China powers of retail 2009: Squeezed but promising
32 pages
English

China powers of retail 2009: Squeezed but promising

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32 pages
English
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Tout savoir sur nos offres

Description

The report reviews the industry performance last year and summarizes the key findings, based on a survey conducted by CCFA on the top 100 retail chains in China, interviews with coportate executives and subject matter experts, and Deloitte points of view on China's retail sector.

Informations

Publié par
Publié le 01 janvier 2009
Nombre de lectures 333
Langue English
Poids de l'ouvrage 1 Mo

Extrait

Squeezed, But Promising
China Powers of Retail 2009

Consumer Business & Transportation

Content

1 2 4 8 91 32 72 82

2

Preface

Executive summary

China powers of retailing Top 100 highlight

Top 100 Chinese Retail Chains, 2008

Leading companies by format

Top trends for retailers 2009

Postscript

Contact

Preface

Deloitte China and China Chain Store & Franchise Association (CCFA) are pleased to present the China
Powers of Retail 2009. The report reviews the industry performance last year and summarizes the key
findings, based on a survey conducted by CCFA of the top 100 retail chains in China, interviews with
corporate executives and subject matter experts, and Deloitte's points of view on China's retail sector.
Also discussed are the future direction of China's retail industry as well as eight major industry trends, in
light of the global financial crisis and China's economic downturn and recovery.

Squeezed, but Promising
China Powers of Retail 2009

1

Executive summary

China Retail in 2008
In 2008, influenced by the financial tsunami
triggered by US sub-mortgage crisis, the retail
industry around the world entered into a prolonged
"slack season". The downturn in consumption
abroad and exports had a strong impact on China's
economy, whose growth had relied on exports
for most of the reform era. China's GDP growth
decreased to 9 percent, and consumer confidence
index declined to the lowest level in recent years.
Data has not been released that would permit a full
analysis of the financial tsunami's negative impacts
on China's retail industry. But it is evident that if
the macroeconomic environment continues to
deteriorate, the short term performance of the retail
industry cannot be optimistic. This is true despite
the fact that domestic household consumption and
retail growth are being stimulated precisely because
of the export slowdown.
Data from CCFA show that sales of top 100 retail
chains in 2008 were high but peaked in first few
months of 2008, then declined. Performance varied
by different retail formats and geographical areas.
In terms of formats, home improvement stores and
electronics specialty stores were the most seriously
inflicted, and supermarkets the least. In terms of
geographic areas, first-tier cities in eastern coastal
areas were the most seriously inflicted with same-
store-sales growth rate declining significantly. In
contrast, the growth rate of sales in inland tier-2
and tier-3 cities continued to increase. To counter
the impact of the economic slowdown, many retail
chains took various measures to boost sales, cut
costs and improve operational efficiency.
In 2008, the combined market share of the top
100 retail chains' sales out of total retail sales
dropped, as did the percentage of the top 10. This
measure signals a reversal of a trend over the last
several years, which saw industry consolidation.
Domestically owned chains toped the listings, in
both total store number and revenue, are also
ranked the top among top 100. Next are the
US retail chains, having also the second most
diversified formats, including food & beverage,
supermarket, home electronics and home
improvement. US retail chains achieved the highest
average sales revenue per location. Asian retailers
(excluding China) are focused on two formats —
department stores and supermarkets. Asian chains
2

had the lowest ranking in the top 100, in enterprise
numbers and average sales revenue. There is a
"dumb-bell" shape distribution in geographic
footprint, with most retailers either nationwide
companies or single-province/city companies.

In 2008, the top 100 retail chains in
mainland China covered all retail
formats. Rankings of the top 100
included both annual revenue and total
number of store locations.
This indicates that enhancing the depth and width
of network coverage is the most effective tactic for
retailers to increase sales revenue.
Each of the retail formats in the top 100 has its
own characteristics. Multi-format retailers and
supermarkets are the two largest groups. Multi-
format retailers can satisfy the demands of various
segments of consumers, while supermarket format
is designed to meet consumer's daily essential
needs. These are "low discretion" categories and
therefore the impact of economic fluctuation on
these two retail formats is comparatively small.
On the other hand, the electronic specialty store
is the largest among all retail formats in terms of
sales revenue; however, the growth rate of its sales
revenue has declined due to the sluggish real estate
market.
In 2008, among top 100 retailers, sales growth
came mainly from regional retailers with multiple
formats, nationwide and multi-area supermarket
chains. Strongest growth driver was the trade up in
tier-2 and tier-3 markets.

Main Trends of Retail in China
Retailers develop private brands to realize
Retail chains will continue to grow rapidly in the differentiated competition, enhanced customer
future, especially in inland tier-2 and tier-3 markets, loyalty, and improve profitability. Management
where growth potential is strong. Growth rates of private brands also requires retailers to master
of all key indicators in these areas are higher than higher more advanced management capabilities,
those of the eastern coastal cities. By the year bearing on product category management, price
2012, China will become the second largest retail management, vendor management and marketing,
market in the world, second only to the US. Foreign etc. As retailers' business grows larger, their supply
and local retail enterprises will leverage their chain becomes more complex. To make the
respective advantages in management, resources, necessary advances at a time or intense operating
geographical positioning and relationships to costs pressure incurred by decreasing consumption
capture more market share. Since competition in is difficult. Succeeding in the necessary
tier-1 and tier-2 markets is getting more intensive, transformation will impose a new challenge to
growth space for retailers is limited there. Retail retailers and their supply chain management skills
chains will focus on tier-3 market and below. China and systems. As a response, many retailers have
has a vast territory and consumption capability, and started proactively to cultivate new competencies
consumer habits and preferences differ significantly of systematic supply chain management, including
across regions. Retail chains will need to fine-tune establishing their own supply bases for perishable
their business strategy to fit different attributes goods, logistics, and distribution. Some retailers
across regions, driving a process of tactical are also progressing in the implementation of ERP
localization.systems that will be necessary to achieve the supply
With China's surging growth of internet users, chain control they require, lower cost, and improve
on-line shopping and even multi-channel shopping responsiveness.
are developing rapidly. As this happens, most
retailers lack the capability to integrate processes
and resources to offer customers a cross-channel
seamless shopping experience. At present,
their offerings are simply an addition of a new
channel grafted on to the traditional ones. With
the emergence of new retail formats promoting
customer service and lifestyle as their value
proposition, retailers have begun to develop
business models that emphasize a customer
experience, and these require a higher level of
business strategy, management, organization,
processes, IT system and data mining capability.

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China powers of retailing
Top 100 highlight
The global retail market faces a bleak outlook

Exhibit2. U.S. GDP vs. Retail
1
sales growth
Since 2008, the financial tsunami has spread
over same period last year (%), 2006-2009
out all over the world. As a result of the credit
and liquidity freeze, an investment shortage and
10
consumption shortage drove the faltering U.S.
8
economy into a further recession. Of course, a
6
drop in American consumption, curtailing global
4
economic growth. There was a sign of slowdown
2
in the U.S. economy as early as the second half
0
of 2007, and that turned into a launchpad for a
-2
true crisis in early 2008. Within weeks the global
-4
financial sector was in turmoil. As a result, the
-6
growth rates of all major economies were in steep
-8
retreat in 2008 from previous years. China, India,
-10
and Brazil did well, comparatively speaking.
-12
Exhibit1. Growth rates of the world’s key
Retail Sales
economies (%), 2006-2008
GDP
14
Source: U.S. Bureau of Economic Analysis
21dropped precipitously, much faster than the GDP. This
10
shows how lev

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