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11 October 2006
Taipei
Competition for the grocery dollar is set to continue in Asia Pacific 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. Across Asian countries Taiwan remains the highest convenience stores density with one store per 2,600 people. Furthermore, Taiwan is also ranked as the second highest hypermarkets density with one store per 212,264 people while Korea is No. 1 with 177,537 people.
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. 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. “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,” Oliver Rust, Executive Director, Retail Measurement Service, ACNielsen Taiwan 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 centres, 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.
Hypermarket-dominant markets
Among the three markets in the hypermarket-dominant category, Taiwan is significantly more developed than both Malaysia and Thailand, with 83 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,” Rust urged.
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,” Rust added.
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.
“All in all, there are no signs that the competition for our grocery dollar is slowing in Asia Pacific. While China has been the most dynamic grocery retailing market in Asia over the past decade and continues its dramatic transformation, it could be facing some competition in the next couple of years,” Rust added. “With news every week of companies looking to invest in the retail sector in South Asia, and India in particular, retailers and manufacturers need to watch this retail space very closely.”
About ACNielsen
ACNielsen 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 http://www.acnielsen.com.tw
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