China's ecommerce grows by 50%

Consumer spending on FMCG grew by 2.2% compared to the same period last year.

The latest figures from Kantar Worldpanel China, for the 12-weeks ending 2nd December 2016, show consumer spending on FMCG grew by 2.2% compared to the same period last year. Modern trade increased by 0.5%, while ecommerce grew by 50% during the latest 12-weeks.

A new high for ecommerce penetration

Every year, the period which includes the famous Double 11 festival lifts ecommerce penetration to a new level and this penetration is maintained during the following year. The latest 4-weeks data, ending 2nd December 2016, show that the Double 11 festival of 2016 brought ecommerce penetration to a new record high at 20.5%. In fact, ecommerce penetration started to gain momentum even before November 2016 as a result of Tmall’s early activity to generate interest in the event even earlier than previous years. Some Taobao stores also ran promotions before the event to lock in consumer spending and avoid directly competing with the big stores on 11/11 itself.

Retailers add shoppers and increase spend at regional level

The latest data reveals that RT-Mart is losing penetration at national level, but that this is mainly happening in provincial capital and prefecture level cities. In county level cities and counties, RT-Mart is still recruiting new shoppers. It has also managed to grow its shopper’s trip spending, especially in higher tier cities, with the average spend per trip reaching 97.8 RMB in the latest 12-weeks. This compares to Wal-Mart’s 102.8 RMB average spend per trip. This also shows that there is still potential for RT-Mart to grow its shopper’s basket spend.

Yonghui’s fast development is mainly driven by the West and South regions, where RT-Mart is not as strong. In the West region, Yonghui’s consumer spending grew 35%. Compare this to market leader Wal-Mart, which only grew 2.3%, slower than the growth of modern trade in the West at 2.9%.

Regional players are growing steadily in the South. WSL group and Bubugao grew by 21.7% and 15.5% respectively, mainly driven by penetration gains.