China's FMCG Market Showed Steady Growth in 2024
China's FMCG Market Showed Steady Growth in 2024, with Convenience Stores Under Pressure in Q4
The latest report released by Kantar Worldpanel shows that the fast-moving consumer goods (FMCG) market in urban China grew by 1.2% year-on-year in the fourth quarter of 2024 in terms of value sales. The overall sales for the entire year increased by 1.7%, indicating a stable development trend.
In terms of categories, the beverage category saw significant growth, with annual sales rising by over 7%. Meanwhile, the personal care category continued to decline, but the decline narrowed in the fourth quarter. The dairy category still faced considerable growth pressure.
The East, West and North regions all experienced growth in FMCG but the South region saw a decline of 1.9%. At the city levels, lower-tier cities, especially county-level cities and town-level cities, emerged as key drivers of FMCG market growth. With the increase in the urbanization, the demands of the consumer market will be accelerated further.
click here to access the report
Modern trade channels (including hypermarkets, supermarkets and convenience stores) saw a slight 0.4% decline in the fourth quarter. Large formats such as hypermarkets and supermarkets remained the main drivers of this decline.
Among small formats, convenience stores also experienced a decline in the fourth quarter. The South, a key region for the development of convenience stores, saw a significant drop in the fourth quarter. Data from the Kantar Worldpanel indicates that the penetration of convenience stores in the South region decreased by 3.7 percentage points. It was impacted by the discount formats, as discount stores attracted a large number of customers from convenience stores. On the other hand, it was also affected by the online channels. The continuous improvement of O2O platforms and the ‘hourly delivery’ services of e-commerce platforms has weakened the convenience advantage of convenience stores.
Among the top 10 retailers, Hema had a remarkable performance, driven by active store expansion and business growth. In the fourth quarter, the market share of Hema increased by 0.4 percentage points compared to the same period last year. Walmart Group and SPAR also saw an increase in market share.
Community-Oriented Hypermarkets and Supermarkets, and the Rise of Regional Retail Brands
Hypermarkets continued to face downward pressure in 2024, but the decline has significantly narrowed while supermarkets have stabilized their growth.
For large formats, attracting consumers back to stores is a key challenge. This requires focusing on consumer needs to optimize product structures, emphasizing health, functionality and emotional attributes of products, and enhancing the emotional experience of products through scene-centric displays and marketing.
At the same time, it is also crucial to strengthen the in-store service details that are most easily perceived by consumers. Breaking away from the traditional ‘product selling space’ strategy and actively transforming into a ‘lifestyle experience centre’ to meet consumers' diverse needs during the shopping process and create a personalized shopping experience, are key to enhancing consumers' experience and loyalty to the store.
Several leading retailers, including Yonghui Group and Bubugao Group, have adjusted and upgraded their stores. By optimizing product structures, providing processed fresh products, and developing private label ranges, they aim to meet consumers' personalized shopping needs and in-store experience.
Regional retailers, especially those in Henan Province, have delivered outstanding performances in recent years. In addition to the industry benchmark brand, Pangdonglai, other players such as Dennis and Dazhang Group have also achieved strong performance. These retailers have deeply explored local consumption habits, refined consumer demand levels, and built a multi-level, multi-format retail network to cultivate the regional market. Dazhang Group, with its business philosophy of ‘low price, high quality, and freshness’, provides consumers with cost-effective products. It actively develops private labels and reduces costs by optimizing the supply chain. At the same time, its multi-format development includes premium supermarkets targeting young consumer groups and community stores focusing on the specific needs of local residents.
With the growing elderly population and the rising convenience needs of young consumer groups, the emergence of community-oriented small formats has further promoted the development of small-sized retail formats.
In 2024, the sales of small supermarkets increased by more than 10%, and grocery stores grew by 7%. This community-oriented small format, which is close to consumers' daily living radius, will become an inevitable trend in development.
Retailers need to dynamically adjust regional development strategies according to the population structure, economic level, and the existing development level of small formats in the regional market and select product categories according to the specific needs of community residents, offering more life-oriented products and services.
Omni-channel Integration Responds to Consumers' Instant Needs
Although consumers are increasingly rational in their shopping behavior, they are still willing to pay a premium for ‘instant gratification’. In 2024, the warehouse model performed exceptionally well, with annual sales growth increasing by over 26%.
Retailers across various formats are also expanding the instant retail market through integration and upgrades.
Sam's Club and Hema have accelerated the development of service networks by increasing the number of pre-warehouses. Walmart Group has accessed Meituan's delivery service. According to the Kantar Worldpanel data, Pupu Mall(朴朴超市) a representative of the warehouse model, achieved a sales growth of over 7% compared to the same period last year. Xiaoxiang Chaoshi rapidly expanded to 15 cities in 2024, achieving high growth by meeting users' instant and diversified needs through instant delivery, promotional activities, and the development of private labels. Taobao revamped the homepage with the addition of an ‘hourly delivery’ entry point. The integration of Dada Group into the JD.com ecosystem and the upgrade to ‘JD Speed Delivery’ with the fastest delivery time in 9 minutes. JD Fresh, by integrating warehouse and store formats, achieved significant online sales growth supported by its strong logistics and after-sales service. The express of Easy Joy (易捷速购) also entered the instant retail market by leveraging its store network.
To meet consumers' demand for immediacy, retailers need to comprehensively upgrade their supply chains, logistics, technology, and consumer experience. By optimizing omnichannel integration, strengthening technological innovation, and formulating various category strategies based on consumer needs for necessities, personalized items, and self-indulgent products. As technology progresses and consumer demand continue to evolve, instant retail will continue to further deepen and become a significant growth engine for the retail industry.
Discounts and Differentiated Services Meet Consumers' Demand for Quality and Affordability
Discount retailing continues to thrive and is undergoing transformation. According to the Kantar Worldpanel data, the penetration of snack discount stores exceeded 30% in 2024, with significant sales growth in town-level markets. To expand their market, retailers are increasingly investing in discount formats.
The hard discount format has become a key battleground for retailers. Aldi, a representative of hard discount, has deepened its presence in the Shanghai market, with its penetration increasing by 9 percentage points in 2024 with over a quarter of Shanghai households purchasing FMCG products at Aldi. Meanwhile, Aldi is about to expand beyond Shanghai into the Yangtze River Delta region.
Local retailers like Hema and Yonghui Group are also actively embracing the hard discount format, with Jiajiayue's Haohuixing discount stores growing significantly. The MMHM Group expanded its all-category wholesale supermarket format to enhance the shopping experience; Wanchen Group opened its first ‘Lai You Pin’ discount supermarket, entering the hard discount arena; and Hot Maxx recently launched its first 10000-square-meter warehouse style discount store in Nanjing.
In 2025, to continue moving forward in the discount wave, anchoring different competitive strategies is essential for maintaining and expanding market share. Taking Hot Maxx as an example, whether expanding business models or broadening product selections, the focus remains on providing unique shopping experiences and high-cost-performance products to surprise consumers. In 2024, Hot Maxx's penetration in upper tier cities increased by 2.3 percentage points.
On the other hand, the market share of e-commerce channels in 2024 remained similar to the previous year. Various e-commerce platforms drove sales growth through strong promotional strategies. However, this, together with intensified price competition, led to a decline in average selling prices due to intensified price competition.
Among different e-commerce platforms, Taotian Group maintained its leading position, but its market share decreased by 3 percentage points compared to last year. Leveraging its strengths in short videos and live streaming, Douyin surpassed Pinduoduo to become the second-largest e-commerce platform. In 2024, 49% of urban households in China purchased fast-moving consumer goods (FMCG) through the Douyin platform. Furthermore, by vigorously developing local services, Douyin created new consumption scenes and enhanced user stickiness through interactions with local consumers. Based on consumption data from local services, brands can gain deeper understanding of local consumer preferences, adjust their product and service marketing strategies more effectively and enhance consumers' purchasing intentions.
Xiaohongshu, a content-sharing platform covering multiple fields, with its precise content-pushing mechanism and strong community attributes, experienced significant growth in upper-tier cities, creating different competition with other comprehensive e-commerce platforms.
Facing consumers' price sensitivity, a simple low-price strategy is insufficient to meet their demand for cost- performance. However, there are still structural development opportunities in the e-commerce market. Future e-commerce competition will no longer be a zero-sum game but a complementary multi-format model. It is essential to maintain core strengths while further integrating shelf-based and content-driven approaches, re-evaluating category advantages, experience and service differentiation to establish competitive advantages beyond price and explore new growth opportunities. Expanding local services will also become a critical strategy for e-commerce platforms to break through price wars and achieve their business scope.
The value of membership systems is playing an increasingly important role, especially for consumer groups seeking high-quality, low-price products and premium services.
Membership stores developed strongly in 2024, with annual sales increasing by over 20% year-on-year. International brands like Sam's Club, with their mature supply chains, cost effective private labels, and strong member loyalty, have rapidly expanded in the Chinese market, creating a leading market presence. According to the Kantar Worldpanel data, Sam's Club's penetration exceeded 7% in 2024, a 2 percentage point increase from the previous year. This year, it will continue to focus on penetrating lower-tier markets. Local brands are also actively expanding their territory. For example, Mclub, under Sun Art Retail Group, had 9 stores nationwide in 2024 and plans to deepen its market in Jiangsu in 2025. Kantar Worldpanel data indicates that Mclub 's sales growth was particularly notable in 2024, becoming the most significant growth segment within the Sun Art Retail Group's portfolio.
In today's Chinese retail market, the traditional model of relying on a single channel for continuous growth is no longer sustainable. To unlock incremental value in a saturated market, retailers will increasingly depend on omnichannel collaboration, enhanced product competitiveness, and refined consumer engagement. The core demand remains meeting the diverse needs of consumers. Therefore, for retailers, it is increasingly important to understand the role that different formats play in the minds of consumers when expanding their multi-format presence.
For brand owners, it is essential to actively collaborate with retailers and adapt to the development of community-oriented supermarkets, discount retail, and omnichannel integration. By understanding the emotional and functional needs of consumers for their brands and by differentiating product portfolios and marketing strategies, they can strengthen their presence in multiple dimensions and continue to capture consumers' attention.
If you would like to learn more, please get in touch with our experts or access our data visualisation tool to explore current and historical grocery market data for your region.