Thursday, September 13, 2007

Hypermarkets creating a new shopping culture in China

I thought this article about shopping in China at The Retail Bulletin was a pretty amazing contrast to an earlier report in the WSJ about shopping in India. In India, if you'll recall, organized retail is still the exception rather than the rule, and except for a small population of elite Indians (well, small by percentages -- only about 14% -- but that's still 150 million people), most still do their daily shopping in disorganized mom and pop stores and stalls. In order to capitalize on this massive amount of people and their combined purchasing power, big retail chains have taken to creating organized retail stores that merely look disorganized, selling damaged merchandise alongside new goods, keeping stores hot and stuffy, and making aisles curved and cluttered instead of neat and orderly. In short, in order to cater to the existing shopping culture, retailers have changed the way their stores work.

Now go ahead and read the aforementioned Retail Bulletin article, and you'll see that in China retailers are trying precisely the opposite. China's middle class is growing at an astounding rate and are being influenced by outside forces and Western concepts like never before. Combined with traditional shopping patterns and expectations that are somewhat different from India's, China has been a breeding ground for new hypermarket activity, as, "on average, China's middle class consumers visit hypermarkets every 10 days, making for a frequent-shopping pattern that owners of hypermarkets can bank on for a predictable revenue stream." In fact, according to the article:
TNS Worldpanel (China), which continuously measures household consumption in 20 of China's provinces as well as Beijing, Tianjin, Shanghai and Chongqing, says latest data show that hypermarkets increased their share of the value of China's grocery sector in the country's 15 largest cities from 28.5% in 2005 to 29.8% in 2006. The share in these largely provincial capital cities and municipalities - known as tier 1 cities - has continued to increase this year, reaching 30.1% in the first half of 2007. TNS is predicting a share for hypermarkets of 35% by the end of the decade - compared to the level of just 19.7% seen in 2001.
Most hypermarket operators aren't native, but are instead imports from other countries (Wal-Mart/Trust-Mart (US), Carrefour (France), Tesco (UK), and RT-Mart (Taiwan)), further illustrating a difference between Chinese and Indian shopping preferences.

What's interesting is that both economies are growing rapidly, and both countries still have hundreds of millions of people who will grow wealthier over the next few decades, and will consequently have more expendable income to spend on food, soft/hard goods and luxury items. But where retailers -- even those native to the country -- have had to scale back their plans to Westernize their stores in India, in China the swelling middle class can't seem to get enough of Western-style organized retail activity. It's even more ironic considering that India's mode of government is democratic, and the nation has long appreciated the dynamic of free market economics, whereas China's sometimes stifling Communist government only recently began allowing the foreign investment and competitive business practices essential to making something like a hypermarket work in the first place.

I certainly haven't yet figured out what makes these two countries so different in terms of shopping cultures, but given the sizes of their markets and the speed at which they're both growing, there are probably a lot of smart minds working on the problem at this very moment.

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6 comments:

Paul N Davis said...

In the rush to try and dominate the shopping culture in China many of the western hypermarkets that have a presence in China are losing support and custom at home.

TESCO in the UK are being condemned by experts, members of parliament, celebrities and over 6,000 people for their activity in China.

A boycott is already being pledged against Fresh & Easy ( TESCO ) in the USA, even before they have opened their first store, due to the way they are trading in China.

Selling and butchering live animals for food by TESCO in China will not be accepted by many here in the UK or the USA. As awareness grows and more and more people boycott TESCO and Fresh & Easy, one wonders at what cost do TESCO want to secure their presence in China ?

http://www.turtlesco.com

http://www.thepetitionsite.com/takeaction/518761759

Bill Gerba said...

I think your first claim is unsubstantiated. I'd like to see some data showing both a correlative and causal relationship between any of these firms' expansion into China and their performances at home, as I've never heard that stance before.

As for your soapbox stance (which is obviously why you posted your comment in the first place, as it has nothing to do with the original post), I completely and whole-heartedly agree that animals need to be treated ethically and slaughtered as humanely as possible.

But you do know that meat comes from animals, right?

Paul N Davis said...

"I think your first claim is unsubstantiated ....."

Our online petition clearly shows that it is. Are you suggesting that thousands of signatures of objection, many of those pledging boycott, condemnation by experts and Members of Parliament, shows no direct relationship ?

If you google 'tesco turtle china' you will find many articles and newspaper coverage of this issue.

"it has nothing to do with the original post ....."

The original post talks of ' the influence of western culture' and difference in shopping cultures '.

My post clearly shows that globalisation and difference in culture brings about objection and boycott. I am sorry that you cannot see the conection.

Bill Gerba said...

I'm not saying that there aren't thousands of angry people, I'm just saying that there are still tens of millions of perfectly happy shoppers at those stores, so the few thousand only represent a small minority. Add in the fact that internet petition subscribers are frequently a self-selecting group, and it might be even less significant than that.

As for what Western culture does or doesn't bring, I pose this question to you: the Chinese have been killing and eating turtles for a long, long time. How do you think they did it before Tesco moved in?

Paul N Davis said...

I agree, there are millions of happy shoppers, neither of us know how many of those are aware of what TESCO are doing in China, and if that would change there mind about using TESCO, only time will tell as the awareness spreads.

But forgetting the numbers, there is still the evidence that there is change in the UK and the USA for what TESCO are doing in China.

As for culture, the base question being asked here is " are we happy to fund the activity of TESCO in China ", an activity that would be prosectuted if carried out here, is against expert advice on conservation and animal welfare.

That is why many choose to boycott TESCO, as they do not want their money used in that way.

Carrying out any activity just because it is acceptable in another culture is not an excuse.

Globalisation should try and lead toward common high uniform values therefore helping to build content multi-cultural societies.

Changing values and standards to a minimum to please a culture, just for profit, does nothing toward that aim.

Craig Burnard said...

When content is ‘king'......

There is no stopping the abundant growth of digital signage. A relative newcomer in comparison to the US and Asia, Australia is at the threshold of a digital signage revolution. Fuelled by an ever increasing choice of competitively priced screens and management systems, this revolution has the opportunity to benefit from the lessons learned by the early adopters.

There has been no shortage of casualties. Many early adopters leaped into the bewildering world of digital signage without the strategy required to recover their investment. Entertainment was usually a good enough rationale. Many however, would argue that consumers have countless opportunities to be entertained elsewhere. They have TV, internet, radio, mobile phones, pod casts, the list goes on.

Most consumers are hungry for information. They don’t visit the bank or shopping mall to discover the weather forecast or latest horoscope. Digital signage is arguably the most under resourced and under utilised medium of the decade. We all know that TV sells. Moving visual imagery demands attention and stimulates the senses. And despite declining audiences, big brands still spend money like water in an attempt to get people off the lounge, to deprive them of their cash and credit card limits.

So when faced with strategically located TV screens, directly in line of sight of prospective customers, at point of decision, do so many organisations fail to leverage digital signage? The all too common lament is “Why, we spent so much of the budget on screens and hardware that we had nothing left over for content”. Left over? Well here’s the news - it all starts and ends with content. Content is King! Digital content needs to form an integral component of the marketing mix as with any established media. It’s not about chucking a few images up there from last years’ brochure or some out of focus pics from the trade show.

And here’s another tip. Don’t be lead into the trap set by those technology (as opposed to marketing) wizards suggesting that you fill a single screen with a multitude of conflicting information. This used to be called advertising ‘noise’. If you must communicate five messages, then don’t be tempted to bundle them together on one screen! Five individually sequenced messages will have far greater impact and longevity. Isn’t this the whole rationale for digital signage in the first place?

Digital signage as a marketing or branding exercise is really no more than an interactive billboard. When next in the car or on the train work out which billboards grab your attention. Most likely it will be those that are the most simple and to the point. Consumers don’t read clutter.

And successful billboard campaigns don’t evolve overnight. A successful campaign is driven by analysis of customer needs, and executed through careful planning, selective imagery and strategic delivery.

Start thinking of digital signage in these terms and your organisation will be in the best possible position to profit from your investment.

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