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Supermarkets fighting losing battle with e-commerce in China

  • Staff Reporter
  • 2014-03-17
  • 17:56 (GMT+8)
A dying mode of grocery shopping. (Photo/CNS)

A dying mode of grocery shopping. (Photo/CNS)

The growing popularity of e-commerce in China has now taken business away even from traditional supermarkets, whose annual gross margins have posted annualized declines, according to the Beijing Youth Daily.

A woman surnamed Sun said her trips to the supermarket have decreased since she has become used to placing orders online for everything from home appliances to clothing, books and food, according to the report. The change in buying behavior, with fruit and daily necessities making their way to homes through e-commerce websites, has impacted traditional retailers significantly. According to the semi-annual financial reports of public retail firms in 2013, at least 80% reported that they had incurred growing management costs and decreasing gross margins.

Official data show that foreign-invested supermarkets in China have been in a crisis since 2012. The world's largest retailers — Walmart, Carrefour and Tesco — slowed down expansion in the mainland market by 27% in 2013, with all of them closing some of their respective branches. Walmart shut down five, Carrefour two, and Tesco five.

Refrigerated and frozen foods are being pushed to boost sales of traditional supermarkets and attract customers and because of their high gross margin. Frozen products are also more difficult and expensive to keep chilled during shipping.

Beijing-based Wumart Stores said sales of its refrigerated and frozen products registered two-digit percentage growth in 2013. In addition, a Walmart executive pointed out that the retailer has established new distribution centers to attract new customers.

This has not stopped e-commerce companies from eyeing the frozen and fresh food sector. Another senior analyst is of the view that the revenue generated from fresh foods could touch 40% on average for e-commerce companies, with seafood and frozen meat reporting the highest revenue, followed by fruit.

Chinese internet giant Alibaba said its sales for fresh produce surged by 195% in 2013, with fruit, seafood and vegetables posting the largest growth.

Who's Who

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