Yesterday, Kantar Worldpanel's latest report revealed that China's urban FMCG market maintained a moderate recovery in the first quarter of 2024, with overall sales climbing 2.6% year-on-year. Among them, the eastern region has a strong growth of 7%, highlighting the dual resilience of its economic vitality and consumer purchasing power. At the same time, the market landscape continues to evolve, modern channels are accelerating their transformation and upgrading, online Douyin is gaining momentum, and the discount store format is also showing strong expansion momentum.
Regional market highlights: The growth rate in the east is eye-catching, and the sinking market continues to exert force
In the first quarter, the eastern region led the national growth, with sales surging 7% year-on-year, vividly illustrating the vitality of the region's economic recovery and the solid foundation of consumer purchasing power. At the same time, the sinking market continued to play its role as a consumption engine, with the strong recovery of people flow and cultural and tourism activities, the sales of the town-level market increased by 3.9% year-on-year, surpassing the growth rate of cities, and further narrowing the consumption gap with the up-line cities.
Modern channel dynamics: hypermarkets have adjusted, small supermarkets and convenience stores have grown, and membership stores have a bright format
Hypermarket: to retreat to advance, accelerate the upgrading and transformation. Although hypermarkets are still in a downward channel, with sales down 1.4% year-on-year, industry leaders such as Sun Art Retail, China Resources, Yonghui and others are actively adjusting their store layouts, closing underperforming stores, and vigorously promoting store upgrades and renovations. Yonghui Supermarket has opened new high-quality stores in Chengdu and Kunming, implementing the strategy of "high-quality services" and "affordable products", while Walmart plans to upgrade more than 30 hypermarkets this year to create a "selected one-stop omni-channel shopping experience" to meet consumer needs with product power and experience reconstruction.
Small supermarkets and convenience stores: the growth trend is good, and the penetration rate is increasing. Small supermarkets and convenience stores have benefited from the Spring Festival homecoming and gift-giving scenes, especially those in the sinking market, and their penetration rate and purchase frequency have increased significantly. In the first quarter, the sales of membership stores increased by more than 20% year-on-year, and the market share of Sam's Club increased by 0.4 percentage points. In addition, the German discount store brand ALDI has strengthened its positioning as a "affordable community supermarket", and plans to rapidly increase the number of stores in Shanghai to 500-600, and expand to the Yangtze River Delta, with the penetration rate in Shanghai increasing by 7 percentage points to 12.3% in the first quarter.
Online channel pattern: Douyin continues to make efforts, and its penetration rate surpasses that of Pinduoduo
The online retail channel maintained steady growth in the first quarter, with sales increasing by about 2% year-on-year and penetration rate increasing by 0.4 percentage points, mainly driven by the increase in purchase frequency. Among them, the Douyin platform is growing rapidly, with more than 28% of urban households in China purchasing FMCG products through Douyin, and the purchase frequency has increased significantly. With the official launch of the Douyin mall version of the APP, users can enjoy a complete e-commerce platform experience and realize the two-way integration of interest and shelf e-commerce.
The rise of discount formats: Snack discount stores are expanding rapidly, and the regional market is still hot
Chinese consumers' pursuit of cost-effective products has driven the rapid development of the discount format. In the first quarter, 5.9% of urban households bought FMCG products at discount snack stores, with the eastern and southern districts being the main battlefields, the western and northern districts expanding steadily, and the penetration rate of prefecture-level cities exceeding 7%. Snacks are busy with Zhao Yiming's snack strategy merger, the number of stores nationwide exceeded 7,500, focusing on the development of the northern market, Wanchen Group's Q1 revenue is expected to exceed 5 billion, and its mass snack business leads the industry. Mass-merchandised snack stores actively expand food and beverage categories, deepen brand and supply chain integration, and strive to improve operational efficiency and build differentiated advantages in scale expansion.
Source: Kantar Worldpanel