The Growth of Asia Food Retailing Opportunities and Implications
BMI View: The spread of organised grocery retail will continue to gather pace among Asian Pacific economies. This trend, however, is particularly pronounced in the region’s emerging industry s, as rapid urbanisation and an ongoing liberalisation of retail foreign direct investment (FDI) regulations encourage growth in organised grocery retail revenues . Examining the relative attractiveness of organised grocery retail industry s, we highlighted three distinct groups in the Asia Pacific region and concluded that the most exciting long-term growth opportunities lie with the underdeveloped retail industry s of India, Indonesia and Vietnam.
As the concept of organised retail gets more entrenched in emerging Asian economies, we also aim to examine in this report the impact of an ongoing spread of organised retail on various key stakeholders, which includes traditional retailers, consumers, suppliers as well as farmers.
While we see the proliferation of organised retail as a blessing for emerging industry consumers, providing benefits such as cost savings and the assurance of quality, the same certainly cannot be said for traditional retailers and smaller suppliers as they face increasing pressure on their industry share and bottom line.
In addition, with the world’s leading organised grocery retail players all vying for a share of the Asian retail pie, we assess the relative growth prospects of global retailers in emerging Asian retail industry s and take into account three key considerations, namely the retailers’ existing Asian exposure, their growth strategies in Asia and financing capacities. In our opinion, Wal-Mart and Tesco are the most well-positioned in Asia, given their growth strategies and massive financing capacities, and should continue to enjoy considerable success from their expansionary efforts going forward.
Key Takeaways • Japan, Australia, South Korea, Hong Kong, Singapore and Taiwan: Developed organised grocery retail industry s are fast approaching saturation point and will gradually lose their appeal in the near-tomedium term.
• China, Thailand and Malaysia: Rapid urbanisation and continued FDI translate into fantastic long-term opportunities for organised grocery retail revenues .
• Indonesia, Philippines, Vietnam, India, Cambodia and Pakistan: Underdeveloped nature of organised grocery retail segments leave massive scope for growth and a gradual liberalisation of FDI regulations should further stimulate organised grocery retail revenues growth.
BMI Market Projections • China Organised Grocery Retail Sales Projection To 2015 = Growth of 51.6%
• India Organised Grocery Retail Sales Projection To 2015 = Growth of 91.3%
• Indonesia Organised Grocery Retail Sales Projection To 2015 = Growth of 53.4%
• Vietnam Organised Grocery Retail Sales Projection To 2015 = Growth of 54.9%
Food Retailing Industry
Executive Summary ................................................................................................. 7
The Growth of Asia Food Retailing Opportunities and Implications...................................... 7
Key Takeaways ....................................................................................................................................................... 7
BMI Market Projections ............................................................................................................................................ 7
Chapter 1 ................................................................................................................ 8
Asia Pacific Organised Retail Segments ...................................................................................... 8
Identifying Relative Value and Opportunities............................................................................................................. 8
CHART: A Three-Tiered Hierarchy ............................................................................................................................................8
Organised Retail as a Proportion of Grocery Retail Sales (%) (2011 versus 2020)
First Tier: Modern Retail Well-Entrenched, But Growth Could Start To Stagnate .................................................... 8
CHART: Developed Industry s Leading The Pack......................................................................................................................8
2011 Gross Domestic Product per capita (US$) and Proportional Contribution of Organised Retail to Grocery Retail Sales in 2011 (%)
Second Tier: Exciting Long-Term Rewards on Offer ................................................................................................ 9
CHART: Very Dynamic Growth....................................................................................................................................................9
China, Malaysia & Thailand: Gross Domestic Product per capita % chg y-o-y & MGR Sales Growth, in local currency terms, % chg y-o-y
Third Tier: Underdeveloped MGR Segments Leave Massive Room For Growth ...................................................... 10
TABLE: Total Mass Grocery Retail Sales, in local currency terms........................................................................ 10
INDICATORS: Australia (AUD bn), China (CNY bn), Hong Kong (HKD bn), Indonesia (IDR bn),
India (INR bn), Japan (JPY bn), South Korea (KRW bn), Malaysia (MYR bn), Philippines (PHP bn),
Thailand (THB bn), Taiwan (TWD bn), Vietnam (VND bn)
Chapter 2 .............................................................................................................. 12
Implications Of An Ongoing Spread Of Modern Retail ....................................................... 12
Traditional Retailers Have The Most At Stake......................................................................................................... 12
Impact On Traditional Retailers .............................................................................................................................. 12
CHART: Growing Dominance of Modern Retailers.........................................................................................................12
LHS: Hong Kong Mass Grocery Retail Sales, HKD bn and RHS: Singapore Mass Grocery Retail Sales, SGD bn
Impact On Suppliers And Farmers ......................................................................................................................... 13
Impact On Consumers .......................................................................................................................................... 13
Chapter 3................................................................................................................ 15
China Mass Grocery Retail Segment Outlook........................................................................... 15
Holding Massive Long-Term Appeal........................................................................................................................ 15
CHART: Rising Affluence Drives Spread Of Modern Retail ........................................................................................ 15
China - LHS: Gross Domestic Product per capita, USD and RHS: Mass Grocery Retail Sales, % chg y-o-y
SWOT: CHINA MGR INDUSTRY.......................................................................................................................................................15
CHART: Discount Store Sub-format Set To Outperform .............................................................................................. 16
China - MGR Sub-Sectors Growth Projection , % chg y-o-y
TABLE: CHINA MGR INDICATORS – HISTORICAL DATA & FORECASTS ..................................................................................... 16
INDICATORS: Supermarkets (CNY bn), Hypermarkets (CNY bn), Discount stores (CNY bn),
Convenience stores (CNY bn), Total mass grocery retail segment (CNY bn), Total mass
grocery retail segment growth, % y-o-y
TABLE: Key Players In China’s Mass Grocery Retail Segment ........................................................................................ 17
COMPANY: Carrefour, Wal-Mart, Lianhua Supermarket Holdings, RT -Mart, China Resources
Vanguard supermarkets, Dashang Group, Shanghai Bailian Group, Beijing WuMart,
Metro Jinjiang, Beijing Hualian Hypermarkets, Hualian Supermarket Co, Tesco, CP Seven Eleven,
Auchen, KPI Co Ltd
4 Business Monitor International Ltd
Asia-Pacific Food Retailing: Opportunities and Implications
India Mass Grocery Retail Segment Outlook............................................................................ 18
Indian MGR Sales Set To Soar As MGR Segment Gradually Liberalises .................................................................. 18
CHART: Very Low Incomes.........................................................................................................................................................18
2011 Gross Domestic Product Per Capita, USD ’
SWOT: India MGR INDUSTRY........................................................................................................................................................18
Looking Ahead ....................................................................................................................................................... 19
TABLE: India MGR Indicators–Historical Data & Projections ........................................................................................ 19
INDICATORS: Supermarkets (INR bn), Hypermarkets (INR bn), Discount stores (INR bn),
Convenience stores (INR bn), Total mass grocery retail segment (INR bn), Total mass
grocery retail segment growth, % ch g y-o-y
TABLE: Key Players In India’s Mass Grocery Retail Segment ......................................................................................... 19
parent COMPANY: Pantaloon Retail, Shopper’s Stop, RPG Enterprises Retail,
Consumer Protection and Guidance Society, Tata Retail, Aditya Birla Retail, Reliance Retail,
Metro Cash & Carry, Nilgiri’s Franch ise Pvt Ltd, Godrej Aadh ar, Ad ani, Home Stores Ind ia Ltd
Indonesia Mass Grocery Retail Segment Outlook .................................................................... 21
Convenience And Supermarket Segments To Outperform Through 2015.................................................................. 21
CHART: One of the Gang!............................................................................................................................................................ 21
Real Gross Domestic Product Growth, % chg y-o-y
SWOT: Indonesia MGR INDUSTRY..............................................................................................................................................18
CHART: Supermarkets Leading Retail Sales Growth.................................................................................................... 22
Supermarkets, Hypermarkets and Convenience Store Sales Growth, % chg y-o-y
TABLE: Indonesia MGR Indicators–Historical Data & Projections .............................................................................. 22
INDICATORS: Supermarkets (IDR bn), Hypermarkets (IDR bn), Convenienc e stores (IDR bn), Total mass
grocery retail segment (IDR bn), Total mass grocery retail segment growth, % ch g y-o-y
TABLE: Key Players In Indonesia’s Mass Grocery Retail Segment ............................................................................... 23
parent COMPANY: PT Carrefour Ind onesia, PT Sumber Alfaria Trijaya Tbk, PT Hero
Supermarket Tbk, PT Matahari Putra Prima Tbk, PT Ramayana Lestari Sentosa Tbk,
PT Ind omaret Prismatama, PT Lion Superind o, PT Makro Indonesia **, PT Alfa Retailind o Tbk
Vietnam Mass Grocery Retail Segment ..................................................................................... 24
BMI Sees Plenty Of Upside In Vietnam’s MGR Segment ........................................................................................... 24
CHART: Economic Boom Lifts Purchasing Power............................................................................................................. 24
Vietnam: Gross Domestic Product per capita, USD (LHS) and Real Gross Domestic Product Growth, % chg y-o-y (RHS)
SWOT: Vietnam MGR INDUSTRY.................................................................................................................................................. 24
TABLE: Vietnam MGR Indicators–Historical Data & Projections .................................................................................. 25
INDICATORS: Supermarkets (VND bn), Hypermarkets (VND bn), Convenienc e (VND bn),
Total mass grocery retail segment (VND bn), Total mass grocery retail segment growth,
% ch g y-o-y
TABLE: Key Players In Vietnam’s Mass Grocery Retail Segment ................................................................................... 25
parent COMPANY: Saigon Co-op, Metro Cash & Carry Vietnam, CP Group, Groupe Casino,
Hanoi Trade Corporation, Vietnam National Textile And Garment Group, Saigon Trading
Corporation, Dairy Farm International Holdings, In timex Hanoi, An Ph ong Firms
Chapter 4................................................................................................................ 27
World Retailers’ Prospects In Asia....................................................................................... 27
Wal-Mart and Tesco’s Asian Prospects Looking Particularly Bright........................................................................ 27
Asian Exposure Key To Supporting Future Growth ................................................................................................ 27
CHART: Tesco: An Enviable Asian Profile............................................................................................................................ 27
Asia Sales, USD mn
Wal-Mart and Tesco Well-Poised In China... .......................................................................................................... 27
CHART: Limited Appetite For Carrefour’s Higher-Value Positioning ...................................................................... 28
Selected Countries Gross Domestic Product per capita (US$), 2011
...And In Emerging Asia ......................................................................................................................................... 28
CHART: Wal-Mart & Tesco Have Strong Financing Capacities..................................................................................... 29
Selected Retailers Debt-To-EBITDA Ratio
Wal-Mart and Tesco’s Strong Financial Clout To Support Expansionary Ambitions................................................ 29
Chapter 5................................................................................................................ 27
World Retailers’ Emerging Industry Exposure ...................................................................... 30
Big Western Retailers Need More EM Exposure.................................................................................................... 30
CHART: Still A Lot More That Can Be Done..........................................................................................................................30
Selected Retailers Emerging Industry Proportional (%) Contribution To Annual Sales
CHART: The Action Is Clearly In Emerging Industry s ....................................................................................................... 30
Selected Retailers Revenue Growth 5 Year Geometric (%) (Average)
Similar EMSI Scores ............................................................................................................................................. 30
Russia Exemplifies What Can Be Done In EMs ..................................................................................................... 31
World Firms Profiles....................................................................................... 32
Wal-Mart Stores.................................................................................................................... 32
Company Overview ............................................................................................................................................... 32
Strategy ................................................................................................................................................................. 32
SWOT: wal-mart analysis.........................................................................................................................................................32
Emerging Industry s Increasingly Important .............................................................................................................. 33
TABLE: Wal-Mart Annual Sales & Contribution By Business Unit/Region (%)–Fiscal Year To January...... 33
INDICATORS: US Sales, USD bn, International Sales, USD bn, Sam’s Club, USD bn, US Sales Contribution, %,
International Sales Contribution, %, Sam’s Club Contribution, %
Tesco PLC ............................................................................................................................... 34
Company Overview................................................................................................................................................ 34
Strategy.................................................................................................................................................................. 34
CHART: Mature ..............................................................................................................................................................................34
UK Mass Grocery Retail Sales - from 2002 to 2015
SWOT: Tesco analysis.................................................................................................................................................................34
Emerging Industry s Growth Crucial ......................................................................................................................... 34
South East Asia Exposure Key To EM Strategy ..................................................................................................... 34
Precious Scope For Retail Growth Domestically..................................................................................................... 35
TABLE: Tesco Annual Sales–Fiscal Year To February.................................................................................................... 35
INDICATORS: Group Sales (including Value Added Tax), British Pound bn, Growth, % ch g y-o-y.................................... 35
sales by geographic breakdown, excluding value added tax: UK Sales, British Pound bn, Rest of Europe
Sales, British Pound bn, Asia Sales, British Pound bn, US Sales, British Pound mn
Carrefour.............................................................................................................................. 36
Company Overview................................................................................................................................................ 36
Strategy ................................................................................................................................................................. 36
CHART: Discount Challenge Affecting Already Ailing Hypermarket Segment................................................... 36
France Hypermarket Sales - from 2003 to 2015
SWOT: Carrefour analysis.......................................................................................................................................................36
Revamp Strategy Necessary, Stronger Focus On Price To Follow? ...................................................................... 36
CHART: Carrefour’s Falling Margins.................................................................................................................................. 37
Operating Profit Margin (%)
TABLE: Carrefour Sales By Business Unit/ Region (EUR bn)–Fiscal Years To December................................. 37
INDICATORS: Carrefour Franc e Sales, Carrefour International Sales, Maxidisc ompte
Carrefour top five industry s by annual sales proportional contribution to group revenues
(%) - fiscal years to December: Franc e, Spain, Brazil, Italy, Belgium
CHART: France Reliant, Brazil and China Crucial...........................................................................................................38
Carrefour Top Ten Industry s By Annual Revenue Contribution (%) - December 2010 Year End
Carrefour Re-Focusing EM Strategy On Core Industry s .......................................................................................... 38
Carrefour Arguably Has Most Riding On EMs ........................................................................................................ 38
Casino Guichard-Perrachon.................................................................................................. 39
Company Overview................................................................................................................................................ 39
Strategy.................................................................................................................................................................. 39
CHART: Growth Will Have To Come Mostly From EMs.................................................................................................... 39
France Mass Grocery Retail Sales (EUR bn), 2001 - 2015
SWOT: casino analysis...............................................................................................................................................................39
CHART: Changing Focus.............................................................................................................................................................40
Casino France Sales Breakdown
France Weakness Holding Back Growth ................................................................................................................ 40
CHART: Casino Holds Steady As Revamp Hits Carrefour’s Margins........................................................................ 40
Selected Retailers Historical Operating Profit Margin (%)
EM Focus Pivotal .................................................................................................................................................. 40
TABLE: Casino Sales By Business Unit/Region–Fiscal Years To December............................................................ 40
INDICATORS: Franc e Sales, Euros bn, Latin America Sales, Euros bn, As ia Sales, Euros bn, Other
International Business Sales, Euros mn casino proportional contribution to group sales by
region/business unit (%) - fiscal years to December: Franc e Sales, Latin America Sales,
Asia Sales
