Looking back on 2016, the year can best be described as one of change and uncertainty across many of our Asia-Pacific markets.
While it is still unclear what impacts Brexit and the new American presidency will bring, change and disruption in some Asian countries are having more immediate effects on local markets.
Notable events in Q4 included the passing of Thailand’s King Bhumibol, the sudden currency reform in India and the impeachment of South Korea’s president. Add in growing uncertainty about the future of the Trans-Pacific Partnership and it was certainly a tumultuous end to the year.
But in the face of these challenges, how are Asia-Pacific consumers feeling and how does that translate to retail performance?
Consumer confidence across the region strengthened modestly during 2016, although it varied widely by country, from a high of 136 points in India to a low of 43 points in South Korea. In 10 of the 14 markets, consumers were more optimistic by the end of the year.
Overall FMCG growth remained stable in the region. While some markets felt the effects of local uncertainties, most continued to perform well and offered plenty of opportunities, especially Vietnam, Taiwan and India in Q4.
The trump card for retail in the Asia-Pacific is the vast opportunity within its own borders. This is a region with burgeoning population growth, a predominantly young workforce, improving living standards in the developing markets and a growing consumer desire to spend.
Two out of three consumers across the region feel they are better off than they were five years ago, significantly more than the 55% global average. Almost three out of four Asia-Pacific consumers believe they are financially comfortable enough to buy things just because they want them or spend freely. This is a higher proportion than in any other region.
Consumers here are also enjoying increased access to better technology, more premium products and a broader assortment of products.
Technology is driving major change in the Asia-Pacific as it is in most of the world. Access to improved technology is transforming people’s lives, including the way they interact with family and friends, get their news, run their businesses, and increasingly, how they shop. For many consumers across our markets, technology is their constant companion from when they wake up until they go to bed.
Companies are innovating and experimenting with technology to find new ways of reaching consumers. We have seen this with the emergence of social media platforms that connect with commerce such as Facebook’s Marketplace and China’s super app WeChat.
Retailers are using new technologies such as virtual reality in their showrooms to enrich the brand experience for consumers in real time. Other retailers and suppliers are exploring the potential of drones for delivery as well as automated ordering systems in homes.
New technologies will gather and sort enormous amounts of data on consumers like never before. This will enable retailers and manufacturers to offer the right product and experience at exactly the right time and at exactly the right location.
These are just some examples that give a sense of the breadth and depth of change technology will continue to bring. Understanding when and how these changes will take place is critical for FMCG players. But to do so, it is essential to know the social fabric and values that are important to consumers. For it is their connection to brands and the experiences they deliver that drives their engagement and determines how and if they will decide to purchase.
In this edition of Quarter by Numbers, we are delighted to include Myanmar for the first time. Having recently opened up its economy and with consumers hungry for change and new opportunities, this is a country with enormous market potential.
We also bring you Nielsen’s annual overview of the retail landscape across the region. This includes channel share of trade, channel universe estimates and chain store counts by market.
Insights contained in this article are extracted from the 2016 quarter 4 edition of Nielsen Quarter by Numbers, where a total retail picture in Asia-Pacific is presented. Every three months, Quarter by Numbers will scan the markets that matter to organisations doing business in Asia Pacific, report on the latest consumer insights, and dive into FMCG landscapes to help senior business leaders think fast and win big in this region.
To purchase the report, click here.