To investigate the market performance of the foreign supermarkets in China over time

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To investigate the market performance of the foreign supermarkets in China over time

 

Introduction

In the recent past, the supermarket and hypermarket sector in China has experienced vibrant changes in the manner in which business is conducted. The way the mainland shoppers want to buy the commodity is rapidly changing. There has been an increase in online shops, which has rendered the revamping stores formats struggling to up with this pace. The supermarkets are facing significant and increasing competition, where the online grocers are the biggest threat to the brick and motor sales at supermarkets. There are a large number of foreign supermarkets in China, such Wal-Mart, Tesco, Lotus among others. Though their internationalisation strategy to China could be considered as a great growth strategy, considering that China is a promising developing economy, the market performance of these foreign supermarkets is a matter of interest. This is precipitated by factoring in the changing shopping preferences of Chinese to online grocers, the increased competition, the emergence of local supermarkets and the changing Chinese customer’s tastes and preferences. Based on this background, this study intends to carry out an investigation of the market performance of the market performance of the foreign supermarket in China, over the last five years.

Research Questions

  • What is the market performance of the foreign supermarkets in China over the last five years?
  • How has been the financial performance foreign supermarket in China in the last five years?
  • How have the online grocers affected the market performance of the foreign supermarkets in China over the last five years?

Research objectives

  • To determine the market performance of the foreign supermarkets in China over the last five years
  • To find out the financial performance foreign supermarket in China in the last five years
  • To investigate how the online grocers have affected the market performance of the foreign supermarkets in China over the last five years

Literature

From the fast food products to smartphones, from the luxury products to the groceries, the manner in which China shops, and what the Chinese people want to buy is changing rapidly. These changes, as illustrated by Yin & Zhang (2017) are leaving the foreign supermarkets and hypermarkets chains struggling to keep up with the competition by revamping their store formats and selling most of their products online. A good example is Walmart supermarkets, which have considered to address its declining sales over the period, by increasing the number of operational stores in China, renovating the existing one, and more importantly, introducing new online shopping applications. More importantly, there is intensified competition from the other Chinese big hypermarkets and new online grocers, (Zhang and Wei, 2015).

The sector’s woes, as illustrated by Maruyama and Wu (2014) are not limited to the foreign brands either. According to the report released by the OC&C Strategy consultants, almost all the big players in the supermarket and hypermarket sector has experienced an almost-consistent negative growth since the year 2010. In this case, the biggest threat facing the brick and motor sales is the online grocers, as they can reach a wide range of people in their online stores. Inferring from Zhao (2013), the rate of change of consumer tastes in China is more rapid, as compared to the more established markets. This is supported by the fact that in the last two years, only the online grocery sales have exploded.

According to the recent research conducted by OC&C Strategy consultant, the online sales increased by 50% in the year 2014. On the other hand, the sales made by the supermarkets and hypermarkets increased by 6.7% with an inclusion of the openings of the new stores. These changes in the market performance are attributed to the fact that many consumers are shifting their buying to the convenience stores. The older people in China do not have more entertainment, hence considers shopping in the grocery stores considerable ways of entertainment. On the other hand, the young generations have grown up with computers and prefer traveling as a way of entertainment, as compared to shopping in the physical stores. Based on the research conducted by Lapoule (2010), combining online and offline stores are the way to go if the foreign supermarkets want to achieve market growth in China.

According to the research by Alliance PKU Management Consultant, a specialist firm that advises clients in the retail sector in China, the sales and market share in the physical outlets of foreign supermarkets continue to drop. There has been a decline in the economic performance of China in the previous years, which had seen these companies experience hardship in their market performance. The decline has led to changes in the shopping habits and reduction of the foreign traders’ previous aggressive expansion. In the last four years, the foreign companies have closed several branches. The British retail supermarket Tesco has closed four stores while the French supermarket named as Carrefour has closed two branches. Further, Wal-Mart, which is considered as the American giant has closed five stores in China, in the last five years (Li-Wei & Zhao, 2014)

Another factor determining the level of performance foreign supermarkets in China is the level of support given from the government. Hai Thi, Wood & Wrigley (2013) indicates that the domestic operators were able to stand the economic downturn due to supportive measures initiated by the local government. The local government allocates some resources to foster the growth of the local companies. This is accompanied by the absence of preferential policies to support the foreign supermarket operators (Davis, 2013).

Methodology

Research strategy

The case study research strategy will be adopted, which will involve studying the prevailing conditions of the foreign supermarkets operating in China. The case study will rely on the data collected from the foreign supermarkets operating in China. The research will adopt a descriptive research design, which will rely on both secondary and primary data. The research design will be geared towards answering the research questions. A mixed research methodology will be applied, where both quantitative and qualitative techniques will be applied. This will present a perfect means of comprehensively covering the research objectives.

Data collection

The data collection methods applied will be questionnaires for primary data, and the selected supermarket’s performance over the previous years. The data collected will include the financial performance, the market share, and growth rates over the past five years. The primary data will be collected from the respondents from selected foreign supermarkets. The questionnaires will be sent to the respondents for them to fill and return. The secondary data will be gained from the financial statements and reports produced by these supermarkets over the years. The industrial data will also be applied.

Sample size

The sample size will be made up of 5 foreign supermarkets. From these supermarkets, a sample of 50 respondents would be selected, where 10 respondents would come from each of the supermarkets. Random sampling technique will be applied to come up with the sample, where each in the population would be given an equal chance of being included in the sample.

Data analysis

The analysis of the data will be done to answer the states research questions and meet the objectives. The data will be analysed both quantitatively and qualitatively. For qualitative analysis, the SPSS statistical software will be applied to analyse the data. Tables, graphs, and charts will also be applied in the analysis. The qualitative analysis will involve discussing the findings through explanation. The data analysis section will form the basis of discussion, conclusion, and recommendations of the research.

Conclusion

The present research is aimed at investigating the market performance of the foreign supermarkets in China over time. This objective will be met by answering the three stated research questions. The mixed methodology will be applied to carry out the research, where the data will be gotten from both the primary and secondary sources. The population of research would be the foreign supermarkets in China, from which a sample of 50 respondents will be used. The questionnaire will be used to collect the data to answer the stated research objectives.

 

 

References

Davis, L. 2013, “Exploring Chinese Consumers’ Shopping Value across Retail Outlets”, International Journal of China Marketing, vol. 4, no. 1, pp. 51-64.

Hai Thi, H.N., Wood, S. & Wrigley, N. 2013, “The emerging food retail structure of Vietnam”, International Journal of Retail & Distribution Management, vol. 41, no. 8, pp. 596-626.

Hsu, C.H., 2014. Brand evaluation of foreign versus domestic luxury hotels by Chinese travelers. Journal of China Tourism Research, 10(1), pp.35-50.

Lapoule, P. 2010, “Carrefour and its competitors in India”, Management Decision, vol. 48, no. 3, pp. 396-402.

Li-Wei, M. & Zhao, H. 2014, “The characteristics of supermarket shoppers in Beijing”, International Journal of Retail & Distribution Management, vol. 32, no. 1, pp. 56-62.

Maruyama, M. and Wu, L., 2014. Quantifying barriers impeding the diffusion of supermarkets in China: The role of shopping habits. Journal of Retailing and Consumer Services, 21(3), pp.383-393.

Yin, C. & Zhang, M. 2017, “Research on the Key Issues of “Farming-Supermarket” Docking Under the Background of “Internet Plus””, Management & Engineering, , no. 26, pp. 74-82.

Zhang, L. and Wei, Y.D., 2015. Foreign Hypermarket Retailers in China: Spatial Penetration, Local Embeddedness, and Structural Paradox. Geographical Review, 105(4), pp.528-550.

Zhao, S., 2013. Foreign policy implications of Chinese nationalism revisited: The strident turn. Journal of

Contemporary China, 22(82), pp.535-553.

Zhang, Q.F. and Pan, Z., 2013. The transformation of urban vegetable retail in China: wet markets,

supermarkets and informal markets in Shanghai. Journal of Contemporary Asia, 43(3), pp.497-518.