Anyone that has spent time in or around China understands that the brick and mortar commerce structure is a little bit different than in the Western world. Americans shop at supermarkets—warehouses designed to offer everything from office supplies to the makings of a charcuterie board. In China, however, people pick up individual ingredients at wet markets—open-air stalls along streets and alleys where you can find fresh produce sold directly from the farmers, butchers, and other makers—or in corner stores that carry a limited supply of locally sourced goods.
Studies show that many Chinese, despite living busy working lives, still prefer to cook at home instead of ordering in or going out to eat. As tech grows around the world, companies are figuring out how to tap into the lucrative grocery market in China. However, the transition hasn’t been as simple as in countries like America, where tech giants like Amazon have been able to replace trips to the supermarket in a move as simple as launching the app. In China, tapping into this market involves shifting generations of cultural habits that surround shopping for groceries within the local community.
The Arrival Of E-Commerce Grocers
With such a wide availability for online grocery delivery services to move in, the latest technology frontier in China has been e-commerce grocers. Companies like Alibaba have already invested in the platform, expanding their range of products to include fresh food like meats and produce. Since then, smaller tech companies have popped up to add to the competition around China and its different territories. In Shanghai and Beijing, a small handful of tech startups local to China have launched grocery apps that let users order groceries to be delivered in 30 minutes or less.
The obvious window for e-commerce grocers around China and Hong Kong has attracted a more global response from commerce giants such as Walmart. While Amazon has yet to hone in on the market, Walmart is looking to expand its grocery delivery services to the far-East. The company is currently testing the potential of a grocery delivery system tied to one of its stores in Shenzen, the city just within the Mainland Chinese border next to Hong Kong. Although the company has not made any formal announcements about the service, it plans to expand if things go well, according to TechCrunch. Customers can access the grocery delivery service, called Walmart To Go, through WeChat.
A Shifting Global Economy
While tech giants are working to make grocery delivery an easily accessible option for the Chinese, companies like Carrefour are opting to move out altogether. The French grocer has, until now, had a major stake in the Chinese brick and mortar grocery economy, which brings in billions of yuan per year. Carrefour announced on Sunday that it would be pulling out of roughly 80% of its stake in China’s grocery business. The decision was made in an effort to shift its focus on combating Amazon, as the e-commerce giant seeks to expand throughout France.
The 80% stake in Carrefour represents a 4.8 billion yuan deal (equating to around $698 million). Carrefour sold the shares to a company called Suning, which is one of the biggest retailers in China. Right now, Carrefour has around 240 stores throughout China, but that number could dwindle down to nearly zero if the company seeks to sell its remaining 20% stake in the Chinese market.
Regardless of how the brick and mortar grocery economy is doing in China, its rapid shift into the tech world could signal a major economic and cultural change as younger generations of Chinese come of age. All of this poses one major question. How will community markets, a major part of China’s rich cultural traditions surrounding food, fare in the future?