Kantar: Share shrinking globally for supermarkets, hypermarkets

Hypermarkets and supermarkets will account for less than half the total world trade by 2021, according to a recent report from Kantar Worldpanel. Countries where traditional larger-scale grocery formats are shrinking most include the United Kingdom, South Korea and Peru, where online shopping is growing more rapidly.

Kantar looked at the value share and growth per channel in 2016 among the various shopping formats. E-commerce had 4.6% of the value share growing 26% from the prior year. Discounters like Aldi and Lidl garnered 5.6% of the share, rising 5.15% from 2015. Convenience stores were flat with 4.6% of the share. Formats losing market share were supermarkets and hypermarkets akin to supercenters in the U.S. that garnered 52% of the share, down 0.7% from the prior year.

The share of hypermarkets and supermarkets is predicted to decline to just 48% of global grocery spend by 2021, with e-commerce set to grow to 7.5% and discounters 6.5%, the report states.

“Channels which traditionally dominated the field – supermarkets, hypermarkets, drugstores – are in steady decline worldwide. Step forward the ‘new order’: e-commerce and discounters, cannibalizing the big retailers with their promise of convenience and lower prices.”Technology is fast changing the way people shop and, with e-commerce and discounters set to continue their march at the expense of large format retailers, there is an urgent need for retail reconfiguration across the world,” said Stéphane Roger, global shopper and retail director, Kantar Worldpanel.

The share of grocery shopping conducted online continues to rise, particularly in the world’s most advanced e-commerce markets, such as South Korea, China and the UK. In the UK, online sales grew from 6.7% to 7.3% value share in the last year. British shoppers are second only to South Koreans in the proportion of groceries they buy online.

Kantar found mainland China’s online grocery purchases grew by 53% between 2015 and 2016. South Korea saw its online grocery sales rise 41%, while in Taiwan sales jumped 36% in the same period. Spain and Portugal each saw online grocery commerce rise 29% and 24.3% respectively in the reporting period.

Wal-Mart is investing in its grocery business in China, having recently expanded its stake with J.D.com to allow customers to order online for home delivery.

The slowest growing areas for online grocery commerce included France and the UK, each up 8%, while Argentina rose 7%. Japan and the U.S. were up 5%, according to the report.

Kantar said discounters like Aldi and Lidl were the second-fastest growing channel in 2016 with 5.1% value growth. Discounters saw the highest sales value growth in Colombia up 124% amid the opening of 600 stores in 2016. Latin America is where the majority of growth in discounters occurred in 2016, aside from the United Kingdom where Lidl and Aldi both expanded. Argentina saw growth of 32%, while Brazil and Ecuador recorded growth of 13% and 7% respectively. In the UK discounters grew sales by 11%. Countries that saw lower sales from discounters were France, down 5% and Portugal down 4%.

The report found the large store channel is still growing as of 2016, but at a sluggish rate of 0.7%. Kantar said large-store shopping is up in some areas of Latin America amid an expansion of Wal-Mex, a Latin American subsidiary of Wal-Mart Stores. But the large store formats continue to struggle in the U.K., Spain and Peru against deep discounters. That same is true South Korea where e-commerce is becoming the dominant channel.

Regions were hypermarkets are growing include Argentina, up 25%, Central America up 20%, Brazil and Mexico up 16% and 10%, respectively. However, the format is losing share in South Korea, down 7% between 2015 and 2016, and falling 5% in Peru with 3% losses in the U.K.

Kantar found in developing regions that the traditional cash and carry, door-to-door, and pharmacies are still performing quite well.

“In Africa, for example, where price and connectivity are key factors, traditional trade accounts for an average of 69.4% value share,” Kantar notes. “Spending through this channel is growing faster than in most regions across the globe.”

Argentina is growing this format with a sale value uplift of 27% in 2016. Brazil is also expanding this format with an uptick in sales value of 15%. Outside the Americas, Taiwan saw a 6% bump up in sale values and Vietnam’s sales values grew 5%. Saudi Arabia had the steepest declines in this format with sales values dropping 5% between 2015 and 2016.