French retail giant Carrefour leads retreat from China as ‘underdog’ hypermarkets lose dominance
- The French supermarket’s partial exit underscores the shift underway in shopping patterns in the world’s most populous nation
- Rise of online retailing has led to erosion of market share for hypermarket operators such as Carrefour, Wal-Mart, and Auchan
Hypermarkets, hailed as game changers in China’s retail industry as recently as two decades ago, have been pushed aside by the popularity of smartphone-enabled payments and online shopping.
Carrefour, the French retailer announced on Sunday, is selling an 80 per cent stake in its China operations to Suning, ceding control in a market that it had first entered in 1995.
“Foreign hypermarket brands are increasingly facing difficulties in making money from their Chinese businesses,” said Jason Yu, the general manager of market research firm Kantar Worldpanel China. “For most of them, it is a critical time to readjust strategies due to the mounting challenge from the local e-tailers.”
Carrefour’s partial exit underscores the shift underway in shopping patterns in the world’s most populous nation. China’s e-commerce market is worth 2.24 trillion yuan (US$325.6 billion), growing by 15.3 per cent in the first quarter from a year earlier, according to the National Bureau of Statistics. As much as 23 per cent of total consumer spending took place online during the first quarter, reflecting growth of 1.6 percentage points from last year, while the share of consumer spending at hypermarkets eased to 20.2 per cent, a drop of 3.4 percentage points from 2014, according to Kantar.
Foreign supermarkets and hypermarkets, featuring rows and stacks of consumer items, foodstuffs, clothing, appliances and furniture over tens of thousands of square feet, were the subject of awe and envy in China during the early days of the country’s experiment with market capitalism.