Retail and Shopper Trends in Asia Pacifc

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Retail and Shopper Trends Asia Pacific 2010The latest in retailing and shopper trends for the FMCG industryAugust 2010

About The Nielsen CompanyWe are a leading global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. We deliver critical media and marketing information, analytics and industry expertise about what consumers watch (consumer interaction with television, online and mobile) and what consumers buy on a global and local basis. Our information, insights and solutions help our clients maintain and strengthen their market positions and identify opportunities for profitable growth. We have a presence in approximately 100 countries, including many developing and emerging markets, and hold leading market positions in many of our services and geographies. Based on the strength of the Nielsen brand, our scale and the breadth and depth of our solutions, we believe we are the global leader in measuring and analyzing consumer behavior in the segments in which we operate.

BUYOur Buy segment provides retail transactional measurement data, consumer behavior information and analytics primarily to businesses in the consumer packaged goods industry. Our extensive database of retail and consumer information, combined with our advanced analytical capabilities, helps generate strategic insights that influence our clients key business decisions. We track billions of sales transactions per month in retail outlets in approximately 100 countries around the world and our data is used by our clients to measure their sales and market share. We are the only company offering such extensive global coverage for consumer packaged goods. Our Buy products and services also enable our clients to better manage their brands, uncover new sources of demand, launch and grow new products, analyze their sales, improve their marketing mix and establish stronger consumer relationships.

WATCHOur Watch segment provides viewership data and analytics primarily to the media and advertising industries across television, online and mobile screens. Within our Watch segment, our ratings are the primary metrics used to determine the value of programming and advertising in the U.S. total television advertising marketplace. In addition to the United States, we measure television viewing in 29 countries. We also measure markets that account for approximately 80% of global internet users and offer mobile measurement services in 10 countries, including the United States, where we are the market leader. Our Watch data is used by our media clients to understand their audiences, establish the value of their advertising inventory and maximize the value of their content, and by our advertising clients to plan and optimize their spending.

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ContentsExecutive Summary Retail & Shopper Trends in Asia Pacific 2010 4

Country HighlightsPacific Australia 16 17 New Zealand 8 8 9 9 9 10 10 11 11 12 12 13 13 14 14 15 15

Regional Highlights Grocery Share of Trade in Asia Share of trade for modern self-service outlets Share of trade for modern self-service outlets Total FMCG Nominal Growth in 2009 Total FMCG Growth in 2009 Grocery store numbers in Asia Pacific Traditional grocery trade 2009 v 2000 % of Male Shoppers in South/ South-East Asia (2009 vs. 2002) % of Main Shoppers who are Housewives % of Urban Shoppers Using Hypermarkets Regularly Frequency of Visiting Hypermarkets % of Urban Shoppers Using Supermarkets Regularly Frequency of Visiting Supermarkets % of Shoppers Focused on Promotions Trade Concentration Share for Top 5 Chains Trade Concentration Share for Top 5 Chains Private Label Share of Total Market

North Asia China Taiwan Hong Kong Korea 19 21 23 25

South-East Asia Singapore Malaysia Thailand Indonesia Philippines Vietnam 27 29 31 33 35 37

South Asia India Sri Lanka 39 41

Country Highlights include: Retail Structure Store Numbers Shoppers Usage of Modern Trade Store Types Modern Trade Retailers Banner Names and Numbers Share of Trade

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Executive SummaryRetail & Shopper Trends 2010Peter Gale Managing Director Retailer Services Asia Pacific, Middle East & Africa The Nielsen Company

The big increase in the consumer index for the Asia Pacific region was led by Vietnam (+18) and Singapore (+5). The region also took 6 of the top 10 spots globally, in terms of consumer confidence: India (129), Indonesia (119), Vietnam (119) The Philippines (113), Singapore (112) and Australia (108). Of these countries, India and Indonesia occupied the top 2 positions globally. In Q2 2010, 43% of consumers in the region felt good about spending on items they want and need over the next 12 months, compared to 36% in Q3 2009. While consumers are also saying that they plan to change their spending to save on household expenses, they plan to spend their spare cash in areas including Clothes and New Technology which should be positive for the Hypermarket channel, which suffered from the cut back in general merchandise sales during 2009. They also plan to increase spending on out-of- home entertainment which may be less positive for the grocery trade, particularly in developed markets, where the move to entertaining at home had a positive effect on grocery sales in 2009.

2009 a tough year for retailers in most Asia Pacific markets but light appearing at the end of the tunnelVolume growth down in 2009: Throughout the Asia Pacific region, countries experienced a lower level of grocery sales growth in 2009 compared to the very strong performance in 2008. Discounting the effects of lower inflation on absolute sales dollars, volume growth was significantly lower in many markets. The strongest performing markets in 2009 were India and Vietnam, where sales values increased by nearly 15% compared to 2008. In China and Indonesia, markets that had consistently enjoyed double-digit growth over the last 5 years, the growth rate slowed down to +3% and +5% respectively. China has seen a strong recovery though since Q4 2009 and is now back to 11% growth in Q1 driven by a strong demand for food categories. In the more developed markets of Hong Kong, Singapore and Korea, where grocery sales had benefited from the economic difficulties as consumers spent less on eating out, we saw growth rates slowing down in the 2nd half of 2009 as consumer sentiment became more positive. In Singapore where the sales of basic groceries such as cooking oil grew strongly in 2009 we are now seeing growth switching back to personal care, health and more premium products. Both New Zealand and Australia also showed continued steady sales growth of over 6% last year. Surging consumer confidence in 2010: The latest consumer confidence index in the Asia Pacific region, as surveyed by Nielsen globally, continued to improve in 2009 and reached an index score of 101 in Q2 2010, an increase of 23 points from Q1 2009. Globally, the consumer confidence index reached its highest level since Q3 2007, at 93 points in Q2 2010.

The 2000s - a decade of change for grocery retailing in AsiaOver the last 10 years we saw a massive change to the grocery retail business across Asia, driven by retailer investment in new stores. The number of modern trade stores has been growing by over 16,000 stores a year with the total store count increasing from less than 50,000 to close to 220,000. Modern trade on the rise: Across the region, the modern trade now accounts for 53% of the packaged grocery sales tracked by Nielsen, from the 35% share in 2000. This shift of consumer spending of nearly 2% per annum has been strongest in North Asia led by China where the importance of modern trade increased on average by 3% China and Korea are fastest changing markets: While there has been significant store growth in all markets, the biggest story of the decade was clearly the expansion seen in the China market. China alone accounted for over 100,000 new stores or more than 60% of the total new store investment and equivalent to a 1000% increase in a 10 year period. Subsequently the modern trade share increased from 34% to 64% during the decade with all formats driving that growth.

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numbers increased from just over 2000 to more than 11,500. It is now difficult in many cities to stand on a corner and not see at least 2 of these stores!! The impact of mini-markets on where people shop has been significant as their share of trade has increased nearly six-fold to over 17%. Indonesia is also a market where Hypermarkets have grown strongly but where there is still room for expansion with only 43% of shoppers using one on a regular basis.

2010: The start of the male shopper decade?Over the last 10 years, we have also seen some change in who is taking responsibility for doing the grocery shopping. Across the Asia region, the proportion of men claiming to be the main shopper increased on average from 14% to 22%. The only exception was in China where the proportion of male main shoppers remained relatively flat at just 15%. In South and South-East Asia, men are generally more likely to be grocery shoppers in most countries, we now see male shoppers accounting for more than 25% of the main shopper pie. Malaysia leads the way with 38% followed by the Philippines and India. There are still two countries though, where things remain a little more traditional Korea and Vietnam. While there are signs of change in Korea, likely due to the development of Hypermarkets, only 11% of men claim to be the main shopper for their families. In Vietnam, where only 3% of main shoppers are males (from 1% a decade ago), the traditional Wet Market dominates with only 11% of packaged grocery sales going through the modern trade channel. Housewives no longer dominate the (shopping) aisles: As male shoppers become more involved