A quick look at the state of grocery retail in Asia with a focus on the imminent growth of online.

1. Online Grocery Shopping In Asia
Leah Kinthaert 2014

2. Between now and 2015, there will be 500 million
new internet users from emerging markets
These new users will
interact with the Internet
for the first time in a
markedly different
manner: through mobile
devices instead of
traditional desktop PCs.
More new users are
coming online from Asia
than anywhere else.
Most new internet users coming from Asia
Google estimates that
between now and 2015,
there will be 500 million
new Internet users
from emerging markets,
compared to only 15
million new users from
the US. 15 million new ones
from the US.
500 Million New Users
2014 Leah Kinthaert
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3. 2014 Leah Kinthaert
Google Map of Internet Users in 2000
Figure one: Internet Users in
2000.
An overwhelming majority of
internet users came from the US
in 2000.
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4. 2014 Leah Kinthaert
Google Map of Internet Users in 2010
Figure two: Internet Users in
2010.
Asia, South America and Africa
show enormous growth in
internet use.
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5. 2014 Leah Kinthaert
Shopping Patterns in Asia
Shifting to Online
2014 Mastercard
Survey
And almost 60%
of those in China
use their
smartphones.
said that 2/3 of
consumers in
Asia-Pacific
shop online.

6. Grocery Retail is Growing in Asia
2014 Leah Kinthaert
As urbanization is
accompanied by a rapid
modernization of the retail
landscape, the number of
modern grocery outlets in
Asia-Pacific is predicted
to rise by 127,000, with
most of the growth
coming from China.
Urbanization increases retailPopulation to reach over 1.7 billion
Chinese and Korean
retailers recorded strong
benefitting from robust
economic growth and the
move towards a
concentration of the retail
environment in their
domestic markets.
Chinese and Korean retailers grow
In the 10 countries with the
largest urban populations in
Asia-Pacific, the urban
population is forecast to
grow by over 190 million
inhabitants between 2012
and 2017, to reach over 1.7
billion.
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7. 2014 Leah Kinthaert
Grocery retail landscape: By Country
•China
The enormous grocery retail market in China is estimated at U.S. $285 billion and is growing at a rate
of 7% annually due to steadily rising disposable incomes and increasing urbanization.
Traditional-style markets account for 68% of the market. Local customization and price sensitivity is
key.
•Hong Kong SAR
The grocery market in Hong Kong is mature with two main local players. Land is too scarce for
hypermarkets and car ownership is low. Traditional style markets are declining. Current trends are
towards longer opening hours and the sale of convenience foods which cater to the longer hours
people are working.
•India
Despite a large population, increasing wealth and economic growth, the Indian retail market is
underdeveloped. Traditional grocery markets account for 98% of grocery retail, although this is
changing. The Indian middle class is growing. Problems within the sector include its slim profit
margins and highly competitive nature. It is fragmented and there is little brand awareness. Foreign
players are few due to tax implications but the government is beginning to address this issue.

8. 2014 Leah Kinthaert
Grocery retail landscape: By Country
•Indonesia
Consumer confidence in Indonesia has been dented by such issues as the Bali bombings, the Asian
tsunami, bird flu and fuel prices. The grocery market 99% traditional. Modern retailers are
concentrated on Java and are characterized by hyper, super and mini markets all competing on price.
Average prices have reduced as a result. There are few foreign players due to onerous regulations.
•Japan
This is a mature grocery retail market second only in size to the U.S. It is not growing. Japan has not
fully recovered from economic downturn and there have recently been some food safety scares.
Foreign players have not adapted well to the Japanese market. Hypermarkets tend not to be
successful as the Japanese prefer fresh food and shop frequently rather than in bulk. There has been
some growth in the convenience store sector.
•Malaysia
Increasing urbanization and Westernization have led to growth in the grocery retail market at the
expense of the older traditional, independent retailers. Both local and multinational players have been
successful in Malaysia. Because consumer tastes are dictated along ethnic lines the market is
fragmented. Hypermarkets and convenience stores are popular.

9. 2014 Leah Kinthaert
Grocery retail landscape: By Country
•Singapore
Grocery retailing in Singapore is like that of Western countries. Modern retailers dominate (70%) and
there is little growth opportunity due to low population growth. With rising affluence, however,
Singaporeans are demanding more convenience and higher quality goods. Supermarkets
predominate but there has been a rise in convenience stores due to busy lifestyles. Online grocery
shopping is beginning to make inroads, most notably with the online store redmart.com.
•South Korea
With a stable population, growth in the grocery retail sector in South Korea is expected to be only
about 2%. Areas where there is expansion include health, well-being and organic product lines.
Western-style products are beginning to become more popular. Hypermarkets are taking a bigger
share as car ownership increases and people buy less frequently and in bulk. Traditional grocery
markets still dominate at 61% of the total.
•Thailand
There is significant growth in the retail market in Thailand at around 10% annually. Demand is
increasing for packaged and processed food. Hypermarkets and supermarkets are mostly clustered
around Bangkok. Supermarkets are beginning to be squeezed out by the hypermarkets and
convenience stores. Traditional grocery markets still dominate at 66% of the total and these retailers
have gained government protection.

10. Online Grocery in Asia
2014 Leah Kinthaert
Online grocery retailing is still in a nascent phase across most of the Asia Pacific region, as less
than one-in-10 shoppers regularly access grocery retail websites
Still in Nascent Phase
South Korea is a notable exception, however, as close to 80% of grocery shoppers there
regularly purchased grocery products online in 2012, and the frequency of purchasing increased
to nine times a month from seven times a month in 2011.
The exception: 80% of South Koreans purchase groceries online
Most of the retailers across the region see opportunity in online retailing and are investing in
online strategies. Consequently, grocery retailers’ digital footprint will expand in the year ahead
as they identify new ways to engage and sell profitably through online channels.
Digital Footprint to Expand in 2014
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11. 2014 Leah Kinthaert
Overall Online Grocery Market by Category

12. 2014 Leah Kinthaert
“Brands absolutely need an online retail
presence” John Fang, China Market Research Group
Worries about pollution may be making consumers
shift to online shopping even faster,” Fang says. “So
brands absolutely need an online retail presence to
reach their customers where they are looking to
buy. And increasingly, retailers need to be accessible
on mobile devices, as purchases are starting to shift
from home computers to phones and tablets.”
While pointing out that China’s broadband penetration
is only 30%, McKinsey predicts the country’s online
sales could reach $650 billion by 2020.

13. 618 million internet users
Online spending growing at 40-50% per year compared to just 12-14% per year for overall retail
according to John Fang of China Market Research Group
301.9 shop online (half), although some estimates now say 2/3
Alibaba 76% of mcommerce sales
500 million are mobile users (80%)
Mobile Growing 141% YOY
Alibaba 50% of ecommerce sales
2014 Leah Kinthaert
Overview of eCommerce in Asia
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14. How is eCommerce in China
Different from Western Countries?
2014 Leah Kinthaert
Only a small portion of Chinese e-tailing takes place directly between
consumers and retailers.
This provides the impression of a high-energy shopping atmosphere
e-tailing stimulates consumption that would not otherwise take place.
Chinese online shoppers prefer that each click on a site opens a new
window
Most eCommerce occurs on digital marketplaces
Chinese shoppers' behavior is quite different from western
countries
Chinese shoppers favor crowded websites with information and links
all packed into one page
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15. In general, Chinese consumers are very price
sensitive and right now, Chinese e-commerce
is primarily a promotion driven business.
Shoppers do not yet value the concept of "time
is money." Whereas, in the western
countries, shoppers are willing to pay
considerable fees for expedited delivery, this
behavior in China is rare.
China's e-commerce industry is experiencing a
transition from online shopping as more of a
niche market towards online shopping
becoming a lifestyle. It is evolving from tasting
new, special, and hard-to-find products to
buying daily consumption needs such as
food, drinks, toothpastes and shampoos.
2014 Leah Kinthaert
The Evolution of Online Grocery in China
Price
ProductsPromotion

16. Tmall.com - Alibaba-owned Tmall is the market leader. It sells pretty much anything.
Suning.com – Sells appliances.
Dangdang.com - Its main focus is still on gadgets and books leaving it vulnerable to the growth of Suning and its
rival Jingdong
Jingdong (formerly 360Buy.com) - has expanded aggressively to outpace its main rival Dangdang. The two
merchandising mortal enemies cover much of the same area: Mainly electronics and home appliances, but also
books and clothing.
Amazon.cn - Close behind is the US company whose Amazon China site, which has the very short URL
Z.cn, focuses on its core products more in the manner of a western company.
2014 Leah Kinthaert
China’s Top 10 eCommerce Sites
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17. Vancl.com - This is China's biggest clothing e-tailer, selling only its own-brand clothing in the
manner of, say, GAP, or Uniqlo.
Coo8.com - They sell electrical appliances
YiHaoDian.com - Walmart-backed YiHaoDian is the country's largest food and consumables
online retailer.
51Buy.com - Sells mostly gadgets and home appliances.
NewEgg.com.cn - Sells electronics.
2014 Leah Kinthaert
China’s Top 10 eCommerce Sites
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18. 3 Major Online Grocery Players
2014 Leah Kinthaert
Majority owned by Walmart since 2012. Came online in 2008. Yihaodian saw close to $1.9 billion in sales last year,
which marks a new high. That also brought it into an exclusive club of only five sites in China to have rung up over
RMB 10 million ($1.64 billion) in transactions in a single year.
Yihaodian
(main rival to Jingdong, owned by Alibaba) collective $159 billion in sales revenue in 2012. Tbao is an
ebay/Amazon of sorts where third parties sell food. Complaints about spoiled or mislabeled food
purchased from this site may lead to more regulation in the future.
Tmall and Tabao
(formerly 360 buy) Relatively new in the food market and challenging the dominance of Walmart-
majority-owned Yihaodian. Jingdong stocks some interesting imported items that most regular brick-
and-mortar stores wouldn’t have. Saw $9.85 billion in sales in 2012.
Jingdong
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19. The End
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