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July 2005
Mumbai, India
The Urban Indian Shopper is spending more on food, groceries and personal care than before. According to the 2005 ACNielsen ShopperTrends, The average monthly expenditure on these items grew by a robust 14% (USD 57 vs USD 50) over the previous year. (Table 1)
“This is heartening since it indicates a greater share of wallet being dedicated to the shopping basket and is a necessary fundamental building block for trade development in a country like India”said Shrikant Kulkarni, Associate Director, ACNielsen India.
Of this expenditure a significant portion (47%) was dedicated to fresh food. This indicates an increase over the previous year when the proportion dedicated to fresh food purchases was recorded at 42%. “The presence of fresh food in the shopping basket and indeed its growth, are a clear indicator that the modern self-service trade would do well to stock fresh foods in order to increase the amount of money being spent within them. Already large retailers have ventured into stocking these items and are reaping the benfits of it” pointed out Kulkarni. “In the future, this is likely to be an important tool to corner a greater share of shopper spends.”
Within India, the profile of shoppers too has changed vis a vis the previous year. “The households dependence on the male shopper has reduced” observed Kulkarni. The proportion of males as the main shopper has reduced to 21% compared to 26% in the previous year. “But their influence on shopping decisions has increased dramatically” he said. Males comprise 43% of the key influencer for shopping decisions compared to 34% last year.
“ACNielsen ShopperTrends points to the fact that while an increasing number of women are now more empowered to exercise purchase decisions, they are still ready to consider the preferences expressed by the males in the household” explains Kulkarni. “To retailers and marketers this is a key input in terms of planning their communication strategies and speaking more specifically to males as a segment, who may not necessarily walk into the store, but nevertheless play an important role in deciding what is purchased” said Kulkarni. (Refer Table 2a, Table 2b)
Regional Trends
In terms of sales growth at a regional level, Southeast Asia enjoyed the fastest growth in 2004, in Indonesia, Malaysia and the Philippines in particular, recording double-digit value sales growth “While this growth can be attributed - at least partly - to increased retail prices caused by rising oil prices, there was also significant underlying growth,” said Shrikant Kulkarni, Associate Director, ACNielsen India. “Additionally, Thailand was not far behind these three countries, enjoying another year of strong growth with sales increasing by eight percent.”
It was a very different picture across the rest of Asia, with most North Asian markets flat year-on-year, except for China. India too, shrugged off a sluggish performance in the previous and the grew by six percent over the previous year. In the Pacific, both Australia and New Zealand continued to show positive trends, with sales growth of five to six percent, much the same as in 2003.
Modern Trade Development
The Asia Pacific region continues to catch up with global retailing trends in terms of retail structure, with the modern self-service trade continuing to grow ahead of the overall market, leading to a three percent shift in its share of trade for Asia.
“At the moment, the share of the modern trade is running at 47 percent and we expect it to continue to climb and pass 50 percent by the end of 2005,” added Kulkarni.
In North Asia, nearly two-thirds of all grocery sales are now made through the modern trade. Over the last three years there has been a near 10 percent shift in business away from the traditional trade, led by the continued rapid development of the market in China. With the total number of self-service stores increasing by over 35 percent to 54,000, the modern trade now accounts for more than half of all grocery turnover in China. (Table 3)
Korea was the other market in North Asia seeing major changes during 2004, with the growth in Large Format stores leading to the decline in importance of the traditional trade to just 25 percent. There are now over 250 large format stores in Korea, with more than five stores per million people. Korea now has the highest density of this store format in the Asia Pacific region.
However, the pace of development in South-East Asia is much slower, it is being driven primarily by the rapid market change in Indonesia where the modern trade now accounts for 30 percent of sales. This growth has been driven by the increase in new stores openings including 90 Hypermarkets nationally and a dramatic 40 percent increase in the number of minimarkets to 5,600.
“This store format has proved very successful in Indonesia with one in seven urban grocery shoppers using them as their main store and over 60 percent using them regularly,” commented Kulkarni.
In South Asia, while the development of modern trade seems to be in its infancy, it is starting to accelerate. In India, there are now over 2,400 supermarkets, which account for 10 percent of total grocery sales within the 28 urban towns under modern trade coverage. Just over a quarter of all Indian household shoppers have used a supermarket during the last month. Supermarkets also accounted for 10 percent of sales in Sri Lanka during 2004.
Convenience Stores
Meanwhile Convenience Stores continued their booming momemtum from 2003, recording more than 10,000 new store openings in 2004 in Asia Pacific, an increase of over 14 percent over the previous year. The Convenience Store format has been the most fast moving in China, with more than 60 percent of all new stores coming from this market, resulting in China hitting the 20,000 store mark nationwide.
Most Asian countries experienced a 10 percent increase in new stores, with the exception being Japan, where there was little change despite the country still leading the way with nearly 43,000 stores. Taiwan, however, has the highest store density, with 8,000 stores throughout the country or one store per 2,800 people. As revealed by ACNielsen | ShopperTrends 2005, 80 percent of urban grocery household shoppers in Taiwan visit a convenience store each week, with an average number of visits per month reached 14. The convenience store format also continued to grow in Hong Kong during 2004, with 10 percent more shoppers using them on a weekly basis.
In South-East Asia, Thailand leads the way in convenience store development, with 10 percent of sales passing through this channel. Half of all urban shoppers use them weekly, visiting an average of two to three times a week. There is still plenty of room for growth though, with only 64 stores per million people across the country as a whole according to Mr Kulkarni.
Hypermarkets
Across Asia, hypermarket/large format stores are now the dominant format in urban areas of five countries, namely Thailand, Taiwan, Korea, China and Malaysia with about 45 to 60 percent of urban household shoppers using them as the main outlet for the majority of their packaged groceries. In Thailand in particular, 90 percent of urban shoppers use hypermarkets at least once a month and the market possesses the highest proportion of loyal hypermarket shoppers . “However there is still plenty of room to further expand the shopper base throughout Asia as the number of stores continue to increase,” Kulkarni added. “And it’s worth noting that sales growth for the hypermarket format is mostly driven by an increase in the average frequency of visiting in most countries where shoppers visit them between two to four times a month.”
Personal Care Stores
As ACNielsen | ShopperTrends 2005 reveals, the Personal Care Store format is another channel of tremendous potential and one not to be overlooked. While at the moment only less than 40 percent of household shoppers using them regularly, there is plenty of room for expansion. Among all markets, Hong Kong is by far the most developed for this store format, with 90 percent of shoppers using them each month and typically visiting more than once a week.
Traditional Trade
Amid the buoyant development of the modern trade throughout Asia Pacific, the total number of traditional grocery stores remained fairly steady during 2004, at 11.4 million. In the Philippines, store numbers continue to grow and reached 590,000 outlets, an increase of over 40,000 stores compared to 2003. The substantial rise in store numbers also led to an increase in the share of trade to 57 percent of grocery sales, making the Philippines the only country where the traditional trade is gaining share from self-service stores. Together with India, Sri Lanka and Indonesia, the four countries have the highest store density of at least 6,000 grocery stores per million of population.
In terms of penetration, three quarters of the urban population in Southeast Asia still use the traditional trade regularly, at least once every other day, particularly for impulse categories.
With the exception of Korea and Japan, Asian shoppers continue to use Wet Markets as their main place to buy fresh food, with the vast majority regularly using them three to five times a week.
About ACNielsen | ShopperTrends
Conducted annually, ShopperTrends is the only consistent region-wide survey providing retailers with insights in shopping behaviour and key trends in the Asia Pacific region, factors driving shopper satisfaction and loyalty. It allows key retailers to assess their store, compare the relative level of development of each country and quantify the potential for development. It also helps understand shoppers’ awareness and usage of private labels. The 2005 ACNielsen | ShopperTrends polled nearly 15,000 urban households across 14 Asia Pacific markets namely Australia, New Zealand, China, Hong Kong, Taiwan, Korea, Japan, India, Indonesia, , Malaysia, Philippines, Singapore, Thailand and Vietnam.
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.
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