Penetration rate of convenience stores and online shopping increased to 32% and 38% from 19% and 35% respectively, growing faster than that of traditional hyper/supermarkets, forcing the latter to transform
According to a new Nielsen report, the penetration rate of convenience stores and online shopping has jumped to 32% and 38% respectively from last year’s 19% and 35%. As a result, traditional hypermarkets and supermarkets have been forced to adapt to the changing needs of consumers. At the same time, competition is getting fiercer among online shopping platforms due to product homogeneity, requiring companies to differentiate themselves and build competitive advantages.
The report found that the lure of cheaper goods online has had a significant impact on consumers’ behavior, with 61% of those surveyed said they choose to buy things online due to cheaper prices, a significant rise from 42% last year. About 56% of the respondents said they prefer online shopping platforms due to “easier to compare prices”, an increase of 15% from last year’s figure. Another 54% of respondents said that they shop online because of the delivery service; that number last year was 42%. In the meantime, as there are more online platforms now, consumers are becoming wiser. “Generally speaking, consumers are purchasing less at brick and mortar stores - basket sizes have decreased. Previously, consumers mainly shopped at hyper/supermarkets to stock up on household basics, but fewer consumers do that now, preferring to buy things they need at convenience stores or online,” said Rachel Ma, vice president of Nielsen China.
“Consumers pay attention to pleasant shopping experiences and promotions while shopping in stores. “Cheaper price”, “easy to compare prices” and “delivery service” are the major factors driving consumers to choose online shopping,”
According to Nielsen’s latest 2016 China Hyper/Supermarket Shopper Trends Report, the penetration rate of hypermarkets and supermarkets increased slightly in 2015, up by two percentage points and one percentage point respectively to reach 78% and 82%. Although customers’ frequency of visits remains stable, their average shopping basket value fell from 172.4 RMB in 2014 to 162.7 RMB. The reason behind this is that fewer consumers go shopping to “stock up on things” nowadays, as the percentage of regular bulk purchase fell from 24% in 2014 to 22%. Most of the respondents went shopping just to buy things that they need in the household (38%).
However, in terms of sales and penetration, hyper/supermarket are losing their market share to convenience stores and online platforms, as more and more people, especially the young, prefer to use these two emerging channels, which are more convenient. As the statistics show, the penetration of convenience stores and online platforms rose from 32% and 19% last year to 38% and 35% respectively, increasing much faster than that of hyper/supermarkets.
Nielsen research found that, consumers pay more attention to the overall shopping experience while shopping at hyper/supermarkets, which can be a competitive advantage. Pleasant shopping experience rose from 80% to 86%; organized assortment up by 6% and reached 86%; clean environment increased from 81% to 90%. What’s more, friendly service (94%), a wide selection of products (92%) and convenient location (90%) remain the most influential factors. In 2015, 19% of the respondents have visited newly opened hyper/supermarkets in the past six months. Convenient location (55%) and a good reputation (46%) are the main reasons that they go to a new market, which shows the importance of location and brand image.
Therefore, hyper/supermarkets should focus on promoting brand image, interesting promotional activities to retain customers. In addition to that, opening new stores and exploring online platforms to attract new consumers are also important.
According to the Nielsen Chinese Consumer Confidence Index Report, two indicators of personal finances and job prospects slightly dropped in 2015 while that of willingness to spend soared to 48, reaching a record high, which indicates that consumers have great willingness to buy but are more concerned with price.
The Nielsen Online Shopper Trends Report shows that the percentage of price-sensitive shoppers increased from 15% to 19%. Those shoppers are usually over 35 years old with relatively less education and lower income. They are more concerned with price and list price as their first priority while shopping.
Sales and promotion are still effective ways to attract consumers. Almost seventy percent (68%) of respondents go online shopping when there are sales. Recently, online shopping platforms have ramped up their promotional efforts - the penetration of shopping festivals is up to 95%. As shopping festivals and various kinds of promotions have mushroomed, the price war is getting fiercer among various e-commerce platforms.
This year, mobile has replaced the PC as the most popular device for online shopping in China. According to Nielsen, 59% consumers use desktops for shopping, 57% use laptops while 81% of online shoppers use smartphones.
Convenience is the major driver behind the popularity of mobile shopping, with 71% consumers stating that mobile devices are more convenient than PCs. What’s more, 52% of the respondents said that they prefer mobile devices because of the convenience of mobile payments, an increase of 10% year-over-year. Besides that, payment security (39%) is also an important factor contributing to the rise of mobile shopping.
According to the latest statistics from the China Electronic Commerce Information Center, by December 2015, the number of Chinese online payment users reached 416,000,000—an increase of 112,000,000 since the end of 2014, up by 36.8%. Since the end of 2014, the percentage of Chinese netizens who use online payment methods increased from 46.9% to 60.5%. It’s worth noticing that, in 2015, mobile payment usage soared rapidly, as the number of users reached 358,000,000, an increase rate of 64.5%. The percentage of netizens who use mobile payments increased from 39.0% to 57.7%. Nielsen’s research findings also support the assertion that Chinese online shoppers are moving towards mobile platforms. Statistics show that the percentage of online shoppers who use mobile payment apps increased from 96% last year to 99% this year.