Retail and Shopper Trends Asia Pacific 2010 The latest in retailing and shopper trends for the FMCG industry August 2010 About The Nielsen Company We are a leading global information and measurement company that provides clients with a comprehensive understanding of consumers and consumer behavior. We deliver critical media and marketing information, analytics and industry expertise about what consumers watch (consumer interaction with television, online and mobile) and what consumers buy on a global and local basis. Our information, insights and solutions help our clients maintain and strengthen their market positions and identify opportunities for profitable growth. We have a presence in approximately 100 countries, including many developing and emerging markets, and hold leading market positions in many of our services and geographies. Based on the strength of the Nielsen brand, our scale and the breadth and depth of our solutions, we believe we are the global leader in measuring and analyzing consumer behavior in the segments in which we operate. BUY WATCH Our Buy segment provides retail transactional Our Watch segment provides viewership data and measurement data, consumer behavior information analytics primarily to the media and advertising and analytics primarily to businesses in the consumer industries across television, online and mobile screens. packaged goods industry. Our extensive database of retail and consumer information, combined with Within our Watch segment, our ratings are the primary our advanced analytical capabilities, helps generate metrics used to determine the value of programming strategic insights that influence our clients’ key and advertising in the U.S. total television advertising business decisions. marketplace. In addition to the United States, we measure television viewing in 29 countries. We also We track billions of sales transactions per month in measure markets that account for approximately 80% retail outlets in approximately 100 countries around of global internet users and offer mobile measurement the world and our data is used by our clients to measure services in 10 countries, including the United States, their sales and market share. We are the only company where we are the market leader. offering such extensive global coverage for consumer packaged goods. Our Watch data is used by our media clients to understand their audiences, establish the value of their Our Buy products and services also enable our clients advertising inventory and maximize the value of their to better manage their brands, uncover new sources content, and by our advertising clients to plan and of demand, launch and grow new products, analyze optimize their spending. their sales, improve their marketing mix and establish stronger consumer relationships. 2 Contents Executive Summary Country Highlights • Retail & Shopper Trends in Asia Pacific 2010 4 Pacific • Australia 16 Regional Highlights • New Zealand 17 • Grocery Share of Trade in Asia 8 North Asia • Share of trade for modern self-service outlets 8 • China 19 • Share of trade for modern self-service outlets 9 • Taiwan 21 • Total FMCG Nominal Growth in 2009 9 • Hong Kong 23 • Total FMCG Growth in 2009 9 • Korea 25 • Grocery store numbers in Asia Pacific 10 • Traditional grocery trade 2009 v 2000 10 South-East Asia • % of Male Shoppers in South/ • Singapore 27 South-East Asia (2009 vs. 2002) 11 • % of Main Shoppers who are Housewives 11 • Malaysia 29 • % of Urban Shoppers Using Hypermarkets • Thailand 31 Regularly 12 • Indonesia 33 • Frequency of Visiting Hypermarkets 12 • Philippines 35 • % of Urban Shoppers Using Supermarkets Regularly 13 • Vietnam 37 • Frequency of Visiting Supermarkets 13 South Asia • % of Shoppers Focused on Promotions 14 • India 39 • Trade Concentration Share for Top 5 Chains 14 • Trade Concentration Share for Top 5 Chains 15 • Sri Lanka 41 • Private Label Share of Total Market 15 Country Highlights include: • Retail Structure – Store Numbers • Shoppers Usage of Modern Trade Store Types • Modern Trade Retailers – Banner Names and Numbers • Share of Trade 3 The big increase in the consumer index for the Asia Pacific Executive Summary region was led by Vietnam (+18) and Singapore (+5). The region also took 6 of the top 10 spots globally, in terms of consumer confidence: India (129), Indonesia (119), Vietnam Retail & Shopper Trends 2010 (119) The Philippines (113), Singapore (112) and Australia (108). Peter Gale Of these countries, India and Indonesia occupied the top 2 positions globally. Managing Director – Retailer Services Asia Pacific, Middle East & Africa In Q2 2010, 43% of consumers in the region felt good about The Nielsen Company spending on items they want and need over the next 12 months, compared to 36% in Q3 2009. While consumers are also saying 2009 a tough year for retailers in most Asia that they plan to change their spending to save on household Pacific markets but light appearing at the end expenses, they plan to spend their spare cash in areas including Clothes and New Technology which should be positive for of the tunnel the Hypermarket channel, which suffered from the cut back Volume growth down in 2009: Throughout the Asia Pacific in general merchandise sales during 2009. They also plan to region, countries experienced a lower level of grocery sales increase spending on out-of- home entertainment which may growth in 2009 compared to the very strong performance be less positive for the grocery trade, particularly in developed in 2008. Discounting the effects of lower inflation on absolute markets, where the move to entertaining at home had a positive sales dollars, volume growth was significantly lower in effect on grocery sales in 2009. many markets. The “2000’s” - a decade of change for grocery The strongest performing markets in 2009 were India and Vietnam, where sales values increased by nearly 15% compared retailing in Asia to 2008. In China and Indonesia, markets that had consistently Over the last 10 years we saw a massive change to the grocery enjoyed double-digit growth over the last 5 years, the growth retail business across Asia, driven by retailer investment in new rate slowed down to +3% and +5% respectively. China has seen stores. The number of modern trade stores has been growing by a strong recovery though since Q4 2009 and is now back to 11% over 16,000 stores a year with the total store count increasing growth in Q1 driven by a strong demand for food categories. from less than 50,000 to close to 220,000. In the more developed markets of Hong Kong, Singapore and Modern trade on the rise: Across the region, the modern trade Korea, where grocery sales had benefited from the economic now accounts for 53% of the packaged grocery sales tracked difficulties as consumers spent less on eating out, we saw by Nielsen, from the 35% share in 2000. This shift of consumer growth rates slowing down in the 2nd half of 2009 as consumer spending of nearly 2% per annum has been strongest in North sentiment became more positive. In Singapore where the sales of Asia – led by China where the importance of modern trade basic groceries such as cooking oil grew strongly in 2009 we are increased on average by 3% now seeing growth switching back to personal care, health and more premium products. Both New Zealand and Australia also China and Korea are fastest changing markets: While there showed continued steady sales growth of over 6% last year. has been significant store growth in all markets, the biggest story of the decade was clearly the expansion seen in the Surging consumer confidence in 2010: The latest consumer China market. China alone accounted for over 100,000 new confidence index in the Asia Pacific region, as surveyed by stores or more than 60% of the total new store investment Nielsen globally, continued to improve in 2009 and reached and equivalent to a 1000% increase in a 10 year period. an index score of 101 in Q2 2010, an increase of 23 points from Subsequently the modern trade share increased from 34% to Q1 2009. Globally, the consumer confidence index reached its 64% during the decade with all formats driving that growth. highest level since Q3 2007, at 93 points in Q2 2010. 4 numbers increased from just over 2000 to more than 11,500. It is now difficult in many cities to stand on a corner and not see at least 2 of these stores!! The impact of mini-markets on where people shop has been significant as their share of trade has increased nearly six-fold to over 17%. Indonesia is also a market where Hypermarkets have grown strongly but where there is still room for expansion with only 43% of shoppers using one on a regular basis. 2010: The start of the male shopper decade? Over the last 10 years, we have also seen some change in who is taking responsibility for doing the grocery shopping. Across the Asia region, the proportion of men claiming to be the main Hypermarkets are the strongest modern trade channel shopper increased on average from 14% to 22%. The only accounting for 28% of packaged grocery sales. The importance exception was in China where the proportion of male “main” of Hypermarkets differ significantly by city though – in shoppers remained relatively flat at just 15%. Shanghai, 77% of shoppers claim to use them as their main store compared to just 45% in Beijing. The biggest growth In South and South-East Asia, men are generally more likely opportunity for this channel is now coming from the lower tier to be grocery shoppers – in most countries, we now see cities with the key cities generally reaching a relatively mature male shoppers accounting for more than 25% of the “main” level of development. shopper pie. Malaysia leads the way with 38% followed by the Philippines and India.