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Factors impeding market share growth of supermarkets : food retail modernization in Hong Kong

Authors Goldman, Arieh
Krider, Robert E.
Ramaswami, Seshan
Issue Date 1996-10
Summary Supermarkets were introduced into Hong Kong in the early 1950's. In spite of the long time, the highly developed nature of Hong Kong's economy, and the high income levels and sophistication of consumers, supermarkets' market share of food purchases is only 40 percent. A traditional food retail system, consisting mostly of wet markets, continues to successfully function. In this respect Hong Kong is an example of many other countries in which supermarkets were introduced long ago but, in spite of the time that passed and the progress of the economy, they are far from dominating food retailing. The reasons for this situation are analysed in this paper. The analysis is guided by a framework identifying the elements driving the process of supermarket market share gain. They are: supermarket diffusion across space and consumer segments, consumer adoption of supermarket shopping, supermarket's product assortment offering, and consumers' utilization of the assortment. We find that supermarkets have already completed their diffusion across space and consumer groups and that all consumers have adopted supermarket shopping. The key limiting factor is the weakness of supermarkets in the fresh foods area and the corresponding strength of the wet markets. This situation is not expected to change soon. We therefore conclude that it is possible that the end state of food retail modernization in Hong Kong will involve a coexistence of modern and traditional retail formats. It is suggested that supermarkets should explore some form of participation in the wet market sector, developing new retail concepts combining the wet markets' and supermarkets' strengths.
Language English
Format Working paper
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