As supermarket chains continue their rapid expansion in China, a recent report suggests that modern retail formats are increasingly meeting the fresh-food shopping needs of Chinese consumers, at the expense of the traditional ‘wet market’. Joe Ayling reports.
A new study of fresh-food buying patterns across Asia has confirmed that the majority of Chinese consumer needs are better met by modern supermarkets than by the traditional ‘wet market‘. According to the research, consumers in China spend more on fresh foods at the supermarket than at the wet market.
In 2005 alone, when a new initiative was launched, 70,000 supermarkets opened in rural China, with the Ministry of Commerce hoping to increase this number to 250,000 by 2008. According to reports, it has set aside funds of CNY60m (US$7.4m) for development and hopes to attract additional social capital for the programme.
The added value, consistency, quality, information and sales advice offered by supermarket chains now operating in China, which include international groups like Wal-Mart, Auchan, Carrefour and Tesco, as well as local operators such as Lianhua and Wumart, is clearly proving attractive to a large segment of Chinese consumers. Lianhua is the largest chain with 2,700 stores and is expanding rapidly, as is Wumart, which as the name suggests has capitalised on China’s somewhat lax trademark protection. Tesco, trading as Hymall, is poised to open its fortieth store in China, and has stressed its intention to increase its presence further.
The fresh-food study of vegetable, fruit, fish, meat and poultry retailing, conducted by Accenture for the Coca-Cola Retailing Research Council in the cities of Beijing and Cheng Du, confirmed that the majority of consumers in China generally favour the advantages supermarkets offer. Researchers identified four consumer types: authority seekers (41%), easy-life seekers (30%), value seekers (23%) and quality seekers (6%).
“The report was written with the intention to serve the entire food industry – from modern to wet market operator – so that any food operator can lift their game to better meet the needs and expectations of the Asian consumer,” said Josef Mueller of Asia Pacific Retail at Accenture.
Mueller told just-food: “The results were taken from two built-up cities in China, but it is possible for modern retailing to spread further if the country becomes more urbanised over the next ten to 20 years in a similar way, for example, to Thailand’s development. I don’t think the wet market will go away in China. There is plenty of opportunity both for the wet market and the modern retailer; they can learn off each other.”
The study, which formed part of a larger survey called The Fresh Imperative: Creating Excellence in Asian Food Retailing, looking at food shopping behaviour across a range of Asian markets, revealed that some 41% of Chinese consumers are ‘authority seekers’. These are sophisticated shoppers who value quality and like to consult or be advised by retailers. Meanwhile, only 6% were deemed to be ‘quality seekers’, consumers who are difficult to please with a wide knowledge of the food they are buying.
‘Easy life seekers’, comprising people who have a generally low level of food knowledge, made up 30% of consumers in the study. This segment would be considered a perfect target audience for supermarket chains with products such as ready meals and frozen foods.
Nearly a quarter (23%) of the Chinese market were found to have an attitude towards fresh-food shopping which made them suited to both the wet market and the large-scale retailer. This group was termed ‘value seekers’. They look for a balance between price and quality, leaving them torn between the value of the wet market and the consistency and standards offered by supermarket chains.
As for how these different consumer types shopped, it was found that authority seekers and easy life seekers, making up 71% of Chinese consumers, spent 61% of their weekly fresh-food budget at modern retail stores, and 39% in the wet market. In contrast, quality seekers and value seekers, comprising a total of 29% of the poll, did 54% of their fresh-food shopping at the wet market and 46% at modern stores.
As with all such research, the distinctions are probably subtler than may first appear, and consumer tastes and buying habits are of course constantly evolving. “There can be evolution of segments, and consumers may fall into different segments for vegetables, meat and poultry purchases as time goes by,” Mueller said, citing changes in poultry shopping habits following the outbreak of bird flu in China.
Vegetables were the key fresh-food category, and the cornerstone of every retailer’s offer in China, as in most other Asian countries, the study revealed. The freshness of the vegetables category was found to be critical in creating a positive impression of overall freshness, and has a major impact on consumer perceptions of the whole store.
“Asian consumers in general first shop for fresh vegetables, and then decide on the type of meat and fish to go with it. This is different from the dominant western shopping model, where consumers first decide on the protein sources and then focus on vegetables,” said Kenth Kaerhoeg, group communications director at Coca-Cola Asia.
Moreover, Chinese consumers generally still prefer to do their vegetable shopping in the wet market. The study showed that some 60% of vegetables and fish, and 70% of poultry, was still being bought from the wet market, whereas consumers are now buying 65% of their meat and 55% of their fruit from modern supermarkets.
So it seems the Chinese wet market is likely to survive as long as vegetables dominate the menu, but the massive growth in hypermarkets, supermarkets and convenience stores is being enthusiastically welcomed by Chinese consumers who are increasingly looking for quality, information, advice and convenience – fresh-food retailers take note.