While Internet usage is moving toward maturity and online activities are ingrained in consumers’ everyday lives, a new dimension is rapidly expanding—that of Internet-capable mobile devices, including smartphones, tablet computers, eBook readers, connected games devices or other hybrid forms likely to emerge in the near future. The upcoming year’s anticipated surge of mobile device ownership, particularly smartphones, will have a profound impact on the digital behavior of Hong Kong consumers.

Mobile Application – The Rising Trend
Almost nine-in-ten (86%) Hong Kong digital consumers who have accessed the Internet via their mobile phones have downloaded an app (application) to their phones. And following the footprint of smartphones, tablets are another potential game changer, but the larger screen size is attracting a slightly different pattern of behavior.

On-demand, anytime, anywhere access to the Internet is also impacting social media use, which has revolutionized the way consumers communicate, share information, entertain themselves and others, socialize, form relationships and source information. Social media has provided more customer touch points, more methods of content and communication distribution and more information about customers and their preferences.

For more detail and insight, download Nielsen’s Hong Kong Digital Behavior Insights report.

The Nielsen Company conducted a face-to-face survey in fourth quarter 2010 to understand mainland tourists’ purchase patterns and experience in Hong Kong. In addition, a telephone survey with 1,000 local Hong Kong consumers aged 15–54 was conducted to understand their adaptation to the increasing number of mainland tourists in Hong Kong.

Who Is Visiting Hong Kong?
Mainland tourists to Hong Kong came from all regions across China and represented a fairly homogenous segment, as most were married and skewed to the 25–44 age range. They are usually educated and are earning an above average income. Eighty percent of mainland tourists came to Hong Kong in small groups of four or less, usually with their spouses and children being their core companions.

“Well-known as the Asian shopping paradise, Hong Kong provides an array of luxurious shops and malls, making Hong Kong one of the leading travel destinations in Asia for mainland tourists. As many as 80 percent of mainland tourists came to Hong Kong to shop for themselves, with clothing and electronic products favorite purchases,” said Troy Yang, Vice President, Consumer Research, The Nielsen Company Hong Kong. “Mainland tourists come all the way from their hometowns to Hong Kong to purchase quality products – usually during the National Day Golden Week (65%) and Christmas (35%).”

How Do They Spend?
Nielsen’s survey revealed that over two-thirds (68%) of mainland tourists planned their purchases before coming to Hong Kong, with females (65%) and those aged 34 and under (37%) as the most well-planned in terms of purchases. Not surprisingly, cosmetics and skincare products (61%) are the key planned purchase categories, followed by electronics / photographic products (52%), clothing (45%) and jewelry / watches (38%), indicating high-ticket items are the chief purchase targets for mainland tourists.

Mainland tourists planned to spend HK$12,000 on average during their stay in Hong Kong with more than half of the money allocated on shopping (59%), one quarter on food (23%) and less than a quarter on accommodation (18%). Corresponding to their planned purchases, key actual purchased categories of the mainland tourists included cosmetics (33%), electronics / photographic products (22%), clothing (22%) and jewelry / watches (17%).

“It is interesting to note that almost half of mainland tourists consult online platforms (47%) and recommendations from friends / families (48%) when looking for information about Hong Kong. While word-of-mouth is still the most widely accepted mode, there is an increasing engagement with digital platforms, in particular the reliance on discussion boards, forums and blogs for more first-hand experience from the users,” Yang commented.

Impact of Mainland Tourists on Local Consumers
You can find the footprints of mainland tourists everywhere in Hong Kong, whether they shop in Causeway Bay, Tsimshatsui or Mongkok. Given this huge number of tourists, it is not surprising to find promotions tailor-made for mainland tourists.

More than 80 percent of local consumers in general are either positive or neutral towards the increasing number of mainland tourists shopping in Hong Kong. Hong Kong consumers believe the increased spending of mainland tourists is creating more job opportunities and boosting the tourism / catering industries and thus bringing prosperity to Hong Kong. On the other hand, 18 percent of Hong Kong consumers have negative feelings about the influx of mainland tourists into Hong Kong, stating that places are now too crowded for shopping and they cannot adapt to the cultural differences of the mainland tourists.

Opportunities for Growth
With the high percentage of mainland tourists planning their purchases prior to arrival into Hong Kong and given their high engagement with online platforms, there is an opportunity for marketers to create targeted brand awareness programs by advertising on blogs and forums to maximize the reach to their potential consumers.

In addition, mainland tourists in general are very satisfied with Hong Kong retailers. Retailers can be proud of their achievement and should continue to maintain high servicing standards and offering of quality products. “Given these competitive advantages of the retail market, Hong Kong serves as a very good platform for test market on new product launches, especially on luxury and high-end brands before the products are introduced into the China market,” said Yang, “Brands should also identify the key product categories that mainland tourists look for in Hong Kong as well as the places most frequently shopped. These insights will provide retailers and marketers with the information necessary to further expand their reach to capture opportunities among the mainland tourists.”

To get a better sense of where the fast moving consumer goods industry stands – and where it’s going – in Asia Pacific Nielsen has released its comprehensive mid-year report highlighting regional trends such as total FMCG category growth, the role of hypermarkets and the changing gender profile of shoppers as well as country highlights on retail trends in 14 key nations.

FMCG Growth
Volume growth in the industry was down across many Asia Pacific countries as consumers cut back during the recession.  But there were some standouts: India and Vietnam posted value sales rises of nearly 15%.  In China, where value sales had been posting double-digit gains for much of the decade, growth slowed to just 3% in 2009.  But thus far in 2010, the segment has rebounded nicely, with 11% in the sector in the first quarter of the year.

Modern vs. traditional
The traditional retail trade, both wet markets and counter service mom & pop stores, continues to play an integral role throughout much of Asia.  Even in countries experiencing rapid growth such as China, Vietnam, Indonesia and Malaysia, the wet market continues to be the main place for buying fresh food.  But modern grocery stores, such as hypermarkets and convenience stores are now an established presence in most urban areas, with the strongest growth for such formats seen in China and Korea.

Modern channels have continued to grow steadily and now account for 53% of all packaged grocery sales in the region, up from just 35% in 2000.  But that trend varies widely: almost all packaged grocery shopping was done in the modern market in Taiwan and Singapore (94% and 92%, respectively) while in India, just 5% went through self-service outlets.

China has been the most dynamic country over the past decade, with the modern trade growing from 34% in 2000 to 64% in 2009, the fastest retail ever seen with Korea fast on its heels, expanding from 63% in 2000 to 86%.

Format Wars
The expansion of hypermarkets has been a boon for many shoppers, especially those in urban areas.  Today, this format is the strongest modern trade channel, accounting for 28% of packaged grocery sales in China.  In Shanghai, 77% of shoppers use hypermarkets as their main store, while in Beijing, 45% do the same.  In Korea, the channel accounts for 31% of trade.  Meanwhile, in Southeast Asia, Hypermarkets are strongest in Thailand with 90% of urban shoppers using them regularly, there has also been significant development in Malaysia where nearly 40% of shoppers spend most in this format.

In many of these countries, the traditional grocery store has been in slow decline as it has faced increased competition.  In Korea, the traditional channel posted a closure rate of 5% per year, accounting for more than 50,000 store closures over the course of the decade.  Although the hypermarket is making huge gains in Malaysia, most shoppers (over 70%) still visit traditional grocery stores two to three times a week. Asian shoppers now have a wide portfolio of alternative shopping channels to meet different shopping needs and occasions including both traditional and modern stores.

Any visitor to Asia will notice the surge of small format stores, both convenience stores and mini-marts, with some intersections boasting two or more such stores on the corner.  Convenience stores such as 7-Eleven, Familymart and Circle K have continued to grow strongly throughout the region, with shoppers attracted by their convenient location and food service offer.

Indonesia has seen explosive growth in mini-markets, small modern grocery stores, with local chains leading this change.  With just 2,000 such stores at the start of the decade, the nation now boasts more than 11,500, and this channel’s now accounts for more than 17% of grocery sales.

Tapping the Potential of Private Label
In North America and Europe, private label goods have experienced strong growth, especially during the recession.  What’s more, consumers in those regions say that they expect to continue buying private label goods even after the recession is over.   The story is very different in Asia.  The private label concept has yet to make a significant dent in sales, and only in Hong Kong do they have above 5% share of sales.  Retailers across the region have been investing in the development of Private Labels but still have a lot of work to do to convince shoppers of the quality and value of these products compared to leading brands.

What’s Ahead
The changes shaping the retail scene in Asia Pacific go beyond store size and format.  Nielsen has identified a number of trends that will affect retailers and manufacturers in the next decade, including:

• The growing role of the male shopper – Tradition still leads the way in most countries in the region, but an increasing number of men are becoming involved in grocery shopping.  Only in India and Indonesia do housewives dominate, and Korea and Vietnam also still strongly adhere to traditional roles.  Across the region, 22% of the “main” grocery shoppers for households are now male, up from 14% a decade ago.

While there are signs of change in Korea, likely driven by the development of Hypermarkets, only 11% of men claim to be the main shopper for their families.  In Vietnam, the percentage is likely to stay low for a while as long as the traditional Wet Market channel continues to dominate packaged grocery sales.

• Hypermarket growth stalls as multi-format strategy gains – Smaller formats that offer shoppers a more convenient way to “top-up” shopping have gained in popularity, many being opened by the leading hypermarket chains themselves.
• Shopping outside the store – Shopping done via the TV or Internet is gaining traction in Asia Pacific, with Korea leading the online shopping sector.   Koreans have embraced this “format,” with 4% of shoppers saying they use the Internet for the majority of their grocery shopping and 71% saying they use it regularly to purchase groceries and personal care items.  An additional 30% say they use TV shopping.

These and other trends are discussed in the 2010 APAC shopper trends report.

• Download the Asia Pacific Social Media Trends webinar and related materials.

The survey found that three of the seven biggest global online brands are social media sites – Facebook, Wikipedia and YouTube. Close to three quarters of the world’s Internet population (74%) have now visited a social networking/blogging site, and Internet users are spending an average of almost six hours per month on social media sites.

Social media is having an increasing impact on consumers’ purchasing decisions – in Asia Pacific, online product reviews are the third most trusted source of information when making purchase decisions, behind family and friends. This is particularly so for purchases of consumer electronics, cosmetics and cars – products where consumers are most likely to base their purchase decisions on online product reviews. But not ever country shares the same way.

REPORT HIGHLIGHTS

Blogging… it’s Big in Japan

• Japanese Internet users are the most avid bloggers globally, posting more than one million blogs per month, significantly more than any other country in the region.
• Japan’s adoption of Twitter continues to grow, with unique visitor numbers increasing in the last year from less than 200,000 to more than 10 million.
• Sixteen percent of Japanese Internet users now use Twitter, which compares to 10 percent in the U.S.

Grass roots celebrities attract China’s social networkers

• Bulletin board systems underpin popular social media behavior in China – more than 80 percent of social media content is bulletin board systems.
• Social media games are used as a stimuli to drive new users and gain reach with existing users, while content sharing behaviors are more popular among the more experienced users. Virtual product placement within social networking site games is becoming one of the most profitable methods of revenue for social networking sites.
• ‘Grass roots’ celebrity tracking dominates online conversations in China, with social media celebrities such as Sister Phoenix and Mr. Yuan outperforming real life celebrities in popularity.
• Chinese Internet users are the most likely in Asia Pacific to post a negative online product review, and are the only consumers in the region more likely to share negative reviews than positive reviews – 62% of Chinese Internet users say they are more likely to share a negative review compared to 41 percent globally.

Facebook threatens Orkut’s share in India

• Although 70 percent of social media users in India identify Orkut as their preferred social media site, Facebook is gaining market share with 50 percent of social media users claiming to use Facebook most often, compared to 38 percent for Orkut, with the most common reasons for switching include friends moving sites, preferring the look and feel of the site, and offering more features.
• Twitter has enjoyed exponential growth in popularity in India, with more than half of Twitter users (57%) having signed up in the past year. Close to one third of India’s social media users (32%) use microblogging sites such as Twitter at least once a day.
• Online product reviews are increasing their influence on purchases in India, particularly for consumer electronics – 55 percent of Indians that read online product reviews have purchased products based on feedback. Consumer durables/electronics are the most common products purchased based on reviews (64% of purchases).

Koreans a-buzz about social media

• By population, Korea is one of the most social media engaged countries in the world, with the country’s leading social media site, Naver, attracting 95 percent of the Korean Internet population every month.
• While penetration of social media amongst Korea’s Internet population is already strong, it continues to grow (Twitter alone saw 1900% growth in the year to May 2009) with much of this growth coming off the back of Korea’s June election and the adoption of mobile social networking.

Australians flock to online forums

• Australia leads the world in social media engagement, with the highest global average for time spent per month engaging with social media, averaging over seven hours per month
• In contrast to many countries, Australians look to communities of interest such as parenting or sports sites as a key channel for social media discussion – 62 percent of Australian Internet users visited a message board or forum in 2009.
• LinkedIn has seen one of the fastest growth trends amongst social media sites in Australia, with unique audience numbers increasing by 99 percent from July 2009 to May 2010

“The findings highlight, beyond a shadow of a doubt, that social media is here to stay and needs to be taken seriously by the broader business community, from the CMO to the CEO,” notes Megan Clarken, Managing Director of Nielsen’s online business in Asia Pacific. “With three quarters of the global Internet population now participating in some form of social media, businesses can no longer afford to simply observe the social media phenomenon, they need to embrace it.”

“All major indicators in the fourth quarter suggested that advertisers are more confident in turning to online advertising as economy picks up, as evidenced by a strong year-over-year growth in advertising expenditure, especially outperforming that of traditional media amidst a slow economy in the first three quarters of 2009,” said  Joseph Kam, Commercial Director, Nielsen Online, Hong Kong & Taiwan. “As we see from a full year perspective, an increase of 17 percent in total online consumer spending indicates that online advertising is gaining its competitiveness as compared to other traditional forms of media.”

More than 2,500 advertisers in Hong Kong advertised online from October to December in 2009, an increase of 137 percent from Q4 2008. The number of advertising campaigns has been doubled from 3,062 in Q4 2008 to 6,152 in Q4 2009, indicating a significant increase in importance of the online platform.

“The Internet is becoming a more competitive platform for advertisers to effectively reach their audience in a cost-effective way,” said Mr. Kam. “With more people turning online, spending an average of almost 20 hours online per week, more advertisers will leverage the Internet as a sufficient and efficient advertising platform to deliver messages across a large targeted group. Advertising follows eyeballs, and a well-targeted message will have higher relevance to people in the right locations and higher ROI.”

Almost three-quarters (73%) of those surveyed said they are no longer in recession.  More than half (56%) described their job prospects as “good” or “excellent,” with 60 percent describing the outlook for their personal finances the same way.  Both of these scores represent double-digit increases since the June 2009 survey.

“This significant rebound in job confidence corresponds with the territory’s unemployment rate falling below five percent for the first time since January 2009,” said Oliver Rust, Managing Director, Hong Kong, The Nielsen Company.

After covering essential costs, Hong Kong residents still prefer to put their cash in savings and invest in the stock market. They also have increased their spending on out-of-home entertainment, new clothes and holidays.  Only spending on new technology products declined during the quarter.

Read the press release with complete findings.

The United States and remaining Western Europe continue to lag but are showing moderate signs of growth as well. This illustrates the pace of recovery which will be quicker across emerging economies in Asia, and Brazil but measured across developed economies.

Download the full Nielsen Economic Current.

“The Nielsen survey shows that in the past six months, consumers have become more optimistic about their countries emerging from recession with better job prospects and personal finances. This is another sign that global recovery is heading in the right direction,” said James Russo, Vice President, Global Consumer Insights, The Nielsen Company. “However, while purse strings may be loosening in some markets, there is clearly a big difference in the pace of expected recovery between the emerging and developed markets, and consumers’ increased confidence is not yet translating into a widespread readiness to start spending.”

While eight of the top 10 most confident markets in the fourth quarter of 2009 came from Asia Pacific, including emerging markets Indonesia (ranked 1st) and India (ranked 2nd), consumers in two of Asia’s most developed markets, South Korea and Japan, were the least confident. Brazil (ranked 3rd) and Canada (ranked 10th) were the only countries outside of Asia to make the top 10. Hong Kong recorded the highest consumer confidence increase for the second consecutive quarter in Q4 – up seven index points from 93 in Q3 2009 to 100 (on a scale of 0 to 200 Index points) in Q4. Confidence in Hong Kong rose a total of 21 points since June 2009.

Globally, between June and December last year, the Nielsen Global Consumer Confidence Index rose five points from 82 to 87.

For more data and commentary, download the complete Nielsen Consumer Confidence Index press release.

About the Nielsen Global Consumer Confidence Survey
The Nielsen Global Consumer Confidence Survey was conducted between December 4 -18, 2009 and polled over 17,500 consumers in Asia Pacific, Europe, Latin America, the Middle East and North America about their confidence levels and economic outlook. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%.

“While these results are encouraging, consumers in most parts of the world remain cautious about spending their money, and are increasingly moving to value channels.  At the same time, retailers are selling more on promotion.  It’s likely these trends will continue until economic recovery has solidly taken root,” said James Russo, Vice President, Global Consumer Insight at The Nielsen Company.

Nielsen Economic Current Key Indicators
Country	Trend	Aug-09	Sep-09
Brazil		1	1
Canada		2	2
China		2	2
France		3	2
Germany		3	4
Hong Kong		2	2
India		1	1
Italy		3	3
Spain		3	3
Taiwan		3	1
United Kingdom		2	2
United States		3	3
Source: The Nielsen Company 1=Very Strong Growth >/= +5%; 2 = Growth between +1 and +4%; 3 =Neutral Between -1 and +1%; 4 =Negative between -1 and -4%; 5 = Very Negative

Country by Country Highlights

• U.S. – Consumers continue to be skittish about the recovery and their willingness to spend money.  Store brands, value channels and buying on promotion all showed growth as manufacturers continued to step up incentives and deals.
• Canada – Volume and value sales grew in September 2009, with strong growth in the number of retailers selling on promotion.  Unit sales rebounded as price increases stabilized at 2 percent.
• France – Volume and values sales showed some growth, but with confidence dropping in the September survey, French shoppers actually reduced their shopping frequency.
• Germany – Volume sales remained neutral, while value sales recorded a small decline.  Germans continue to watch their Euros as their confidence in the economy has dipped.
• U.K. – Volume sales improved, and premium brands returned to growth.  Consumers were taking advantage of the strong promotions on offer, shopping more frequently and spending more per trip – despite slightly decreased consumer confidence.
• Italy – Italian consumers cut back the frequency of their shopping trips, but spent more per trip, taking advantage of retailer promotions and switching to store brands.  Volume was up, but value sales were down.
• Spain – Spaniards remained neutral in their spending habits, but did start shopping more frequently for the first time in nine months.
• Brazil – All indicators show that Brazil has returned to levels prior to the global economic crisis.  Volume and value sales were up, and shoppers were feeling confident: shopping frequency and spend per trip both increased.
• India – Volume and value sales indicators each posted better than 5 percent growth, and Indians are feeling very optimistic about the economy and finances.
• China – While retail sales were relatively flat, growth is now apparent in modern trade outlets, which may be the first sign of fast moving consumer goods sales recovery.
• Taiwan – Volume and value sales increased solidly for the first time in nine months.
• Hong Kong – Increased consumer confidence has driven growth of volume and value sales.

The Buzz
In an analysis of blog buzz in seven countries, Nielsen found that online discussions about the global recession have leveled off as consumers have accepted the “new normal.” At the same time, however, mentions of recovery have not gained traction, and actually declined in the most recent week reviewed.

“It seems as if people are accepting the new reality of an ever present recession, which through our analysis of online buzz illustrates that despite a dip in recession discussions in the spring, that they have now leveled off but not subsided completed. Perhaps it is not on the front burner for all consumers as it was in 2008 thru mid 2009, but definitely still on the back burner where it continues to impact consumer decisions,” concluded Russo.

• Download the Nielsen Economic Current.