Food categories lead slowdown in retail growth

With the trend of Chinese traveling overseas during the holiday season continuing to boom, and dining out becoming more affordable thanks to the government's anti-corruption policy, cooking-related categories were adversely affected. Cooking categories declined by 6.6 percent as a result of weak performance in sesame oil and monosodium glutamate. But honey, oyster sauce and ketchup did well, according the report.

Premium products continue to prevail in higher-priced categories like oyster sauce and olive oil, though overall cooking oil performance was soft due to a reduction in company offers.

The retail market has recorded a slowdown mainly in top-tier cities, including Beijing, Shanghai, Chengdu and other provincial capital cities.

Yu said the fast-moving consumer goods categories were more saturated in key cities, where penetration of most categories hit a plateau. But there is still room to grow in lower-tier cities, he added.

The report forecast that for the rest of the year, growth in China's consumer goods market will slow as shoppers are expected to remain cautious about weakness in the macro-economy.

But with a growing middle class and greater disposable income, opportunities remain in 2014. Yu said publicity about consumer goods safety has lifted awareness of quality and safety to all-time highs. Tapping into consumers' unmet needs in this regard and creating a healthy image might help lift these categories grow against the downward tide.

The report predicts affordable goods purchases should rise as people reduce spending on luxury goods and fine dining.