Growth in a Time of Uncertainty - PowerRanking 2015 China

  • ID: 3829921
  • Report
  • Region: China
  • 52 Pages
  • Kantar Retail
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FEATURED COMPANIES

  • Auchan
  • C-Store
  • Mars
  • Orion
  • Tesco
  • Wilmar
  • MORE
Through its benchmarking studies the publisher has provided insight into industry best practices in category management and trade promotion management for the past 19 years.

The PoweRanking® survey originated from these studies with the objective of researching and benchmarking how retailers and manufacturers view their relationships with each other.
The study reveals which retailers and manufacturers are rated highest in performance by their trading partners, thus setting benchmarks for others.

To accurately reflect the percentage of respondents ranking each company among the top three, the results were tabulated on a two-year rolling basis. Additionally, we carried out follow-up qualitative interviews among a diverse mix of manufacturers and retailers to provide further insight. The PoweRanking report consolidates or separates companies based on howthey are perceived by their trading partners. The methodology takes into account mergers and acquisitions and combines operations into the parent company where appropriate for this year versus one year ago. Where retailers and manufacturers operate largely as independent companies, they are treated as such in the data. For example, the 2015 survey still treats Tesco China and CRV as separate retailers.

PoweRanking Composites:

The 2015 PoweRanking survey includes the overall PoweRanking® Composite, which is created by weighting the three strategic rankings equally with the five business fundamental rankings (see previous page) to place more importance on the strategic rankings. This reflects the importance of a sound strategy.

Strategic Composite:

The Strategic Composite combines the three strategic measures (see previous page) into an overall composite to provide better insight into which manufacturers and retailers are the most strategically important to their trading partners.

Business Fundamentals Composite:

The Business Fundamentals Composite combines the five fundamental areas of business (see previous page) into an overall composite. This reflects the retailers’ and manufacturers’ opinions of their trading partners. As a dynamic monitor, the PoweRanking® survey measures new market trends constantly. the publisher added the digital marketing measure in 2011. In-store support and execution, new product launch and promotion (for manufacturers) and growth and profitability (for retailers) are unique to the China PoweRanking®. These measures are not included as part of the PoweRanking® Composite.
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FEATURED COMPANIES

  • Auchan
  • C-Store
  • Mars
  • Orion
  • Tesco
  • Wilmar
  • MORE
1. Introduction

2. Executive Summary

3. Key Findings

- Manufacturer Rankings
- Retailer Rankings
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FEATURED COMPANIES

  • Auchan
  • C-Store
  • Mars
  • Orion
  • Tesco
  • Wilmar
  • MORE
Compared with 2013 and 2014, retailers value manufacturers differently. With the continued slowdown in the Chinese economy, this should hardly come as a surprise. While organic growth, distribution, new stores and product choice drove past growth, we now see retailers making moves to win more with existing shoppers. Since volume growth is lagging, Chinese retailers are realizing that value growth – through powerful brands, in-store execution, and tailored shopper communication – will be a key success factor. As a result, retailers need manufacturers’ help to create in-store demand, thus paving the way for retailer-supplier collaboration on category management, shopper insights, and innovation. Specifically, retailers are looking to manufacturers to lead consumer understanding in these areas:

1. Good marketing: Building strong brands

Retailers realize they need to win with existing shoppers as much as they need to attract new shoppers. This, in turn, means they need to succeed with winning brands that can have a halo effect across the store.

2. Local understanding: Having the right product

China is not a homogeneous market. Retailers expect suppliers to understand local shoppers and to differentiate by brand, assortment, promotion, and pricing based on those shoppers insights. The dictum of “retail is local” remains as true as ever, and increasingly so in the complex China landscape.

3. Efficiency: Managing the cost of doing business

Retailers are aiming to create greater efficiencies in three key areas:

- Multiformat management
- Supply chains
- Brand proliferation and innovation

As the market matures, we expect retailers to shift their focus from revenue to efficiency in managing not only costs but also return on capital.

Standing still is not an option: Making the top 10 is more difficult

Local China companies are challenging the dominance of multinationals in setting the pace. We see familiar names in the rankings, but the gap is closing. More companies are being mentioned and Chinese businesses are becoming strong challengers. On the retailer side, we see RT-Mart overtaking Walmart, CRV remaining a strong player, Yonghui moving up the rankings, and homegrown eTailer JD.com entering the top 10. We cannot overstate the need for retailers and manufacturers to collaborate and communicate effectively in this fast-changing landscape.

Key Points

- More than half of responding retailers regard most metrics as “extremely important.” However, strategic metrics came out on top – indicating that retailers need manufacturers to help them set direction. When so many metrics are viewed as “extremely important,” it is clear that retailers are likely to value prioritizing objectives and setting direction.
- Interestingly, important consumer brands has jumped in importance. This supports other research showing that volume growth in China is flat, but value growth remains strong, indicating a trend toward branded (and specifically, premium branded) products. Retailers realize they will succeed if they win with premium brands. Furthermore, they see the importance of differentiating their offer on premium brands, thus creating a need for shopper marketing and marketing innovation in general.
- Retailers also see the growing importance of shopper insights and shopper marketing programs in dealing with manufacturers. Retailers must become more efficient in reaching consumers. With growth now harder to find, being more effective in targeting existing shoppers is key. Generally more efficient categories will become important in driving financial metrics – not just revenue and profitability – but overall return on capital employed. As result, launching new products has slipped in importance.
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Suppliers:

- COFCO
- Coca-Cola
- Colgate-Palmolive
- Danone
- Johnson & Johnson
- L'Oreal
- Mars
- Master Kong
- Mead Johnson
- Mondelez
- Nestlé
- Orion
- Pepsico
- Procter & Gamble
- Uni-President
- Unilever
- Wilmar
- Wrigley
- Wyeth
- Yili

Retailers:

- Auchan
- C-Store
- CRV
- Carrefour
- FamilyMart
- JD
- Metro
- RT-Mart
- Tesco
- Tmall
- Walmart
- Watsons
- Yihaodian
- Yonghui
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