THE NEW GLOBAL RETAIL LANDSCAPE: SMALL AND SIMPLE IS BEAUTIFUL RIGHT NOW
Despite evidence that the rise of digital shopping has become an influential factor in the changing retail landscape, consumer shopping channel preferences continue to shift. Which channels are consumers shopping most, and what are they buying there? Are modern trade outlets replacing traditional trade in developing markets or is the opposite true? A review of sales trends for select fast-moving consumer goods categories* across the world reveal that when it comes to trade channel importance, there is no single answer that’s right for all.
Globally, the trade channel mix is becoming more fragmented as consumers shift toward smaller store formats. On a value basis, large supermarkets and hypermarkets account for just over half (51%) of global sales, but smaller formats such as traditional, drug and convenience outlets grew at a faster rate over the past 12 months. In fact, year-over-year sales growth in drug stores (+6%), small supermarkets (+5%) and traditional stores (+4%) doubled, or more than doubled, that of large supermarkets and hypermarkets, which grew a modest 2% each.
“Across the globe, we’re seeing the rise of proximity retailing,” said Patrick Dodd, president, global retailer vertical, Nielsen. “In the eyes of global shoppers, small and simple is beautiful right now. While there is some growth for large stores, the real winners are mini markets, small supermarkets and convenience stores. And digital is taking proximity/convenience retailing to a new level of customer centricity. There is nothing more convenient than a store in your pocket or in your handbag.”
Channel structures and trends vary greatly between countries, however. In developed markets, 80% of sales come from large supermarkets, hypermarkets and convenience stores. While sales in large supermarkets and hypermarkets were flat (+0.3% and +1%, respectively) in the latest 12 months, sales in convenience stores, hard discounters and drug stores grew more rapidly (+3%, +2% and +2%, respectively).
In developing markets, the story is much different. Traditional trade stores continue to be the dominant channel, accounting for 38% of total retail channel sales, but sales in supermarkets, hypermarkets and drug stores are growing at a faster rate. Sales grew by double-digit rates in drug stores (13%) and large and small supermarkets (10% and 11%, respectively), compared with only 4% growth in traditional stores.
Convenience and drug stores demonstrate strong growth potential in both developed and developing markets, which underscores consumers’ desire to use brick-and-mortar stores for quick trips and special (often urgent) purchases. As a result, these channels deserve considerable focus from manufacturers. A central team devoted to understanding consumer preferences specifically in these channels would help build best practices on how to succeed.
The report also discusses:
The product categories best positioned for e-commerce success.
The generational age groups driving online grocery sales intentions.
The technology-based convenience options most used, both in-store and out.
For more detail and insight, download Nielsen’s Global E-commerce and The New Retail Report.
ABOUT THE NIELSEN GLOBAL SURVEY
The findings in this survey are based on respondents with online access across 60 countries. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective only on the habits of existing Internet users, not total populations. In developing markets where online penetration has not reached majority potential, audiences may be younger and more affluent than the general population of that country. Additionally, survey responses are based on claimed behavior, rather than actual metered data.
*ABOUT NIELSEN RETAIL MEASUREMENT DATA
Sales data is from Nielsen’s syndicated Retail Measurement Services database. To examine change over time, data was collected for the latest two years (or three where available) and the most recent 12 months. Collection dates vary by country and category, but most were between September 2014 and January 2015. Sales are in USD and adjusted for inflation. Given the challenges of collecting and harmonizing data for 40 countries, data was collected from all available channels only for 31 selected product categories. Not all channels are covered in every country, nor are all products tracked. E-commerce sales are not included.
The following countries were included in the analysis:
Developed: Austria, Belgium, Canada, Czech Republic, France, Germany, Greece, Ireland, Italy, Korea, Norway, Portugal, Slovakia, Spain, Sweden, Switzerland, U.K. and U.S.
Developing: Argentina, Brazil, China, Colombia, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico, Pakistan, Philippines, Poland, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, United Arab Emirates and Venezuela.