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The Chinese grocery market will overtake the American one by 2023

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The country's total market size will reach $1.8tn, more than Asia's next four largest grocery markets (India, Japan, Indonesia and South Korea) combined.

Posted on Jun 14 ,04:54

The Chinese grocery market will overtake the American one by 2023

A new forecast from international researcher IGD Asia predicts that Chia is to become the world's largest grocery market in value terms in the next 5 years. The country's total market size will reach $1,800 billion, larger than Asia's next four largest grocery markets (India, Japan, Indonesia and South Korea) combined.
"China will not only retain its position as Asia's largest grocery market by 2023, but it will also overtake the US to become the world's largest. The market is expected to have a CAGR of 5.5%, on par with Sri Lanka and Thailand, but slower than markets such as India, Vietnam, Indonesia and the Philippines, where the economy is growing faster.

Less than half of grocery sales in China currently go through traditional trade and as the market continues to mature, we expect traditional trade to continue losing share to modern trade. As the total market size expands, traditional trade will still grow, but at a much slower pace over the next five years (forecast CAGR of 0.8%), compared with the growth rate of modern trade (forecast CAGR of 8.5%)," explained Nick Miles, Head of Asia-Pacific at IGD.

Set for convenience

Researchers believe that the development of modern trade in China over the next few years will be largely driven by ongoing store expansion, as well as strong performances from the online and convenience channels.
"Convenience will be the fastest-growing physical store channel, driven by Alibaba and JD.com transforming traditional mom-and-pop stores, retailers opening smaller format stores and both local and overseas players expanding their networks through partnerships. Online and offline integration will drive online growth. As the fastest-growing channel, we forecast online to contribute up to 11% of sales in 2023," added Mr Miles.

Hypermarkets to lose ground

Meanwhile, IGD forecasts that hypermarkets will see their share of China's total grocery retail market reduce from 22% in 2018 to 18% in 2023, while the market share of supermarkets will remain steady, close to 20%.

IGD research has also found that China's leading grocery retailers will grow at varying rates to 2023. E-commerce giants such as JD.com and Alibaba are set to see significant growth from both online and offline channels and become the second- and third-largest grocery retailers in China respectively. Meanwhile, retailers with nationwide networks such as Sun Art, Yonghui, Walmart, CRV and Carrefour will benefit from the ongoing expansion, partnerships with e-commerce and tech companies, improved efficiencies and investment in small formats. Regional players such as NGS and Wumart will continue to focus on profitability.

Huge opportunity

"There's also a huge $245.5 billion growth opportunity in convenience and online in the next five years, which can be captured by understanding trends and retailer strategies and allocating resources accordingly. But we would also urge suppliers not to neglect traditional trade, which will still account for about one-third of FMCG sales in 2023," concluded Nick Miles.

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