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Retail for Leisure Food in Second and Third Tier Cities in China

In China, the consumption for food remains the biggest consumption sector in year 2012. The rising in food prices poses much pressure for Chinese households. During the twelfth five year plan, the food consumption market will still have a steady growth. The retailing volume and the GDP of food and beverage industry will grow at a pace of 10% per year.

Leisure food is defined as the food that people eat in their leisure time or when they are having a rest. With the rise in living standards, leisure food has received more and more attention, and is becoming the necessary consumption good for common people.

From year 2003 to year 2007, the retailing industry of leisure food in China saw an average annual growth of more than 20%. In 2009, the total retailing value of leisure food has exceeded 8,020 million dollars.

Currently, the market in China’s first-tier cities is concentrated, and most retailers are chain food retailers and supermarkets or hypermarkets. Also, the competition between domestic food and imported food is also fierce.

In second and third tier cities like Chengdu(成都) and Dalian(大连), there are smaller retailers, and the market is not that concentrated. Local chain retailers and big supermarkets have the most market share, and develop at a relatively faster pace. The competition for domestic leisure foods is fierce, while imported foods are more frequently seen in supermarkets. Second and third tier cities will be a very potential world for future leisure food retailers.

Compared with local retailers, national retailers have comparative advantage in market share, goods varieties, sales services, human resource, logistics and information administration. Thus, they will certainly take the lead in the market. On the other hand, local retailers know more about the tastes of local people, and generally have more recognition from the folks. Thus they are also ineligible.

It is almost an inevitable trend that the food retailing industry in second and third cities will finally become chained. In local markets, there are already some food retailers that have some popularity, but there is still no big retailer that has national influence and reputation. Thus, the food retailers need to combine the characteristics of local food retailers, and renew the classifications of goods to better satisfy the need of consumers while making more studies into the local people’s special tastes, and quickly expand their retail network.

Edited by Amy Wang from Daxue Consultant China




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FG China

China FG

Credit Photo: Epday