After years of robust double-digit growth, average FMCG sales growth across the region slowed to 6.7% in 2013 and volume growth accounted for less than 3% of overall growth. This slowdown has continued into 2014 with Q2 2014 sales growth figures falling to 4.1% while volume was almost flat at just 0.3%.
The lack of growth in FMCG is somewhat of an anomaly in a region where overall economic performance and forecasts remain relatively positive. Coming on the back of three years of robust growth for many countries, it is possible that consumption growth is adjusting to a more stable level. Further, a number of countries experienced high inflation, which impacted consumer spending. Other longer term trends, such as decreasing household sizes, increasing household debt and prioritisation of expenditure on technology and out-of-home consumption also play a role.
A significant proportion of the FMCG growth witnessed over the past year is attributed to the rising influence of convenience stores and minimarkets in mature markets, such as Taiwan and South Korea, and developing markets, particularly Indonesia and Thailand. As the popularity of small format stores increases in many markets, there has been a corresponding rise in average shopping frequency. Monthly pantry shopping, which has traditionally been the standard for many shoppers, is in gradual decline as more frequent weekly shopping trips are rapidly becoming the norm.
In the face of such shifting trends, it is critical retailers keep pace with consumers’ basic expectations by offering competitive prices and greater convenience. Improving the in-store experience and focusing on ranging which appeals to time-poor shoppers are increasingly important differentiators for retailers which will serve to drive story loyalty.
Nielsen identifies nine sector-defining trends shaping the retail environment in Asia Pacific.
Insights contained in this article are based on the 2014 Nielsen Asia Pacific Retail & Shopper Trends Report, a comprehensive report on retail trends across 13 markets. The report includes analysis specific to each market, including a macroeconomic overview, consumer and retail trends, and forward-looking insights. Statistics included in the report include market dynamics data, store universe numbers and a summary of chain stores by category. The data in the report is drawn from sources that include the Nielsen Consumer Panel, the Nielsen Retail Index and the Nielsen Global Survey, which includes the Global Survey of Consumer Confidence and Spending Intentions, and the Global Survey of E-commerce.