Private Label in China 2010: A Market Analysis


December 2, 2010
82 Pages - SKU: ACS6002933
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Countries covered: China

This report covers the existence and development of private label (otherwise known as own brand and store brand) goods within the retailing industry in the People’s Republic of China, and includes coverage of both food and non-food products offered as private label by leading retail chains in China.

KEY REPORT FEATURES

This recently updated report includes:

  • An historical analysis of the development of private label in China to date by sector;
  • Case studies and examples of private label lines among key retail companies within the key retail sectors;
  • Case studies of private label innovation, packaging design, co-branding, multiple availability, copyright infringement, quality issues, online sales, segment penetration, shelf placement and price point competition with leading national/global brands in each sector.
  • Analysis of consumer and supplier responses to the development of private label;
  • An overview of China’s total retail market with sales statistics up to 2010;
  • Analysis of the total historical private label market t value up to 2009 and forecast growth up to 2014;
  • Store checks giving examples of private label goods in key sectors, including product description, brand name, retail company, pack size and price;
  • Overview of China’s demographics and macroeconomics.


Additional Information

Executive Summary

 Proprietary brands seem to have been adopted quite early by domestic retailers, contrary to the popular belief that foreign retailers were to first to introduce private label into the country. Based on available sources, Shanghai Kaikai Department Store was the first to introduce a store brand in 1987, under the Kaikai name, for a line of apparel. Perhaps the health and beauty chain store belonging to Hong Kong’s Hutchison Whampoa Ltd., Watson’s, was next. Watson’s entered China in 1989.

Another local retailer, in this instance Nong Gong Shang, also had an early start with private label with the introduction of its first private label lines in 1995, ahead of France’s Carrefour, which introduced its Carrefour Quality Line only in 1999. Shanghai-based Lianhua was also relatively early, with its private label appearing in 1996. However, the significant adoption of private label in China only really started to grow with the opening up of the country’s retail market to foreign retailers and the expansion of modern retailing.

So, private label already has more than 20 years of history in China, but for most of that time the presence and significance has been negligible. Yet, in the last five years, that situation has significantly changed. Private label sales and product variety have begun to show very significant growth in the last few years, and with that growth an increased significance in the total retail market. The ramifications are only just starting to be felt in the wider retail, fresh produce and manufacturing industries in China, but already their significance is already beginning to emerge as profound changes in the way these industries work.

This latest edition is much expanded on the previous one, and includes a wide range of case studies of private label development at leading retailers in China. As well as private label product ranges and price comparisons, the report also looks at the varying strategies for private label development across different retail sectors, and among the leading players in each sector, compares packaging and shelf-placement strategies, covers the emergence of different private label brands for low/mid/high-price product ranges and analyses the changing retailer-consumer and retailer-supplier relationships as private label becomes increasingly significant to more sectors of the market.

Our findings show that, at the current rate of development, private label is going to become very significant to retailers, suppliers and consumers in the coming years. In more developed retail economies, private label tends to come to the fore once a high degree of market penetration and consolidation has been reached, but China (as usual) is proving different. China’s retailers are heading into private label faster and sooner than the old model of retail development would predict, and it will have a significant role to play in shaping how the retail industry develops in the coming years.
INTRODUCTION
Report Coverage
Abbreviations Used
Other Relevant Reports from Access Asia
China Retail Quarterly


1 DEVELOPMENT OF PRIVATE LABEL IN CHINA
1.1 The First Private Label Products in China
1.2 The Private Label Sectors
1.2.1 The Private Label Sectors: Supermarkets & Hypermarkets
Historical Development
Table 1.1 SELECTED SUPERMARKET/HYPERMARKET RETAILERS AND THEIR PRIVATE LABEL ENTRY
Table 1.2 WUMART STORES: PRIVATE LABEL DEVELOPMENT
Brand Naming Strategies
Table 1.3 SELECTED SUPERMARKET/HYPERMARKET RETAILERS AND THEIR PRIVATE LABEL BRAND NAMING PREFERENCES
Retail Concentration
Table 1.4 CHINA¡¯S TOP 50 FAST MOVING CONSUMER GOODS (FMCG) CHAIN-STORE RETAILERS TOTAL SALES TURNOVERS AND OUTLET NUMBERS, 2008
Table 1.5 CHINA¡¯S TOP 50 FAST MOVING CONSUMER GOODS (FMCG) CHAIN-STORE RETAILERS TOTAL SALES TURNOVERS AND OUTLET NUMBERS, 2009
Private Label Sales
Table 1.6 WUHAN ZHONGBAI GROUP CO., LTD. SALES OF SELECTED PRIVATE LABEL PRODUCTS, 2008
Table 1.7 PRIVATE LABEL REVENUES OF SELECTED RETAILERS, 2006-2009
Table 1.8 TESCO PRIVATE LABEL OWN BRAND SALES VOLUME, 2006-2010
1.2.2 The Private Label Sectors: Department Stores
Table 1.9 RAINBOW DEPARTMENT STORE CO., LTD.: PRIVATE LABEL REVENUE, 2007-2009
1.2.3 The Private Label Sectors: Convenience Stores
1.2.4 The Private Label Sectors: Beauty Chains
Sephora
Sa Sa
Gialen
1.2.5 The Private Label Sectors: Pharmacy Chains
Overview
Table 1.10 SHARE OF PRIVATE LABEL OR HIGH MARGIN PRODUCTS OF DRUGSTORE CHAINS, 2009
Nepstar
Table 1.11 CHINA NEPSTAR CHAIN DRUGSTORE LTD.: NUMBER OF PRIVATE LABEL PRODUCTS, 2006-2009*
Table 1.12 CHINA NEPSTAR CHAIN DRUGSTORE LTD.: PRIVATE LABEL REVENUE SHARE, 2006-2009
Watsons
Table 1.13 WATSONS STORES IN CHINA
Table 1.14 MANNING¡¯S STORES IN CHINA, 2003-2009
Table 1.15 WATSONS PRIVATE LABEL PRODUCTS, NOVEMBER 2010
1.2.6 The Private Label Sectors: Consumer Electronics Retailers
Table 1.16 SUNING APPLIANCE CO., LTD.: PRIVATE LABEL VERSUS BRAND EQUIVALENT, NOVEMBER 2010
1.3 Private Label Innovation
1.3.1 Private Label Innovation: Great Value Macaroni Bowl Noodle
1.3.2 Private Label Innovation: Best Buy Insignia LCD TV
1.3.3 Private Label Innovation: Auchan APEO-Free Cleaning Products
1.3.4 Private Label Innovation: Watsons Standalone Private Label Outlet
1.3.5 Private Label Innovation: Watsons Private Label Spokesperson
1.4 Private Label with a Story to Tell
1.5 Private Label Packaging Design
1.5.1 Private Label Packaging Design: Wal-Mart
1.5.2 Private Label Packaging Design: Tesco
1.5.3 Private Label Packaging Design: Lianhua Supermarket
1.5.4 Private Label Packaging Design: Auchan
1.5.5 Private Label Packaging Design: Hualian GMS
1.5.6 Private Label Packaging Design: Lotus
1.5.7 Private Label Packaging Design: Carrefour/Dia
1.6 Private Label Co-Branding
1.7 Private Label Multiple Availability
1.8 Private Label Copyright Infringement
1.9 Private Label Quality ¨C Facing Up to Quality Issue
Table 1.17 SELECTED SUBSTANDARD PRIVATE LABEL PRODUCTS, 2005-2010
1.10 Hypermarket Private Label Sales Through Internet
Table 1.18A PRIVATE LABEL SHARE OF STOCK KEEPING UNITS (SKU) IN AUCHAN, CARREFOUR & LOTUS E-STORES, OCTOBER-NOVEMBER 2010
Table 1.18B PRIVATE LABEL SHARE OF STOCK KEEPING UNITS (SKU) IN AUCHAN, CARREFOUR & LOTUS E-STORES, OCTOBER-NOVEMBER 2010
1.11 Private Label Segment Penetration
Table 1.19 PRIVATE LABEL FOOD SEGMENT PENETRATION IN AUCHAN/LOTUS E-STORES, NOVEMBER 2010
1.12 Shelf Placement Strategy
1.12.1 Shelf Placement Strategy: Auchan
Table 1.20 SHELF SPACE OF PRIVATE LABEL NON-FOOD PRODUCTS AT AUCHAN CHANGYANG OUTLET IN SHANGHAI, 18 AUGUST 2010*
Table 1.21A SHELF PLACEMENT OF PRIVATE LABEL FOOD PRODUCTS AT AUCHAN CHANGYANG OUTLET IN SHANGHAI, 18 AUGUST 2010
Table 1.21B SHELF PLACEMENT OF PRIVATE LABEL FOOD PRODUCTS AT AUCHAN CHANGYANG OUTLET IN SHANGHAI, 18 AUGUST 2010
1.12.2 Shelf Placement Strategy: Century Mart
Table 1.22 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT CENTURY MART SHANGHAI SPORTS STADIUM OUTLET, 18 AUGUST 2010
1.12.3 Shelf Placement Strategy: Lotus
Table 1.23 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT LOTUS CHUANCHANG ROAD OUTLET IN SHANGHAI, 17 AUGUST 2010
1.12.4 Shelf Placement Strategy: RT-Mart
Table 1.24 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT RT-MART CHUNSHEN OUTLET IN SHANGHAI, 16 AUGUST 2010
1.12.5 Shelf Placement Strategy: Wal-Mart
Table 1.25 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT WAL-MART NANPU DAQIAO OUTLET IN SHANGHAI, 19 AUGUST 2010
1.12.6 Shelf Placement Strategy: Tesco
Table 1.26 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT TESCO JIASHAN SPORTS STADIUM OUTLET IN SHANGHAI, 17 AUGUST 2010
1.12.7 Shelf Placement Strategy: Hualian GMS
Table 1.27 SHELF PLACEMENT OF PRIVATE LABEL FOOD & NON-FOOD PRODUCTS AT HUALIAN GMS XINZHUANG OUTLET IN SHANGHAI, 17 AUGUST 2010
1.13 Category Leaders Under Siege
1.13.1 Category Leaders Under Siege: Wanglaoji
Table 1.28 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & WANGLAOJI HERBAL TEA, AUGUST 2010
1.13.2 Category Leaders Under Siege: Yeshu Coconut Juice Drink
Table 1.29 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & YESHU COCONUT JUICE DRINK, AUGUST 2010
1.13.3 Category Leaders Under Siege: Pocky Biscuit Stick
Table 1.30 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & POCKY BISCUIT STICK, AUGUST 2010
1.13.4 Category Leaders Under Siege: Lipton Tea
1.13.5 Category Leaders Under Siege: Liushen Floral Water
Table 1.31 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & LIUSHEN FLORAL WATER, AUGUST 2010
1.13.6 Category Leaders Under Siege: Nescaf¨¦ Instant Coffee
Table 1.32 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & NESCAFE INSTANT COFFEE, AUGUST 2010
1.13.7 Category Leaders Under Siege: McCormick/Knorr/Totole/Shinho
Table 1.33 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & NATIONAL BRAND CONDIMENTS, AUGUST 2010
1.13.8 Category Leaders Under Siege: Colgate
Table 1.34 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & COLGATE ORAL CARE PRODUCTS, AUGUST 2010


2 CONSUMERS & SUPPLIERS
2.1 Consumers: What do they think of Private Label?
2.1.1 Background Consumer Issues
Table 2.1 WHICH STATEMENT BEST DESCRIBES YOUR REGULAR SHOPPING BEHAVIOUR, 2008
Table 2.2 PERCENT OF RESPONDENTS CONCERNED ABOUT FOOD AND BEVERAGE SAFETY, 2008
Table 2.3 HOW MUCH EXTRA WILL CHINESE CONSUMERS PAY TO ADDRESS THEIR FOOD AND BEVERAGE QUALITY CONCERNS, 2008
Table 2.4 PERCENT OF RESPONDENTS WHO AGREE/STRONGLY AGREE, 2008
2.1.2 Consumer Acceptance of Private Label
Table 2.5 REASONS FOR CHOOSING PRIVATE LABEL PRODUCTS, 2004
Table 2.6 SHOPPERS WHO ARE EITHER AWARE OF OR BOUGHT PRIVATE LABEL IN THE LAST MONTH, 2005
Table 2.7 REASONS FOR NOT BUYING PRIVATE LABEL REGULARLY, 2010
Table 2.8 REASONS FOR NOT BUYING PRIVATE LABEL, 2010
Table 2.9 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & MANUFACTURER FOOD BRANDS AT AUCHAN CHANGYANG OUTLET IN SHANGHAI, AUGUST 2010
Table 2.10 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & MANUFACTURER NON-FOOD BRANDS AT AUCHAN CHANGYANG OUTLET IN SHANGHAI, AUGUST 2010
Table 2.11 PRICE DIFFERENCE BETWEEN PRIVATE LABEL & MANUFACTURER BRANDS AT LOTUS SUPERCENTRE, OCTOBER 2010
2.1.3 How Retailers Promote Private Label to Consumers
Credit cards/membership cards
In-Store Advertising
Table 2.12 IMPACT OF ADVERTISING ON CHINESE CONSUMERS, 2008
Table 2.13 MUST-HAVE INFORMATION BEFORE PURCHASING A NEW PRODUCT, 2008*
2.2 The Relationship Between Product Suppliers and Retailers
2.2.1 Creating a New Dynamic
Table 2.14 PERCENTAGE OF BRAND OWNERS WHO AGREE/SLIGHTLY AGREE, 2006-2007


3 PRIVATE LABEL MARKET SIZE
3.1 The Wider Retail Market
3.1.1 The Wider Retail Market: Macroeconomic Context
Table 3.1 RETAIL SALES AS A % OF GDP, 2004-2010*
3.1.2 The Wider Retail Market: The Total Value of Retail in China
Table 3.2 TOTAL CURRENT VALUE RETAIL SALES, 2001-2010*
Table 3.3 PER CAPITA CURRENT VALUE RETAIL SALES, 2001-2010*
3.1.3 The Wider Retail Market: Total Retail Industry
Table 3.4 TOTAL RETAIL INDUSTRY CORE STATISTICS, 2004-2010*
3.2 Current Private Label Market Size
Table 3.5 CHINA TOP-100 RETAILER¡¯S TOTAL SALES AND PRIVATE LABEL SALES COMPARED, 2005-2009
3.3 Forecast Market Size
Table 3.6 CHINA TOP-100 RETAILER¡¯S FORECAST SALES AND PRIVATE LABEL SALES COMPARED, 2010-2014


4 CONTACTS
4.1 Private Label Service Providers
Image Vision Strategy Co., Ltd.
Zhaofeng Advertising Co., Ltd.
Uni-Retail Business & Management Co., Ltd.
Daymon Worldwide (Shanghai) Co., Ltd.
4.2 Trade Organisations
China Chain Store & Franchise Association (CCFA)
4.3 Government Departments
Ministry of Commerce (MOFCOM)
Ministry of Finance


APPENDIX: MARKET BACKGROUND
A.1 Fast Facts
A.2 Regions of China
Map A.1 CHINA: PROVINCES AND MUNICIPALITIES
A.3 Exchange Rates
Table A.1 AVERAGE ANNUAL RENMINBI EXCHANGE RATES AGAINST A VARIETY OF CURRENCIES, 2002¨C2009

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