Value has become a main focus for Asian shoppers, partly driven by the economic situation and partly as a result of increased retailer activity focused around price and promotions. According to Nielsen’s Asia Pacific Retail and Shopper Trends 2009 Report, more than 70 percent of shoppers claim to have become more price sensitive compared to last year. The effect: shoppers are more inclined to buy only what they need, spending their money on essentials rather than on treats or what they now consider ‘nice-to-haves’. They’re also consciously trying to cut down on the quantity purchased and are actively seeking out products on promotion.

Over the course of 2008 in Asia, grocery markets continued to show volume growth, led by India (+9%), China (+9%) and Vietnam (+18%), with only Taiwan (-7%) experiencing a decline in sales. Value sales increased by double figures in many markets on the back of high inflation for key food categories. But with inflation falling in all markets, we have seen value growth drop sharply in 2009, although overall volume growth in many markets has held up reasonably well with shoppers not cutting back significantly on grocery categories.

Traditional trade continues to lose share

As expected, the traditional counter service trade continued to lose share in Asia, with overall share of trade dropping another percentage point to 47 percent in 2008. At the same time, the absolute number of traditional grocery stores in the region grew by one percent to over 12.3 million stores. In most developed countries, traditional store numbers fell by five percentage points or more. In Korea, where traditional store numbers dropped by nine percentage points, the share of trade decreased from 15.9 to 13.9 percent, while in Taiwan the traditional trade now accounts for just over six percent of sales, having lost 1.5 percent share in the last 12 months.

The retail landscape looks very different in Southeast and South Asia, however, where traditional store numbers actually grew year on year, and even though share of total grocery sales continues to decline slowly, the majority of shoppers in all markets continue to shop at this trade channel. The traditional channel continues to meets shoppers’ needs for everyday convenience, personal service and affordability – being able to buy the smallest sizes and quantities.

Growth of small modern trade outlets

Globally, many large retailers such as Wal-Mart, Tesco and Carrefour have embraced a multi-format strategy that includes the development of smaller neighborhood stores. Similar growth in small modern trade outlets is also being seen across Asia, with mini-markets/small supermarket store numbers increasing by 17 percent in 2008 to over 100,000 stores.

Indonesia has led the way over the last 10 years and in 2008 more than 1,500 new stores opened, taking the total to over 10,500. These stores now account for more than 16 percent of total packaged grocery sales. Shoppers in Indonesia are continuing to embrace the convenient location, relatively good service and acceptably low prices offered at mini-markets.

Retailers in China are also investing in this store format, with store numbers growing by 22 percent in 2008 to more than 70,000 stores, accounting for more than three-quarters of all modern self-service outlets.

In South Korea we are also seeing the leading Hypermarket operators expanding into small supermarket formats, or ‘Super Supermarkets’ as they are known in South Korea. Samsung Tesco is now operating over 150 SSM Homeplus Express stores and E-mart is planning to open 30 or 40 small, 300 square meter E-Mart Everyday stores. The expansion of these large chains into the small store arena has led to concerns regarding competition with small store owners, and the South Korean government is considering introducing a bill to regulate the opening of small supermarkets.

Last June, we fielded a survey to our Nielsen Homescan panel which included a question asking primary shoppers about their tendencies for reading labels on food and beverage packages.  Just under two-thirds of U.S. households (61%) agree completely or agree somewhat that they read these product labels, with 31% agreeing completely.  And as you might expect, we do see some differences when we drill down across demographic groups, but we thought it would be interesting to also look at how shoppers at various retailers differ in terms of reading labels.

Here are the demographic groups who tell us they are more apt to read labels and whose response indexed 10% or higher versus the average household response.  No surprise here: better educated, older (probably needing to look at labels due to a health condition), higher income, and those in a professional/managerial occupation.  Is there an opportunity to increase font side on package labels to help older consumers decipher product ingredients?

% Households agreeing completely to “usually reading labels on food & beverage packages”:

• Total Households:  30.5%
• Female Head College Grad:  36.0% (118 index)
• Female Head Age 55 to 64:  35.0% (115)
• Female Head Age 65+:  34.8% (114)
• Incomes of $100k+:  34.1% (112)
• Professional/Managerial:  34.0% (111

Here are the demographic groups least likely to read labels and whose response indexed 10% or lower versus the average household response. These groups were blue collar, lower educated, families with kids of all ages, and larger families.  I suppose it makes sense that those larger, on-the-go families, who are managing tight budgets with more mouths to feed, are less likely to read labels on a regular basis.

However, it is disturbing given childhood obesity rates in this country, but also a good reason why I am pulling for the Guiding Stars program deployed by Delhaize banners to simplify the recognition of healthier products.

• Blue Collar:  24.8% (81)
• Female Head Not High School Grad:  24.9% (82)
• Families w/kids 13 to 17:  25.5% (84)
• Female Head Age 35 to 44:  26.0% (85)
• Families w/kids 6 to 12:  26.3% (86)
• Families w/kids under 6:  26.7% (88)
• 3 to 4 members:  27.1% (89)
• 5+ family members:  27.4% (90)

Here are the retailers whose shoppers (based on shopping in a retailer at least once over the year-ending May 2, 2009) were most likely to read labels and whose response indexed 10% or greater versus the average household response.  No surprise seeing Whole Foods top the list.  With Publix stores located mostly in the state of Florida (our oldest state) it ties with the above demographics insights.  Costco and Safeway probably benefit from a combination of their higher income draw as well as from focus on better-for-you offerings.

• Whole Foods:  52.4% (172)
• Trader Joe’s:  42.9% (141)
• Publix:  35.6% (117)
• Costco:  33.5% (110)
• Safeway Corp Grocery (all banners combined):  33.5% (110)

I’m happy to report that no retailer we tabbed had a response with an index of 10% or lower versus the average household.  However, only 26.8% of households who shop a Tobacco Store (index of 88) agree completely with usually reading labels.  These shoppers obviously forgot about reading labels a long time ago.

For further information or to arrange a comprehensive presentation on consumer shopping patterns, please contact Todd Hale at todd.hale@nielsen.com or 859-905-4615.

62 percent of Taiwan’s grocery shoppers claim to have become more price-sensitive, while among females over 35 and low income households, that number rises to 75 percent.  One store, Post Exchange, has capitalized on this trend with its low price strategy. As a result, 17 percent of all Taiwanese shoppers spend the majority of their grocery dollars at the chain.

Brand loyalty for some categories has suffered: more than 60 percent of consumers would buy an alternative brand of biscuit, snacks, shampoos and laundry detergents if their usual brands were out of stock.  That said, vitamins and face care products seem to engender the highest levels of brand loyalty, with high levels of consumers saying that they would wait until their brand was available or locate it at another retailer.

Read the full press release about Taiwanese consumer trends here.