China Power of Retailing 2015

"China Power of Retailing 2015" is published jointly by Deloitte China and China Chain Store and Franchise Association (CCFA). Based on the analysis of sampled data from 206 responded questionnaires out of all 208 as well as in-depth interviews conducted with top retailers, this report offers insights into the trend of the retail industry in China and provides preliminary advice on the transformation of retail businesses.

The viewpoints / key findings

China GDP YOY growth is around 7% in spite of the fact that China sees its beginning of New Normal with a declined growth rate. The rising cost and narrowed profit still threaten the retail industry. Constantly climbing house rents and labor expenses have pushed up enterprise operational costs and further eaten in their profits. Meanwhile, physical retailers face the challenges from e-commerce, forcing the traditional retail industry to go through the pain of transformation, while the competition among retailers is brutal. On the other hand, technological innovations, changes in consumer behaviors and individualized needs in consumption have combined to drive enterprises to beef up efforts in online business, switch to O2O all-channel operation and speed up mobile e-commerce and cross-border e-commerce deployment.

Our major findings about the situation in the present and trend in the future in China’s retail industry include:

• A slowing economic growth, consumption upgrade, emerging industries and the emergence of online and mobile shopping have grabbed a significant share of offline retailers and resulted in the slowdown in the growth rate of offline retailers.
• The slump environment has further differentiated the operating results across retail enterprises.
• Integration in the retail industry has picked up in speed where businesses seek to break through by mergers and acquisitions. Foreign investors are facing strong local competitors and local companies are proactive in M&A. Most popular M&A are cross-function M&As.