Supermarket sales in China will grow by over 20% a year until 2011 thanks to the growing spending power of local consumers and state-driven development in rural areas, a report on the sector has claimed.
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China’s supermarket sector is forecast to be worth US$106bn by 2011 with sales climbing 20.5% a year, according to research analysts ACMR-IBISWorld.
The analysts said China’s strong economic growth and consumers’ higher disposable income would contribute to a booming supermarket sector.
Furthermore, the analysts said, the Chinese government’s aim of boosting spending power would drive sales.
“The effects of these factors will contribute to increased expenditure by a larger proportion of the population in supermarkets, which will benefit the industry’s future development,” ACMR-IBISWorld said.
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By GlobalDataThe Chinese government is investing in rural China, the analysts said, pointing to the country’s national rail building programme.
As rural China and “lower-tier cities” become more developed, the report said, the likes of Carrefour and Wal-Mart will open more stores outside the country’s major urban conurbations.
“Domestic players will also look to benefit from the rising economic prosperity of the lower-tier cities and will open more outlets in these areas,” ACMR-IBISWorld said.
“With the establishment of more stores in inland regions, the concentration of the industry will be reduced in coastal areas and increase in the rural regions.”
The analysts added: “Carrefour has plans to open around 20 new hypermarkets in the next few years. The new store locations include Zhengzhou in Henan province, Urumiqi in Xinjiang, and Kuming in west China.
“Further, Wal-Mart is focusing on smaller urban centres, such as Fushun, Meaning, Nana and Wuhu.”
China’s supermarket sector remains highly fragmented, with the top five operators accounting for only around 14% of sales, ACMR-IBISWorld said.
The country’s largest supermarket chain, Lianhua Supermarket Holdings Co., held market share of 4.5% in 2006, according to the report.
