FMCG sales at convenience stores solid in 2023

Sales of fast-moving consumer goods at convenience stores on the Chinese mainland last year grew 8.2 percent, 1.3 times the average growth rate in the Asia-Pacific region, according to NielsenIQ monitoring data.

However, in 2024, sales growth of convenience stores on the mainland will slow down, impacting both store expansion and individual store sales growth, the data showed.

A comparison of year-on-year growth between January to February 2023 and the same period this year reveals a decline in overall store sales from 8.2 percent to 5.4 percent, a decrease in store numbers growth from 7.4 percent to 5.2 percent, and a drop in single store sales growth from 0.8 percent to 0.2 percent.

Expanding scales and improving efficiency in operations are important for the development of convenience stores this year, said Ni Yi, vice-president of NielsenIQ China.

The sales proportion of convenience stores in the top 20 cities stands at 56 percent.

The report found significant disparities in consumer and product structure among different provinces. Taking the beverages category as an example, convenience store consumers in Guangdong province, Shanghai and Fujian province prefer this category, with category sales accounting for 11.9 percent, 11.8 percent and 10.8 percent, respectively.

This category accounts for less than 7 percent in provinces such as Jiangxi, Guizhou, Hunan and Sichuan.

Therefore, tailoring policies to individual cities, and refining store cluster operations are key to winning the market, said Ni.

Meanwhile, the Chinese retail landscape is gradually shifting from a consumption upgrading model to a new era focusing on cost-effectiveness, with convenience stores positioned favorably in this evolving market, according to the 2024 China Retail Report released by NielsenIQ.

This trend signals the coexistence of consumption upgrading and downgrading, diversified consumer needs and structural growth opportunities, according to the report.

Overall sales revenue of the omni-channel in China's fast-moving consumer goods retail market in 2023 edged down 0.04 percent compared to 2022. Online and offline channel sales accounted for 42 percent and 58 percent, respectively.

In online channels, sales revenue of content e-commerce platforms increased by 55.9 percent year-on-year.

In the first two months of 2024, thanks to the Spring Festival consumption peak, online sales of the FMCG market grew 20.7 percent, of which the growth rate of Douyin e-commerce exceeded 70 percent. The growth rate of other e-commerce platforms reached 4.4 percent, and that of the offline market fell 6.4 percent.

Driven by strong online sales, the omni-channel growth rate was 1.2 percent, returning to a positive growth track, said the report.

In offline channels, snack discount stores have attracted young consumers with their rapid store expansion and low-pricing strategy.

In 2023, the sector's growth rate reached 75.8 percent, and its penetration rate is currently only 8 percent, which is expected to have significant room for growth.

At the same time, warehouse stores — or membership stores — are entering a period of development by providing unique quality and price ratios that are not available through other channels. In 2023, the number of member stores increased by 37.8 percent.

Li Quncai, deputy director of analysis and insights for the Chinese Retail Industry at NielsenIQ, said that under the concept of rational consumption, the growth rate of the omni-channel FMCG market has slowed down, and the sales scale has remained basically stable due to the lack of significant new players.

Enterprises need to more accurately grasp consumer demand and needs, seek business models based on competitive pricing and value positioning in the omni-channel perspective, and find new growth drivers, said Li.

"How to accurately understand the trade-offs between consumer demand and performance and price, and develop differentiated product assortment and price strategies for different categories, has become key for retailers to seize the current structural growth opportunities," said Li.