Despite global economic uncertainty and slowing GDP growth, annual packaged grocery sales in Asia Pacific increased 13 percent in the past year while volume sales increased by six percent, according to Nielsen’s 2012 Retail and Shopper Trends Report.
The latest installment of the annual Nielsen report, which identifies key trends and market shifts in the grocery sector in Asia Pacific, reveals that grocery prices remain a point of contention for consumers across Asia Pacific, ranking in their top-five concerns. In response to rising grocery prices, many consumers are adopting a cautious approach to spending, which has led to smaller, but more frequent trips to the grocery store.
Shoppers continue to steadily shift their grocery shopping to modern trade channels (up approximately one percent per annum for the past decade), as they embrace the wider range, better shopping environment and lower prices these channels offer. Modern-trade-store numbers increased by 11 percent in the past year, to over 270,000. And investments in new, modern trade stores were the strongest in Vietnam, the Philippines and Thailand. Convenience-store numbers also experienced strong growth in the past year, up 10,000 to over 81,000, with the fastest expansion in convenience stores seen in South Korea. Consequently, the convenience channel saw the fastest growth of any store format in the region, up 15 percent.
Modern grocery trade store numbers by format in Asia Pacific (% annual growth)
The Nielsen report found that private-label brands remain relatively undeveloped in Asia and contribute less than eight percent of sales in modern trade outlets. Growth of private label brands was highest in Taiwan, Korea and Indonesia, with sales increasing by over 20 percent. Sales of private-label products are beginning to gain traction in basic grocery categories– such as paper products, plastic wraps and water– and staples, like rice, and cooking products, where a low price is more important to shoppers. Private-label growth in Asia is hindered by low levels of consumer trust in categories where there is strong brand loyalty.
Annual growth rate (2011), total market versus private label
Analysis by Nielsen’s Retailer Services and Shopper Insights teams has identified five key trends influencing the grocery retail sector in Asia Pacific, including:
- Economizing – Asia Pacific economies have been relatively insulated from the wider global economic situation; however, shoppers across the region are looking to economize in order to reduce their grocery bills. In developed countries, this is primarily evidenced through heavier reliance on promotional offers, while in developing nations shoppers are focusing on buying only essential items.
- The new value equation – Although shoppers are focusing on reducing their overall grocery expenditure, premium product offerings that provide a clear and tangible benefit are experiencing strong growth, particularly in categories such as specialty eggs and premium coffee mixes.
- Everyday shopping – With grocery expenditure a key factor in grocery shopping habits, shoppers across Asia Pacific are increasing the frequency with which they shop for groceries, and in many markets grocery shopping has become a daily occurrence.
- Convenience in proximity – In response to the increased frequency in grocery shopping trips, retailers are increasing their store numbers across all formats, with smaller formats in particular experiencing strong growth.
- Digital grocery shopping 2.0 – Despite strong growth in internet penetration and usage across Asia Pacific, online sales of grocery products continues to lag behind other categories. Less than ten percent of urban shoppers in most Asian markets (with the exception of South Korea) visit grocery retailers’ websites regularly. Of those who do visit grocery websites, online purchasing is low, with obtaining information, viewing promotional leaflets and checking store locations being the primary motivators for visiting grocery websites. Markets where online retailing has gained traction, such as South Korea, provide valuable insight into the likely direction other Asia Pacific nations will take in the coming years as retailers invest in online infrastructure and develop models for profitable delivery of products.
Click here to find out more about Nielsen’s 2012 Asia Pacific Retail and Shopper Trends report, or contact a member of our Client Service team if you are interested in purchasing a copy of the report.