| Contrary to popular belief, Supermarket stores grew by only 5 percent during 2005 and currently less than 20 percent of household shoppers in key cities are regular supermarket shoppers. However Hypermarket has posted better growth with the number of hypermarkets growing by 57 percent form 2004 to 2005. |
| "When compared to China, India is 36 times less developed. But with one modern store for every 400,000 population, there is adequate scope of expansion in the country. With a lot of companies intending to invest in the Indian retail sector, we are likely to witness a retail boom. So it would be an interesting time to monitor the retail space in India" said Sujit Das Munshi, Executive Director, Retail Management Service, ACNielsen South Asia. |
| Another interesting trend when it comes to price sensitive Indian buyers is that it is convenience that takes them to a store rather than pricing. The other key factors that drive store preference are store accessibility, quality of products, loyalty programmes and product assortment. |
| "The numbers of stores visited by consumers have not increased in the Metros. This clearly shows that Indian consumers is evolving and are likely to settle for their favorite branded store instead of experimenting. The task now lies ahead for marketers is to ensure that they manage to retain their customers with availability of good quality products, innovative promotions and world class service within a store. A satisfied consumer can be a great brand ambassador and can help win new/loyal customers." commented Das Munshi |
| Across Asia Pacific |
| In total Asia Pacific region, the Competition for the grocery dollar is set to continue with the total number of grocery outlets in the region increasing by two percentage points to over 12.7 million by the end of 2005, according to the latest 2006 ACNielsen | ShopperTrends report. |
| Conducted annually, ACNielsen | ShopperTrends provides insights into changing grocery shopper behaviour and the factors driving shopper satisfaction and loyalty in 15 countries across Asia Pacific and more than 40 globally. ShopperTrends also provides an understanding of shoppers' awareness and usage of Private Labels. |
| The real action across the region is coming from the growth in modern self-service grocery stores. In 2005, a net increase of over 12,000 stores, an increase by six percentage points compared to 2004 was experienced. The growth was driven by a 19 percentage point increase in hypermarkets and 15 percentage point growth in convenience stores. (Table 1) The increasing availability of these store types is continuing to have a significant impact in changing the behavior of shoppers in this region. |
| The shifting grocery spending |
| In 2005, modern grocery retailing accounted for 48 percent of fast moving consumer goods' (FMCG) packaged grocery sales in Asia "� an increase of two percentage points compared to 2004 and at similar rates to the last five years. (Table 2) "The switch of spending from traditional grocery stores is expected to continue at this rate over the next 12 months, when we are likely to see the modern trade becoming more important, for the first time, than traditional stores," Peter Gale, Managing Director, Retailer Service ACNielsen, Asia Pacific said. "In fact this is already the case in North Asian countries, with China (excluding villages) experiencing another three percentage points shift compared to 2004, with the modern trade now accounting for 53 percent of total grocery sales." |
| In South-East Asia, the picture differs, with Singapore the only market where the modern trade dominates. Compared to North Asia, only 43 percent of sales in South-East Asia go through modern self-service grocery shops, although the shift towards the modern channels continues in nearly all countries. The most significant modern trade growth during 2005 has come from Malaysia, Indonesia and Vietnam. |
| The grocery retailing structure is changing |
| Based on the regular usage of the different store formats in urban centers, the grocery retailing structure in Asia Pacific is gradually changing and can be segmented into four distinct groups according to ACNielsen | ShopperTrends. Among them the Pacific, Hong Kong and Singapore are the most developed; Korea, China and Japan the most fragmented; Thailand, Taiwan and Malaysia have become more hypermarket-dominant; and the developing markets of Indonesia, the Philippines and India are fast catching up. |
| Concentrated supermarket-dominant markets |
| In Hong Kong, Singapore and the Pacific, the modern grocery trade accounts for more than 90 percent of packaged grocery sales and the markets are dominated by a limited number of chains. Supermarkets are the most frequently used channel by the vast majority of shoppers, typically visited twice a week or more. |
| Meanwhile convenience stores are well established in these markets, where 50 to 60 percent of shoppers use them regularly on average, once a week, and less frequently than the use of Supermarkets. In Hong Kong however, with the much higher frequency of shopping, over eight in 10 shoppers are using convenience stores, on average, three times a week. |
| Hypermarkets are either non-existent in these markets or very limited. In Singapore, where there are now nine Hypermarkets used by a quarter of shoppers, only four percent use them as their main grocery store. |
| Fragmented multiple channel markets |
| While they may be at different stages of development in grocery retailing, Japan, Korea and China are experiencing the greatest level of diversity of all markets in Asia Pacific, from the well-developed and slowly changing Japanese market, to the transitioning Korean market, to the fastest changing retail market in the world, China. |
| Within urban centres, there are some striking similarities in how people shop, with a significant amount of cross-channel shopping, most developed in Japan but increasingly in China as available shopping options increase. Shoppers in these markets are, along with Hong Kong, the most frequent shoppers in the region, using Supermarkets two to three times a week and Hypermarkets once or twice a month in China and Korea. |
| The level of development of convenience stores differs across the three markets, with the vast majority of Japanese shoppers being regular and frequent users, while only 25 percent of urban Chinese shoppers are using convenience stores currently. "This is clearly a reflection of the number of stores, with Japan having more than 10 times the number of stores per head of population, but again it's a retail format which is starting to increase in China, with store numbers growing by 18 percent in 2005," Gale added. |
| Hypermarket-dominant markets |
| Among the three markets in the hypermarket-dominant category, Taiwan is significantly more developed than both Malaysia and Thailand, with 90 percent of grocery sales going through the modern trade nationally compared to less than 50 percent in the other two countries. Hypermarkets are the main store format for more than 50 percent of shoppers in Taiwan, Malaysia and Thailand, and the majority of households use them on a regular basis, typically two to three times a month. |
| Meanwhile a developed convenience store sector is fast emerging. In both Taiwan and Thailand, over 85 percent of urban shoppers use convenience stores as often as three or four times a week - higher than in Japan. Malaysia, while behind in this area, has experienced a significant growth in 2005, with an increase in regular users of convenience stores from 43 to 65 percent of households. |
| The effect of this growth in the largest and smallest modern trade formats has been pressure on supermarkets, where the number of shoppers using this channel has been declining. "To survive in these markets it is clear that supermarkets will need to effectively differentiate themselves, as they struggle to compete - on price and range with hypermarkets, and on location with convenience stores," Gale urged. |
| Developing markets |
| At the other end of the scale, traditional trade, counter service grocery stores and wet markets are still dominant in Indonesia, India and the Philippines. Shoppers in these markets visit the traditional format daily or once every other day and supermarkets less frequently . While about 50 percent of urban shoppers are using supermarkets on a regular basis, hypermarket penetration is low and convenience stores are hardly used. Convenience stores aren't developed but there is an interesting trend in the Indonesian market where mini-markets have been growing rapidly with the number of stores growing by 15 percentage points in 2005 to over 6,500 and share of trade nationally increased by 10 percentage points. The appeal of mini markets to shoppers is low-priced convenience. |
| About ACNielsen |
| ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns. For further information visit https://bsmedia.business-standard.comwww.acnielsen.co.in |
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