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Supermarkets to feel bite from online vendors
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SOME domestic supermarket chains are likely to see same-store revenue decline this year since profits will be under pressure from online vendors with lower prices, a senior analyst said.
"Supermarkets will be facing fierce price wars in the near future, especially in first tier cities where supermarkets are already saturated and consumers have plenty of shopping choices," said Spencer Leung, executive director at UBS Investment Research of China's mainland and Hong Kong consumer research.
A total of 49 percent of respondents said they've already started to purchase daily necessities through online vendors, according to a recent survey by UBS Investment Research in 16 cities covering 1,200 consumers.
Another 30 percent said they might shift to online stores in the next two to three years.
"Supermarkets' gross profits will also be going down although they'll use price cuts to ensure sales growth in the short term," he said at a media briefing in Shanghai yesterday.
Department stores will also be under pressure as shoes and apparel usually make up 50 percent of overall sales, which are the categories most vulnerable to damage from online vendors, UBS Investment Research pointed out.
In November, China's domestic retail sales grew 13.7 percent from a year earlier to 2.1 trillion yuan (US$341.4 billion). The month’s growth was higher than October’s increase of 13.3 percent.
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