Neighborhood stores and online-to-offline, community group buying and modernizing traditional trade are emerging opportunities for brand owners in China in a post-COVID world, according to latest recent study by NielsenIQ, a global measurement and data analytics company.

"China continues to demonstrate strong economic recovery momentum and consumer confidence as consumption continues to play a significant role," said Justin Sargent, president of NielsenIQ China and Asia Pacific. "During the pandemic, the market landscape underwent profound changes, the pace of enterprise innovation accelerated and new business models emerged. China's fast-moving consumer goods market is full of dynamics and vitality.

"While China's economic recovery is driven on various fronts, retail and FMCG contribute up to 40 percent of China's total consumption and is expected to remain a bright spot for the months ahead."

According to NielsenIQ, FMCG rebounded driven by online channels, while offline channels also recovered. In the first quarter of 2021, FMCG sales value grew 8.5 percent via omni channels, compared with 3.4 percent in the previous quarter. Online channels saw growth of 14.1 percent, down from 18.8 percent in the last quarter of 2020. Offline channels recorded an increase of 6.2 percent, compared with a decline of 4.9 percent in the previous quarter.

China's e-commerce industry has been evolving over the past 20 years, and all five major formats have their own shares. General e-commerce now accounts for 78 percent, with WeChat mini-programs taking 14 percent, vertical e-tailers accounting for 4 percent, social e-commerce and O2O both taking 2 percent, according to NielsenIQ's latest findings.

New retail underwent profound changes in the post-COVID era, with more channels emerging and digital consumption reshaping the retail market landscape.

The study by NielsenIQ showed consumers are visiting more types of shops. In 2020, consumers visited 5.4 types of retail channels on average, higher than the average of 5 in 2019. Emerging channels such as O2O, e-commerce and Community Group Buy have also gained popularity among consumers.

The penetration rate of Ecom jumped from 34 percent in 2019 to 47 percent in 2020, and that of O2O and community group buying also increased from 22 percent to 33 percent and 3 percent to 16 percent respectively. Using the food & beverage category as an example, sales volume for this category via Ecom, live-streaming and O2O in 2020 increased by 31 percent, 80 percent and 90 percent respectively, compared with that of 2019. If the momentum remains unchanged, digital marketing channels will account for more than 25 percent of sales volume in two years.

The motivation behind the use of such emerging channels varies across consumers, although product variety is often cited as one of the key factors for Ecom, O2O and community group buying. Promotion and price are also key factors for community group buying.

Ryan Zhou, Vice President of NielsenIQ China, said by 2025, 65 percent of retail consumption will be on digital and proximity offline channels. With the fast evolution in retail sales, brand owners need to think about how to drive offline distribution efficiency, how to manage emerging channels like O2O and implement strategies accordingly.

Wang Min contributed to this story.