Globalize your brand by knowing Asian shoppers

ublished in Philippine Daily Inquirer, July 2, 2004

WHILE GLOBALIZATION HAS BECOME a major threat for many local brands including those in the FMCG (fast moving consumer good) category, the same liberalization provides huge opportunities for shrewdly marketed Filipino brands.

While brand value is key to the success of a global brand, understanding shopper and retail trends is critical. Undaunted by global competition, Liwayway Marketing Corporation’s Oishi snacks is making headway in China and Vietnam. San Miguel Corp.’s beer brands are making inroads in North and South Asia, among others.

Recently, AcNielsen Philippines released an industry report on “Grocery Shopper Trends In The Asia pacific.” The study, completed in 2003, tracked over 100 FMCG categories in countries like Australia and New Zealand (Pacific); Japan, Hongkong, Korea, Taiwan, China (North Asia); Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam (Southeast Asia); India and Sri Lanka (South Asia).

Among the grocery category studies were packaged food, impulse products, household, toiletries, dairy and frozen products.

The report states:

The continued growth of the self-service grocery trade. Across the Asia-Pacific region, the self-service grocery trade continues to rise in importance with 44 percent of FMCG sales traced to this retail format.

The rise of multiple store formats. Like most regions around the world, there is the emerging presence of multiple store formats in the Asia Pacific led by hypermarkets, convenience stores and personal care stores. The last three are shaped largely by market acceptance and changing consumer needs. Other store formats include traditional grocery stores or small stores that include sari-sari stores; supermarkets; superstores and warehouse clubs; general merchandise stores; independent and chain drugstores.

Convenience stores, because of proximity to shoppers and brand recall, is expected to remain firmly in place for a long time to meet customer needs. Overall, convenience stores gained share in most countries as the number of stores across the region increased by 16 percent to over 80,000 stores. Convenience store brands include 7-11, Circle K, Ministop, Caltex Star Mart, Shell Select, BP, HBC Your Personal Store, AM-PM.

Japan leads with over 40,000 convenience stores. On the other hand, Taiwan, which led the hypermarket evolution in Asia, reported a slide in hypermarket usage in 2003 while showing a remarkable increase in personal care stores selling imported items and convenience store openings. Taiwan has about 7,500 convenience stores or one store for every 3,000 people. Taiwanese shoppers are also the most frequent users of convenience stores with an average household shopper visiting a store every two to three days.

In the Philippines, the traditional grocery or sari-sari store that carries only around 50 key items and situated in people’s houses showed retail growth in an otherwise less buoyant economy. This was largely due to the movement of small pack sizes and satchets.

Buoyant retail market in China, Thailand, Malaysia and Korea. China is reportedly the fastest growing self-service retail market in the region with the number of modern trade outlets increasing by 40 percent and convenience stores numbering over 12,000.

Thailand comes second to China. Due to a positive growth in economy, there is a surge in demand for non-essential impulse categories like beer, whisky, snacks and energy drinks. These categories grew by over 15 percent and were consumed in both traditional and modern convenience stores. Likewise, hypermarts continue to thrive in Thailand with nearly 60 percent of urban Thai shoppers using this as their main store for purchasing groceries.

In Malaysia and Korea, hypermarts and large format stores are becoming the main store format for at least 40 percent of urban grocery shoppers. Nevertheless, while there is high acceptance for hypermarts in Malaysia, its growth is threatened by legislation with the government announcing plans for new zoning regulations that restrict store openings.

Hypermart brands across the region include Tesco, Big C, Carrefour, Giant, Walmart. Large format stores or warehouse clubs include Cosco, Makro.

Concentrated and emerging retail markets. Australia, New Zealand, Hongkong and Singapore are largely concentrated markets with a few retailers dominating the sector. On the other hand, Sri Lanka and India are emerging markets with the modern self-service trade just starting to develop and thrive.

Main shopper versus key influencer by gender profile. Across the Asia-Pacific region, women remain to be the main shoppers for household goods. Notable though, is the huge influence of men when it comes to food and grocery basket content in countries like Australia, New Zealand, Hongkong, China, Singapore, Malaysia, Indonesia and Sri Lanka.

Propensity to try new products. While there is general conservatism in trying out new things among Asian shoppers, there is a higher degree of propensity to try new products among shoppers in Malaysia, Vietnam and India. On the average, most Asian shoppers try to keep up with information on new products or brands they do not go out of their way to try these new products. Hence, marketers must convince consumers out of their buying inertia.

The promotional versus brand loyal shopper. In the Asia-Pacific, there are up to 30 percent of shoppers belonging to the promotional shopper behavior profile. These shoppers are not brand loyal, are more likely to shop around for special offers and read and respond to store brochures. The promotional shoppers are open to new ideas and willing to try private labels, also known as house or store brands. Australia and New Zealand lead in private label consumption with over 80 percent of shoppers partial to regularly buying store brands.

On the other hand, while 95 percent of shoppers in most Asian countries are aware of private label brands, there are only three countries namely Korea, Singapore and Thailand where half of urban shoppers buy one private label in a month. Private labels remain an opportunity for the Asian retail trade and astute retailers would do well to maximize this window provided they know how to effectively convince shoppers.