In 2019 Carrefour, the French Retailing behemoth had to admit defeat in China and sold their Chinese business to local conglomerate Suning.
A real watershed moment in China retail as Carrefour had been very successful and profitable for almost 2 decades.
Key reasons for their failure. A lack of innovation. An underestimation of local competition and too slow in digitizing their business.
In light of that historic moment, the McKinsey & Company article posted by my friend Ivo Naumann about the state of grocery in China that I am reposting here is even more interesting and a must read for everyone interested in better understanding digitalization in China, the opportunities it brings but also the challenges that must be overcome for digital players.
Groceries, you may think. What’s the big deal? Well, …. as the authors Dymfke Kuijpers and Alex Sawaya write: The grocery market in China is one of the most intriguing in the world: it is huge (second only to the United States), it is a front-runner in online commerce, and it’s growing rapidly. It is also a source of inspiration when it comes to digital and online-to-offline (commerce).
Lead by the digital giants (e.g. Alibaba Group with their online/offline HeMa concept) the Chinese grocery market has been disrupted at a speed and frequency that have left traditional players struggling to keep up.
But not all is smooth sailing for the digital disruptors though. Even with all the tech advantages they bring, grocery retailing remains a specialty and the players that are able to master the hard-core retail basics will be the ones to win.
A must read, for anyone in a more traditional industry or category.