The First Quarter Saw Robust FMCG Growth

The First Quarter Saw Robust FMCG Growth but a Slowdown Witnessed in March

According to Kantar Worldpanel (a CTR service in China), sales in China's fast-moving consumer goods (FMCG) market in the first quarter of 2022 increased by 2.8% year-on-year, supported by the policy of “Growth Stabilization and Consumption Promotion”. However, offline consumption in March bore the brunt of the nation-wide market disturbances caused by transmission of the Omicron variant.

According to the National Bureau of Statistics the total retail sales of consumer goods witnessed a shrinkage of 3.5% in the last 4 weeks, driven by the impact of the surge in Omicron cases and the implementation of lockdown measures, but the FMCG market delivered a 1.6% growth in March. This illustrates that consumers tilted their basket weights towards FMCG goods given the uncertainties and challenges under COVID. Subsequently, packaged foods and beverages grew by 5.1% and 5.6% respectively year-on-year, household cleaning-related sales grew by 5.7%, while the personal care sector declined by 1.4%, driven by less demand for these products for households who are locked down.

This restriction shrunk the turnover in Hypermarkets and Large Supermarkets, leading to mild year-on-year decline by 2.7% and 0.2% respectively. In contract, Online shopping* kept its leading position through the first quarter increasing by 10% year-on-year, even if its growing pace had slowed to some extent.

Leading Grocer Share within Modern Trade – National Urban China

© 2022 CTR                                    Data Source: Kantar Worldpanel

Since 2020, suppressed by COVID transmission and challenged by newly-emerged digital platforms, retailers have been inclined to take a position of greater cautiousness in store and with their business development. Furthermore, the disparity in performance among retailers was more evident in the first quarter, especially when a new-round of COVID hit the more developed coastal China, planting new uncertainties in the growth expectation of retailers that are heavily based in the affected areas.

Although Sun Art and Vanguard have managed to maintain their leading positions, their market shares witnessed a substantial decline compared to the first quarter in the last year. Sun Art lost 1.3 percentage points of penetration. While closing some stores to narrow its deficit, RT-Mart doubled down on resigning 30 stores, a hypermarket transformation that would better fit the new retail fashion in China. In the meantime, Yonghui focused on its omni-channel strategy - “Based on Fresh, Centered on Client”, and won a growth of 6.5% in sales value and 0.3 percentage points in market share, successfully reversing its previous decline. Wal-mart delivered an even better increase by 8.3% for the first quarter and 14.3% for March only. This growing momentum would probably maintain in face of an elevated demand for stocking-up.

The Consistent Growth of Ecommerce Players

E-Commerce* kept its triumphant progress throughout the first 12 weeks. Compared with the last year, the sales value of eComm