TNS Says Booming Hypermarkets are Creating New Shopping Culture in China

TNS Says Booming Hypermarkets are Creating New Shopping Culture in China

September 12, 2007

Big New Opportunity Awaits Companies in The Hypermarket
Channel in China's Tier 2 and Tier 3 Cities, Predicts TNS


    SHANGHAI, China, Sept. 12 /Xinhua-PRNewswire/ --
Hypermarkets are taking hold in China thanks to the lure of
low prices, convenient one-stop shopping, accessible
locations and the integration of other retail facilities
such as restaurants, cinemas and coffee houses that can
turn a shopping trip into a day out for China's shoppers. 

    Jason Yu, Regional Account Development Director for TNS
Worldpanel (China), said: "In the US, stores such as
Wal-Mart have been able to create an entirely new shopping
culture. The one-stop shop philosophy, in particular, is
achieving the attention of China's largest spenders --
middle-class consumers.  On average, China's middle class
consumers visit hypermarkets every 10 days, making for a
frequent-shopping pattern that owners of hypermarkets can
bank on for a predictable revenue stream.  

    "So it's no surprise that most international
retailers are looking closely at China, a market where the
grocery sector has continued to see rapid growth
year-on-year above the rate of GDP expansion.  Hypermarkets
are rushing in.  In July, Carrefour opened its 100th
hypermarket in China in Shaoxing, a prefecture level city
with a population of 650,000.  Walmart's recent acquisition
of Trust-mart is another notable development that underlines
the growth story for hypermarkets."

    TNS Worldpanel (China), which continuously measures
household consumption in 20 of China's provinces as well as
Beijing, Tianjin, Shanghai and Chongqing, says latest data
show that hypermarkets increased their share of the value
of China's grocery sector Note 1 in the country's 15
largest cities Note 2 from 28.5% in 2005 to 29.8% in 2006.
The share in these largely provincial capital cities and
municipalities - known as tier 1 cities -- has continued to
increase this year, reaching 30.1% in the first half of
2007.  TNS is predicting a share for hypermarkets of 35% by
the end of the decade -- compared to the level of just 19.7%
seen in 2001.  

    The hypermarket successes contrast with the supermarket
sector which has recently experienced retrenchment.
Supermarket share of value dropped from 28.4% in 2001 to
19.1% in the first half of 2007.  TNS data shows the number
of visits consumers make each year to supermarkets has
trended down since at least 2005, while the number has
risen for hypermarkets over the same period.  

    As of mid 2007, hypermarkets had made their biggest
impact in Shanghai, where this channel accounted for more
than 45% value share of the grocery sector.  Hypermarkets
are also dominating Hangzhou (37.9% share in mid June),
Shenzhen (37.2%), Guangzhou (35.5%) and Chengdu (33.8%).  

    Hypermarkets are retail facilities carrying
comprehensive product ranges, including full lines of
groceries and general merchandise, and in spaces often in
excess of 4,000 square meters. TNS says hypermarkets are
winning business for a variety of reasons, including:
    
    -- Low Prices -- Most hypermarkets are utilizing price
cutting and "every 
       day" low price strategies to attract shoppers
into the store.  
    -- One-Stop Shopping -- A wide range of food and
non-food items are 
       pulling Chinese families into the stores.  Fresh
food (including cooked 
       ready-to-eat food) is playing a key role in
attracting consumers into 
       the store.
    -- Location -- Most Chinese hypermarkets are
conveniently located in city 
       centers or shopping malls close to residential
communities and also 
       offer free shuttle buses.
    -- Total Shopping Experience -- Restaurants, cinemas,
department stores, 
       and coffee shops are often located on the premises
of a hypermarket, 
       allowing people to plan other leisure activities
around shopping.

    Hypermarket operators predominantly comprise
international retailers. Among the companies leading this
industry growth are Wal-Mart/Trust-Mart (US), Carrefour
(France), Tesco (UK), and RT-Mart (Taiwan), with individual
shares in the first half of 2007 of 4.7%, 4.4%, 2.7%, and
2.2%, respectively of China's grocery spend as measured by
TNS Worldpanel across 15 cities.  

    "The fact that even the market leader does not
command a share above 5% reflects the current fragmented
nature of the grocery trade," said Mr Yu.  "At
the same time, it points to significant market opportunity
arising from future market consolidation, which we believe
will be inevitable." 

    TNS says there is a significant opportunity for
hypermarkets to penetrate China's retail sector still
further, since the hypermarket share of value stands at
just 12.9% in tier 2 cities (prefecture-level cities) and
7.6% in tier 3 cities (county-level cities).

    Mr Yu said: "These figures indicate there is
plenty of room for new hypermarkets.  A few international
hypermarket operators are already looking into expanding
into tier 2 and tier 3 cities, and numerous retailers are
beginning to offer higher margin departments such as
textiles, fresh food, and their own labels.  The
hypermarket channel is a nascent industry, whose turning
point is still to come as the lack of competition in
second-tier cities is an opportunity for further
development.  However, to gain a profitable share in the
hypermarket channel, retailers must act now as local
competitors are faster in developing a multi-format
portfolio to diversify the business risks and capitalize
other development opportunities."    

    Note 1: TNS Worldpanel's share of value in China's
grocery sector covers 50 representative product
categories.

    Note 2: Beijing, Guangzhou, Shanghai, Tianjin,
Shenyang, Wuhan, Chengdu, Xian, Jinan, Nanjing, Hangzhou,
Qingdao, Chongqing, Dalian and Shenzhen.

    About TNS:

    TNS is a global market insight and information group.

    Our strategic goal is to be recognised as the global
leader in delivering value-added information and insights
that help our clients to make more effective decisions.  

    As industry thought leaders, our people deliver
innovative thinking and excellent service to global
organisations and local clients worldwide.  We work in
partnership with our clients, meeting their needs for
high-quality information, analysis and foresight across our
network of over 70 countries. 

    We are the world's foremost provider of custom research
and analysis, combining in-depth industry sector
understanding with world-class expertise in the areas of
new product development, segmentation and positioning
research, brand and advertising research and stakeholder
management.  We are a major supplier of consumer panel,
media intelligence and internet, TV and radio audience
measurement services.  

    About Worldpanel: 

    Worldpanel(TM) is TNS's consumer panel sector
delivering an offering with global scale.  Coverage extends
to more than 50 countries with services typically based on
continuously monitored samples providing information on
purchasing and usage activity.  TNS uses data collection
technology best suited to the environment that is measured.
 Techniques include bar code scanners, online, till receipt
scanning, as well as paper diaries and interviewing. 
Worldpanel subscribers include global and local FMCG
brands, private-label manufacturers, fresh food suppliers,
retailers, market analysts and government organisations.  

    About TNS Worldpanel China (National Urban Panel):

    A pre-recruited sample of families in China who have
agreed to participate in market research surveys, the
National Urban Panel from TNS Worldpanel China covers 20
provinces and four municipality cities (Beijing, Tianjin,
Shanghai and Chongqing).  It measures household
consumption, with participants keeping a diary of purchases
across a variety of product categories including cosmetics,
food and beverages and the toiletry/household sector.  

    TNS is the sixth sense of business.
    http://www.tns-global.com 


    For more information, please contact: 
	
     Cindy Liu, Marketing & Communications Manager
     TNS China
     Tel£º    [phone] ext. 156
     Mobile:  [phone]
     Email£º  [e-mail]