Big retailers see drop, small stores progress in 2022

Last year was a mixed bag in the fortunes of Chinese retailers.

While more than half of hypermarkets surveyed by an industry association said they had suffered declines in scale as well as revenue, over 50 percent of convenience stores on the list sped ahead in expansion plans and sales.

According to the Top 100 China Chains of 2022, released by the China Chain Store and Franchise Association earlier this week, over 50 percent of hypermarket chains in the survey experienced a drop in store numbers, with Walmart China shutting down 31 stores, YH Supermarket pulling down the shutters of 45, and CR Vanguard closing 115 outlets.

This has been the third consecutive year when Walmart, YH Supermarket and RT-Mart have reduced store counts.

Most of the store closures were due to lease expiry, store renovations, loss of profit or debt to suppliers.

In 2022, Better Life Group, a leading retailer from Changsha, Hunan province, exited operations in Sichuan province, closed stores in Hunan and the Guangxi Zhuang autonomous region.

French hypermarket chain Carrefour has closed underperforming stores in the last two years due to losses and shrinking market share.

However, convenience stores stepped up expansions last year.

While MYJ Convenience Store added 3,840 stores, Lawson Convenience Store opened more than 1,000 new stores.

In November 2011, Lawson acquired Wowo supermarket in Sichuan province, and completely bought out Weiwo Convenience Stores from Tianhong, or Rainbow Co Ltd, adding 1,175 stores. Lawson's store count is expected to reach 10,000 by 2025.

Between 2019 and 2022, the total revenue of convenience stores nationwide surged to 383.4 billion yuan ($53.7 billion) from 255.6 billion yuan. The number of stores has surged to 300,000 from 132,000, according to the China chain store body.

Jason Yu, general manager of Kantar Worldpanel China, said its statistics show that the performance of hypermarkets continued to deteriorate, with sales falling 12 percent in the first quarter of this year.

The falling store numbers of hypermarkets, reduced customer traffic and operational challenges faced by some large retailers are the main reasons for the downfall of hypermarkets, he said.

Chinese consumers' preference for shopping locally at convenience stores and smaller supermarkets was driven by the necessity of safety and predictability during the COVID-19 outbreak and this has lingered even post-pandemic, Yu said.