June 2025 Retail Sales Review: Are Physical Restaurants the Real Victims of the Food Delivery Price War?

The National Bureau of Statistics released several macroeconomic data for June and the second quarter today. Based on these data, Dolphin Research provides a brief commentary on the recent domestic consumption situation. (Note that the retail sales growth rate disclosed by the Bureau this year is about 1 percentage point higher than the growth rate calculated from historical data. We will use the official data as the standard.)

Overall, due to the continuous advancement of e-commerce promotions, the growth rate of total retail sales and online physical sales showed a high-to-low trend between May and June. However, excluding this impact and looking at May and June combined, the growth rate of retail sales and online physical sales is roughly consistent with March and April, indicating that domestic consumption is generally stable.

Unexpectedly, the growth rate of catering revenue in June plummeted to below 1%. Dolphin Research speculates that this may be due to the high subsidies from the food delivery wars, which actually reduced the actual income of catering stores.

1. E-commerce promotion nodes advanced, retail sales growth high-to-low; food delivery wars drag down catering revenue growth significantly

According to the Bureau of Statistics, the total retail sales in June increased by 4.8% year-on-year (the growth rate calculated from historical data is 3.8%), showing a significant slowdown compared to May (6.4% in May). In recent years, the start time of e-commerce promotions in June and November has been continuously advanced. This year's 618 promotion actually went online in mid-to-late May, and most of the promotion shopping demand was basically released in May. Due to the advancement of e-commerce promotion time, the retail sales growth rate in May-June and October-November has shown a high-to-low trend as a routine.

After adding up May and June, the combined growth rate for the two months is about 4.6% (generally 1 percentage point lower than the growth rate directly announced by the Bureau of Statistics), which is roughly similar to the growth rate in March and April.

However, aside from the disturbance of the e-commerce promotion time misalignment, another reason for the month-on-month slowdown in retail sales growth in June is the plunge in catering revenue growth. By consumption type, commodity retail sales in June increased by 5.3% year-on-year, slightly slowing down from the previous month, while catering revenue in June only increased by 0.9% year-on-year, slowing down by a full 5 percentage points compared to May.

The significant change in catering revenue growth in such a short time is undoubtedly quite abnormal. Dolphin Research speculates it may be due to the recent high subsidies from the food delivery wars, which have significantly reduced the actual income of the catering industry.

2. Online sales high-to-low, overall stable; online penetration rate returns to steady small-step growth

In terms of online physical retail (after adjustment), June saw a year-on-year growth of 4.7%, significantly down from May's 8.2%, indeed reflecting that most e-commerce promotion consumption was advanced to May.

Looking at May and June combined, online physical sales increased by 6.4% year-on-year, roughly equivalent to the growth rate in March and April. Since the beginning of this year, the growth of the e-commerce industry has been relatively stable.

By category, from January to June, sales of food, clothing, and daily necessities increased by 15.7%, 1.5%, and 5.3% year-on-year, respectively. In absolute terms, food (such as groceries and fresh produce) remains strong, while clothing (apparel) is the weakest. In terms of growth trends, food has maintained strong growth throughout the year, with the growth rate continuing to rise this month. Clothing shows signs of bottoming out improvement from a low base of negative growth at the beginning of the year, with cumulative growth rates gradually rising over the five reporting periods this year.

Meanwhile, the growth rate of daily necessities sales shows an initial slowdown trend on a high base, with the cumulative growth rate as of June being the lowest of the year.

As of June, the overall second quarter saw a 6.3% year-on-year increase in adjusted online physical retail, slightly up from the first quarter's 5.7%. Therefore, the overall GMV growth rate of e-commerce companies in the second quarter should have further accelerated compared to the first quarter. After going through the volatility period of 2023-2024, the online penetration rate has returned to a stage of stable small-step improvement, with year-on-year increases of 0.5% and 0.4% in the first and second quarters, respectively.

3. State subsidies benefits fading? No obvious signs yet

By product category, according to data above the designated size, except for fast-moving consumer goods and furniture (somewhat unexpectedly), the growth rates in May and June were generally stable, while the sales growth rates of other product categories in June showed a significant decline compared to May (of course, mainly due to the advancement of promotion time).

Comparing the simple average growth rate of May and June with the growth rate in March, the slowdown in growth is most pronounced for cosmetics and gold and silver jewelry, two typical optional categories.

Recently, some institutions have begun to believe that in the second half of the year, the boosting effect of state subsidies on durable goods such as furniture, home appliances, and 3C products may begin to weaken. Currently, looking at May and June overall, there are no obvious signs of weakening in the sales growth rate of categories benefiting from state subsidies. If the benefits of state subsidies do indeed weaken, it may have a significant impact on the subsequent investment decisions of e-commerce companies, and further observation is warranted.

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