Hypermarket stores in China closing at a rapid clip as consumers shift spending online
- Hypermarket sales have declined at an annualised pace of 7 per cent over the past three years, compared with a 24 per cent growth in e-commerce sales
- Walmart closed more than 80 stores from 2016 to 2020, and had only 34 left at the end of September
China’s bricks-and-mortar operators are struggling to survive as booming e-commerce has led to a wave of store closures, altering the retail landscape on the mainland.
Sales at hypermarkets in mainland China have fallen at an annualised pace of 7 per cent over the past three years, compared with a 24 per cent growth recorded by online retailers in the same period, according to a joint study on fast-moving consumer goods (FMCG) by global consultancy Bain & Co and market research firm Kantar Worldpanel.
“[Store closures] by large-scale supermarkets and hypermarkets over the past few years has become a trend as they experience painful adjustment of strategies,” said Jason Yu, general manager of Kantar. “Some of the stores have had to relocate to suburban areas or cut their size to survive a market where consumers’ shopping habits have changed dramatically.”
The study did not give a number for absolute number of store closures.
02:26
Singles’ Day 2021 in China shifts focus from consumerism to social responsibility
But the report said that physical outlets, which include hypermarkets, supermarkets, groceries and convenience stores, were losing market share to e-commerce platforms, as mainland consumers were increasingly ordering items online, all the way from vegetables and soft drinks to cosmetics and health care products.
The Covid-19 pandemic has only accelerated the digitalisation of consumer lifestyles. E-commerce firms now account for more than 30 per cent of China’s FMCG market, up from less than 10 per cent a decade ago, the report said. In contrast, hypermarkets, once the subject of awe and envy on the mainland during the early days of the country’s experiment with market capitalism, have seen the market share decline to 15.7 per cent this year, down 6.2 percentage points from 2016.