Chinese manufacturers and retailers are giving their multinational competitors a run for their money, according to retail consultancy Kantar Retail’s China PoweRanking 2015.
More than 430 retailers and manufacturers in China were surveyed for the study, which revealed the retailers and manufacturers whose trading partners have ranked them highest in performance.
In the retailer rankings, Chinese retailer RT-Mart pipped Wal-Mart Stores Inc. to the post by coming in first, leaving CRV, Yonghui, and Carrefour to fill out the rest of the top five positions, in a locally dominated ranking.
Chinese manufacturer Yili experienced a dramatic improvement, rising from number 16 to number eight, scoring highly on its clearly articulated strategy, perceived growth potential in modern trade, marketing innovation, and in-store support.
The top manufacturer positions were still held by multinationals, with Procter & Gamble Co., Unilever, Coca-Cola, Wyeth and Mars making up the top five, due in part to their mature management. However, the report noted that local Chinese companies are challenging the dominance of multinationals in setting the pace, with the gap between domestic and international companies steadily closing.
The survey noted that Chinese manufacturers and retailers are seen as being better positioned to execute a successful in-store brand strategy, leverage shopper insights and exploit lower-tier city growth, which was cited as a key battleground for growth in China.
It was not just domestic companies that saw significant improvements in their rankings; Mars entered the top 10 manufacturer rankings for the first time with a leap up to number five. The report attributed its success to shopper insights strategy, clear shopper marketing and a focus on business fundamentals.
Another key battleground for growth noted by the report was companies’ omichannel and e-commerce strategy. Understanding consumer needs and prioritizing channels was seen as being the key to success.
Homegrown Chinese e-tailer JD.com entered the top 10 retailer rankings for the first time, coming in seventh and being the only online retailer. They were reportedly catapulted by increasing sales in the rapidly growing e-commerce channel. JD.com’s success proves the importance and quick progression of Chinese e-tailers in a short space of time, according to the report.
As a result of the slowdown in the Chinese economy, and subsequent lag in volume, retailers were seen to be changing tactics. Gone is the traditional model of organic growth through store openings and increased product choice, once prevalent in China, with value growth by improving ties with existing shoppers now being preferred, according to the study. The survey showed that retailers are valuing manufacturers differently, and are looking for them to lead on “good marketing,” “local understanding” and “efficiency.”