Hypermarkets are a retail store format that has taken China by storm. They’ve given mom and pop shops, convenience stores, and supermarkets a run for their money. Moreover, foreign hypermarkets have grabbed the bull by the horns and fiercely planted their feet in the market.
We saw a nice spurt of growth during the mid-1990s. Then Tesco entered the market in 2004, expanding rapidly with 82 locations in just 6 years. However, many first and second tier cities in China have become saturated with hypermarkets. Will we see similar growth and expansion in lower tier cities over the next ten years?
Additional Questions
1. Will newer players in the market like Jusco be able to compete?
2. What retail store formats will give hypermarkets a challenge?
Supermarket Matures Gradually, Concentration Ratio Rises
Foreign-funded supermarket magnates are scrambling for bigger market shares in Mainland China, while most of the domestic-funded supermarkets are striving to dominate regional markets; the supermarkets in both third and fourth-tier cities develop faster than those in first-tier cities; the sales growth rates of the shopping malls in the villages and towns of prefecture-level cities and county-level cities/counties are 13-15 and 17-19 percentage points higher than that of first-tier cities. CR Vanguard, being the No.1 supermarket chain in China for years, will develop medium and high-end consumption markets in the future; Wuhan Zhongbai has maintained the most stable growth; Hualian Hypermarket opened new stores far beyond market expectations, and its business performance is likely to turn better in the coming one or two years.
Growth of Various Retail Sectors, 2006-2009
Source: WIND; ResearchInChina
http://www.researchinchina.com/Htmls/Report/2010/5901.html