.2 0.2 0.3 0.3 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 92.4 100.0

2010 1.7 1.6 0.6 0.5 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 91.9 100.0

2011 1.7 1.6 0.6 0.6 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 91.4 100.0

2012 1.6 1.3 0.6 0.6 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 91.7 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 23

Non-Grocery Retailers Brand Shares: % Value 2009-2012

Euromonitor International

RETAILING IN CHINA

PASSPORT

19

% retail value rsp excl sales tax Brand Company Suning Gome Hisap Dashang, Newmart Parkson Wangfujing Golden Eagle Five Star Intime Dashang Watson's Your Personal Store Laomiao, First Asia Chow Tai Fook Maoye Van's Department Store Silver Plaza Rainbow New World Metersbonwe Xinhua Bookstore Others Total
Source:

2009 1.6 1.5 0.4 0.3 0.3 0.3 0.2 0.3 0.2 0.3 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 93.2 100.0

2010 1.7 1.6 0.5 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.2 92.8 100.0

2011 1.7 1.6 0.5 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.2 0.2 0.2 0.2 0.2 92.3 100.0

2012 1.6 1.3 0.5 0.4 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 92.6 100.0

Suning Appliance Co Ltd GOME Electrical Appliances Holding Ltd Hisap High Technology Corp Dashang Group Parkson Retail Group Ltd Beijing Wangfujing Department Store Co Ltd Golden Eagle Retail Group Ltd Jiangsu Five Star Appliance Co Ltd Intime Department Store (Group) Co Ltd Dashang Group Watson (Group) HK Ltd, AS Shanghai Yuyuan Tourist Mart Co Ltd Chow Tai Fook Jewellery Group Ltd Maoye International Holdings Ltd Van's Department Store Co Ltd Silver Plaza Group Co Ltd Rainbow Department Store Co Ltd New World Department Store China Ltd Metersbonwe Group Zhejiang Xinhua Bookstore Co Ltd

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 24 sites/outlets Brand 361 Degrees Tong-Jun-Ge Peak Anta Xtep Li Ning Nike adidas Tong-Ji-Tang

Non-Grocery Retailers Brand Shares: Outlets 2009-2012

Company 361 Degrees International Ltd Chongqing Tongjunge Drugstores Co Ltd Peak Sport Products Co Ltd Anta (China) Co Ltd Xtep International Holdings Ltd Li Ning Co Ltd Nike (China) Inc adidas Sports (China) Ltd Hubei Tong-Ji-Tang

2009 6,693 7,102 6,206 6,591 6,103 7,249 5,157 4,381 4,486

2010 7,263 7,506 7,224 7,549 7,031 7,915 5,085 4,491 4,452

2011 7,865 7,955 7,806 7,778 7,596 8,255 5,477 4,910 4,800

2012 8,425 8,365 8,206 7,988 7,946 7,280 5,658 5,180 5,000

Euromonitor International

RETAILING IN CHINA

PASSPORT

20

Daphne Metersbonwe Septwolves Shiseido Baleno Belle Lilang Yishion Tupperware Jeanswest Kappa Avon Others Total
Source:

Drugstores Co Ltd Daphne International Holdings Ltd Metersbonwe Group Fujian Septwolves Industry Co Ltd Shiseido (China) Investment Co Ltd Texwinca Holdings Ltd Belle International Holdings Ltd China Liliang Ltd Dongguan Dongyue Caparison Co Ltd Tupperware China Co Ltd Glorious Sun Enterprises Ltd China Dongxiang Group Co Ltd Avon (China) Co Ltd

3,307 2,778 3,249 3,288 3,686 2,160 2,561 3,024 3,010 2,341 3,511 6,000 1,628,653 1,721,536

3,789 3,385 3,525 3,759 3,830 2,618 2,885 3,235 3,100 2,705 3,751 2,100 1,773,040 1,870,238

4,229 4,164 3,976 3,985 4,007 3,286 3,268 3,395 3,300 2,956 3,119 1,913,985 2,016,112

4,639 4,634 4,376 4,225 4,142 3,686 3,588 3,535 3,500 3,176 3,039 2,048,180 2,154,768

Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 25

Forecast Sales in Retailing by Channel: Value 2012-2017

RMB bn, retail value rsp excl sales tax 2012 Store-based Retailing Non-Store Retailing Retailing
Source:

2013 10,123.2 705.9 10,829.1

2014 10,937.4 945.8 11,883.2

2015 11,796.4 1,212.7 13,009.1

2016 12,692.8 1,426.1 14,118.9

2017 13,628.6 1,670.6 15,299.2

9,359.8 520.0 9,879.8

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 26

Forecast Sales in Retailing by Channel: % Value Growth 2012-2017

% constant value growth, retail value rsp excl sales tax 2012-17 CAGR Store-based Retailing Non-Store Retailing Retailing
Source:

2012/17 TOTAL 45.6 221.3 54.9

7.8 26.3 9.1

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 27

Forecast Sales in Store-Based Retailing by Channel: Value 2012-2017

RMB bn, retail value rsp excl sales tax 2012 2013 2014 2015 2016 2017

Euromonitor International

RETAILING IN CHINA

PASSPORT

21

Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

3,805.8 5,554.0 9,359.8

4,034.7 6,088.6 10,123.2

4,284.7 6,652.7 10,937.4

4,551.9 7,244.5 11,796.4

4,834.8 7,858.0 12,692.8

5,136.1 8,492.5 13,628.6

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 28 outlets

Forecast Store-Based Retailing Outlets by Channel: Units 2012-2017

2012 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2013 3,830,709 2,293,724 6,124,433

2014 3,881,725 2,432,450 6,314,175

2015 3,924,778 2,569,852 6,494,630

2016 3,962,134 2,703,871 6,666,005

2017 3,992,040 2,835,181 6,827,221

3,774,125 2,154,768 5,928,893

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 29

Forecast Sales in Store-Based Retailing by Channel: % Value Growth 20122017

% constant value growth, retail value rsp excl sales tax 2012-17 CAGR Grocery Retailers Non-Grocery Retailers Store-based Retailing
Source:

2012/17 TOTAL 35.0 52.9 45.6

6.2 8.9 7.8

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 30

Forecast Store-Based Retailing Outlets by Channel: % Unit Growth 20122017

% unit growth 2016/17 Grocery Retailers Non-Grocery Retailers Store-based Retailing

Source:

2012-17 CAGR 1.1 5.6 2.9

2012/17 Total 5.8 31.6 15.2

0.8 4.9 2.4

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 31

Forecast Sales in Non-store Retailing by Channel: Value 2012-2017

RMB bn, retail value rsp excl sales tax 2012 Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing 79.4 29.1 405.9 5.6 520.0 2013 88.5 34.2 577.1 6.1 705.9 2014 97.5 40.0 801.7 6.6 945.8 2015 106.4 46.7 1,052.5 7.1 1,212.7 2016 114.9 54.4 1,249.3 7.6 1,426.1 2017 124.2 63.1 1,475.2 8.1 1,670.6

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Source: Note:

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 32

Forecast Sales in Non-store Retailing by Channel: % Value Growth 20122017

% constant value growth, retail value rsp excl sales tax 2012-17 CAGR Direct Selling Homeshopping Internet Retailing Vending Non-Store Retailing
Source: Note:

2012/17 TOTAL 56.4 117.0 263.5 44.0 221.3

9.4 16.8 29.4 7.6 26.3

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources Vending data captures vending systems installed in public and semi-captive environments only. For further details refer to definitions.

Table 33

Forecast Sales in Non-Grocery Retailers by Channel: Value 2012-2017

RMB bn, retail value rsp excl sales tax 2012 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2013 545.6 924.6

2014 607.7 998.6

2015 674.0 1,076.4

2016 744.8 1,158.3

2017 819.2 1,244.0

487.5 855.3

813.4 972.2 677.2

883.6 1,063.8 752.4

957.6 1,159.0 833.9

1,034.5 1,257.0 921.3

1,113.2 1,356.7 1,014.8

1,193.9 1,457.3 1,115.1

996.8 751.5 5,554.0

1,102.5 816.1 6,088.6

1,212.8 883.0 6,652.7

1,329.3 951.9 7,244.5

1,449.0 1,021.4 7,858.0

1,572.2 1,090.9 8,492.5

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 34 outlets

Forecast Non-Grocery Retailers Outlets by Channel: Units 2012-2017

2012 Apparel Specialist Retailers Electronics and Appliance Specialist 512,773 53,951

2013 558,922 58,100

2014 605,872 62,492

2015 653,736 67,091

2016 700,804 71,902

2017 747,758 76,935

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Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

549,261 357,081 345,896

580,343 378,602 371,297

610,379 399,779 397,535

639,160 420,217 424,292

666,882 439,816 451,209

693,867 458,152 478,263

8,095 327,711 2,154,768

8,590 337,870 2,293,724

9,063 347,330 2,432,450

9,516 355,840 2,569,852

9,945 363,313 2,703,871

10,354 369,852 2,835,181

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 35

Forecast Sales in Non-Grocery Retailers by Channel: % Value Growth 20122017

% constant value growth, retail value rsp excl sales tax 2012-17 CAGR Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2012/17 TOTAL 68.0 45.4 46.8 49.9 64.7 57.7 45.2 52.9

10.9 7.8 8.0 8.4 10.5 9.5 7.7 8.9

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 36

Forecast Non-Grocery Retailers Outlets by Channel: % Unit Growth 20122017

% unit growth 2016/17 Apparel Specialist Retailers Electronics and Appliance Specialist Retailers Health and Beauty Specialist Retailers Home and Garden Specialist Retailers Leisure and Personal Goods Specialist Retailers Mixed Retailers Other Non-Grocery Retailers Non-Grocery Retailers
Source:

2012-17 CAGR 7.8 7.4 4.8 5.1 6.7 5.0 2.4 5.6

2012/17 Total 45.8 42.6 26.3 28.3 38.3 27.9 12.9 31.6

6.7 7.0 4.0 4.2 6.0 4.1 1.8 4.9

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

APPENDIX

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Operating Environment
Foreign direct investment in retail China has issued a series of laws, regulations and ordinances with regard to foreign direct investment, based on the following statutes: Law of the Peoples Republic of China on Chinese-foreign Equity Joint Ventures (promulgated in 1979 and amended in 1990 and 2001); Peoples Republic of China Foreign-funded Enterprise Laws (promulgated in 1986 and amended in 2000); and the Law of the Peoples Republic of China on Chinese-foreign Contractual Joint Ventures (promulgated in 1988 and amended in 2003). The following laws, regulations and ordinances set the current legislative framework for foreign direct investment: Interim Provisions for Submission and Approval Procedure on Electric Power Project Invested Directly by Foreigners (1996); Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning the Registration of Foreign Exchange by Direct Foreign Investment (2002); Circular of the State Administration of Foreign Exchange on Improving the Administration of Foreign Exchange by Foreign Direct Investment (2003); Circular of the Ministry of Commerce and the State Administration of Foreign Exchange concerning Further Strengthening and Standardising the Examination and Approval of Foreign Direct Investment in the Real Estate Industry (2007). China fully opened its retail market in 2004 following its accession to full membership of the World Trade Organization (WTO). China has promulgated a series of relevant laws and regulations since 2004, including Measures for the Administration on Foreign Investment in Commercial Fields (2004), Regulations on Direct Selling Administration (2005), Measures for the Administration on Sales Promotion Acts of Retailers (2006), Measures for the Administration of Fair Dealing of Retailers and Suppliers (2007) and Regulations on Administering Commercial Franchises (2007). These legislative enactments represent an attempt to boost growth in retailing and build up an orderly, standardised and highly efficient market-oriented retail environment. Due to the strong confidence in Chinas long-term economic prospects, foreign direct investment in retailing continues to increase in China. By the end of August 2009, the total number of foreign investment companies reached 2,400, and the total investment capital in China surpassed US$4.8 billion. Informal retailing Informal retailing still represents a considerable proportion of value sales in retailing in China, especially in regions where formal retailing has yet to penetrate fully, such as rural areas. However, with the execution of several retailing reforms in rural areas since February 2005, which aimed to establish a cohesive distribution network in rural China, informal retailing is expected gradually to lose ground, although it will still co-exist with formal retailing in a complementary role for some time yet. Opening hours Retail outlets in Chinas urban areas are normally open from 09:00-18:00hrs, although supermarkets and hypermarkets often operate longer business hours, as long as 14 hours a day, in addition to 24-hour opening for convenience stores and forecourt retailers. Retail outlets in rural areas tend to have shorter opening times than those in urban areas. The majority of retail outlets in urban areas are open seven days a week and 365 days a year, even on public holidays. This is because public holidays are usually peak times for shopping.

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Retail landscape High-end shopping areas are usually found in Chinas major cities, with premium department stores, shopping malls and apparel stores more commonly strategically located in areas of high foot traffic. Luxury retailers tend to be located on the high streets of Chinas major cities, such as Huaihai Road and Nanjing Road (West) in Shanghai, whereas discount retailers are usually based in residential neighbourhoods and suburban areas. Shopping malls are an increasingly popular phenomenon in China. These one-stop retail centres cater to many different consumer needs. For example, grocery shopping can be done in a supermarket or hypermarket, foodservice outlets are available for those who wish to have a meal, and shoppers can visit the cinema. Shopping malls attract a large number of consumers in China, especially during weekends and public holidays.

Cash and Carry

Cash and carry/warehouse clubs are still emerging in China, and there is currently only one major player in the market, Jinjiang Metro Cash and Carry. The company adopted a relatively conservative commercial strategy during the review period, compared with the aggressive outlet expansion of hypermarket retailers. Metro operated 53 outlets in cities across China at the end of 2011. As Metros outlets tend to be located in suburban areas, it is usually members living nearby, or those with a car, which patronise Metro outlets more frequently. Those wishing to apply for membership require a business licence and personal identity card. In order to compete with hypermarkets, warehouse clubs in China need to be unique in terms of the products on offer, which is to say that Chinese consumers are likely to patronise these outlets only in the event that they cannot locate a particular product elsewhere. For example, in China, Metro Cash and Carry offers a wide range of imported products; these are not usually available in regular hypermarkets. Table 37 Company (NBO) Jinjiang Metro Cash and Carry Co Ltd
Source:

Cash and Carry: Number of Outlets by National Brand Owner 2009-2012 Brands 2009 2010 2011 2012

Metro Cash and Carry

42

43

53

61

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

DEFINITIONS
This report analyses the market for Retailing in China. For the purposes of the study, the market has been defined as follows: Store-based retailing Grocery retailers Modern grocery retailers Convenience stores Discounters Forecourt retailers: chained forecourt retailers; independent forecourt retailers

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Hypermarkets Supermarkets Traditional grocery retailers Independent small grocers Food/drink/tobacco specialists Other grocery retailers Non-grocery retailers Apparel specialist retailers Electronics and appliance specialist retailers Health and beauty specialist retailers Chemists/pharmacies Parapharmacies/drugstores Beauty specialist retailers Other healthcare specialist retailers Home and garden specialist retailers Furniture and homewares stores Home improvement and gardening stores Leisure and personal goods specialist retailers Jewellery and watch specialist retailers Media product stores Pet shops and superstores Sports goods stores Stationers/office supply stores Traditional toys and games stores Other leisure and personal goods specialist retailers Mixed retailers Department stores Variety stores Mass merchandisers Warehouse clubs Other non-grocery retailers Non-store retailing Vending Homeshopping Internet retailing Direct selling Terminology: GBO refers to global brand owner, which is the ultimate owner of a brand. NBO refers to national brand owner, which is the company licensed to distribute a brand on behalf of a GBO. The NBO may be a subsidiary of a GBO or it may be a completely separate company. Share tables at both GBO and at NBO level are provided in the report. Reference to shares in the report analysis is at NBO level.

SOURCES
Sources used during the research included the following:

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Summary 1 Research Sources Official Sources Trade Associations

National Bureau of Statistics of China CAPA China Chain Store & Franchise Association China Direct Selling China Toys Association China Vending China Xinhua Bookstore Association Shanghai E-commercial Association

Trade Press
Source: Euromonitor International

TVSM

Euromonitor International