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July 23, 2019

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E-commerce fuels FMCG expansion in 2nd quarter

China’s fast-moving consumer goods expenditure in the second quarter grew 6.9 percent as e-commerce players showed strong momentum while supermarkets also recovered from previous weak performances.

Sun Art and Vanguard Group maintained their leading positions and Yonghui continued to advance its share in the 12 weeks as to June 14, according to a report by Kantar Worldpanel.

FMCG spending through e-commerce saw the fastest growth — 40.3 percent thanks to the mid-year shopping festival in June. The warmer sentiment is a result of the 18-day discount period, as well as higher inflation, especially on food, Kantar Worldpanel suggests.

Hypermarkets struggled during in the quarter with a 2.3-percentage-point drop in penetration rate as shoppers switched their spend to e-commerce during the festival.

Walmart and Carrefour continued to lose ground. Walmart will boost its online and offline businesses by building regional distribution centers.

The consumption potential of lower-tier cities remains the growth engine for e-commerce players while urban consumers’ appetite for premium brands and imported goods continued.

As many as 55 percent of Chinese urban households purchased FMCG from digital channels in the past quarter. Alibaba has added new buyers through marketing campaigns while smaller players such as Pinduoduo and also gained penetration.

Local retail giants have intensified their M&A activities to expand their presence across different retail formats and areas. For example, Suning has been aggressive in opening small-format stores alongside its recent acquisition of Wanda to expand its regional footprint.


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