Documente Academic
Documente Profesional
Documente Cultură
May 2012
Chinese consumers love to shop. More than a third of Chinese (36%), according to
McKinsey research, say that shopping with friends and family is one of their favorite
activities. Retailers like the sound of that. But consider: Three years ago, that figure
was 45%.
By Louise Herring, Daniel Hui, Paul Morgan and Caroline Tufft
The gap indicates an important point: For
retailers big and small, foreign or Chinese,
the days of wine and roses are over. The
future is going to be much more difficult.
Specifically, McKinsey has taken a
close look at the hypermarket model.
Hypermarkets are very big spaces that
combine supermarkets and department
stores and they have been a big hit in
China. By 2010, the country had almost
2,400 of them, concentrated in the big,
prosperous Tier 1 and Tier 2 cities. Within
established retail chains, hypermarkets are
the dominant format. And all this happened
in a blink of an eye, in economic terms. In
1997, hypermarkets barely existed. Between
then and 2003, revenues grew an average of
70% a year; since then, growth has averaged
about 20%.
But now things are about to get much
tougher; the low-hanging fruit has been
picked. Not only is the competition
tightening, but retail dynamics are
changing.. To win, players need to
understand the Chinese market, and then
Exhibit 1:
Hypergrowth
Sales
RMB (billion)
CAGR
1997-03 2003-10
470
417
363
314
267
Other
Supermarkets &
Neighbourhood stores
139%
12%
N/A
32%
Supermarkets
86%
5%
Superstores
Hypermarkets &
superstores
N/A
15%
N/A
27%
Hypermarkets
70%
21%
241
195
158
120
42
4
62
85
1997 98 99 2000 01
02
03 04
05 06
07
08
09
10
Exhibit 2:
Operating room
EBITDA margin
% of sales; 2015
Sales density
improvement
0%
3%
5%
6%
assuming no
operational improvement
after operational
improvement
-0.6
-5.7
1.9
-2.7
3.4
-1.0
4.0
-0.2
7%
4.6
0.5
8%
5.2
1.2
10%
2.5
6.3
1 Footnote
SOURCE:Source
Team Analysis
SOURCE:
http://csi.mckinsey.com
Daniel Hui is an associate principal
in Hong Kong. Louise Herring is an
engagement manager in London, where
Paul Morgan is an associate principal and
Caroline Tufft is a principal.