2010 China Top 100 Chain Retailers is released by China Chain Store & Franchise Association (CCFA) after it has concluded its study on the development of China’s retail industry in 2010.
The total sales volume of the top 100 chain retailers reached 1.66 trillion RMB in 2010 and registered a year-on-year increase of 21.2%, which was 2.8 percentage points higher than the growth rate of the total consumer goods sales. The number of stores of the top 100 chain retailers amounted to 150,000, with an increase of 9.8% compared with that of the previous year. The sales of the top 100 chain retailers contributed to 11% of the total consumer goods sales, a number which was equal to that of the previous year.
Suning Appliance took the first place of the list with its sales of 156.2 billion RMB, followed by Gome Electrical Appliances (154.9 billion), Brilliance Group (103.7 billion), Dashang Group (86.2 billion), China Resources Vanguard (71.8 billion). The sales revenue of the company, which took the last place on the list, rose 37% to 2.2 billion RMB.
The following are some highlights worth our attention in this report:
I. Sales volume increased rapidly.
The total sales volume of the top 100 chain retailers rose by 21.2% in 2010, which was up by 7.7 percentage points compared with 13.5% in 2009 and by 2.8 percentage points compared with 18.4% in 2008. 18 companies, most of which are multi-regional chain enterprises, achieved a growth rate of over 30% in their sales revenue.
The number of stores of the top 100 chain retailer increased by 9.8% in 2010, which is the lowest figure since 2006. (A downward trend can be seen in the increase rate from 2006 to 2009, which are 26%, 17%, 24% and 19% respectively.) There are 18 companies, whose store number did not increase or even decrease in 2010. (In 2008, this figure was 7 and in 2009 it was 16.)
Although the growth of the number of stores slowed down, the sales volume of the top 100 chain retailers increased markedly, which showed the effect of their improved operations. The growth of comparable-store sales averaged 10% in 2010 and after adjusting for price changes, it still gained a slight increase.
II. Foreign-funded enterprises enjoy greater development.
Among the top 100 chain retailers, foreign-funded companies, which mainly operate supermarkets, play dominant roles in the industry. 5 major foreign-funded supermarkets opened 140 stores in 2010, an increase of 22% over that of the previous year.
Foreign-funded retailers have maintained their rapid development, with the increase rates in store number and sales revenue almost the same with those of their Chinese counterparts. In 2010, there were 6 foreign-funded companies which realized a growth rate of over 20% in opening new stores in China. (Such a figure was 2 in 2009.)
Domestic-funded enterprises fell behind foreign-funded ones in terms of opening new stores and increasing sales. Some of the foreign-funded
companies even gained an astonishing increase of over 40% in sales or store number in 2010.
III. Department stores developed faster than supermarkets.
Chain retailers, which mainly operate department stores, accounted for one third of the top 100 companies in 2010. 35 retailers, which mainly operate department stores, have achieved average increase rates of 23.2% in sales revenue and 18.5% in the number of stores and, thus, have obviously outpaced supermarket chains. Merger and acquisition has become an important expansion method for department stores, many of which managed to conclude their M&A deals in 2010.
The sales of fast-moving consumer goods (FMCG) retailers, especially supermarkets, increased by 13.8% in 2010, compared with 10.2% in 2009. The number of stores of these companies rose by 4.5% in 2010, which went down compared with 9.5% in 2009. With the exception of a few companies, these FMCG retailers have presented their improvement in business operations.
IV. Online retail is booming.
Among the top 100 chain retailers, 34 companies started their online business in 2010, which achieved a sales volume of around 3 billion RMB in total. Those who have received great page view and sales on their websites are home appliance companies and department stores.
Moreover, rural areas and residential communities have gradually become important markets for the development of retail industry. Many new stores of the top 100 chain retailers are taken into “Rural Markets in Ten Thousand Villages and One Thousand Counties” program to help the government to build circulation system in rural areas. A number of supermarkets and convenience stores in residential communities have achieved greater performance by adding service facilities, postponing close time, and providing more services. Department stores are also adapting their business model to communities, wishing to build community shopping centers.
V. Operating cost experienced great increase.
The greatest difficulty that the top 100 chain retailers faced in 2010 was the increase in operating costs, including house rental and labor cost.
Retail enterprises had to pay higher house rental, which was pushed up by fierce competition for premium locations and the dramatic increase of housing price. Higher house rental has also eaten up the already-limited profit of these companies and slowed down their plan to open new stores. The house rental increased by around 30% after retailers extended their rental agreement in 2010.
The increase of labor cost comes from the increase of salary and the improvement of worker’s welfare. The growth rate of labor cost averaged 15% in 2010, according to statistics sampling of the top 100 chain retailers on the list. Furthermore, companies have increased their spending on recruitment and training due to the high staff turnover rate.
Despite great pressure and challenges, chain retailers gained wonderful opportunities for development in 2010, such as the advance of urbanization and steady development of consumer market.
In 2011, the overall economic environment will promote the prosperity of consumer market, improving salary and social welfare. Meanwhile, our government takes “boosting domestic demands and consumption” as its guiding principle and will make more policies favorable to circulation industry, including the coming “Domestic Trade Development Plan during the Twelfth Five-Year Plan Period”, which is expected to give a strong push to the development of chain retailers.