Modern trade boosts demand for consumer goods

 “Super/Hypermarkets and Convenience Stores in Greater Bangkok showed great signs of recovery,” commented Yongyut Ongwattanapat, director of Nielsen Retail Measurement Services, “we have observed a strong rebound in terms of sales growth immediately after the flood and this positive momentum has also continued into the first quarter of 2012. Even though Traditional Trade in affected areas still suffers a steep continuous decline compared to the year before, we believe the overall outlook of FMCG in Thailand is still very promising.”
 Despite the inevitable decline during the flood, convenience stores still recorded the highest growth amongst other types of stores in 2011, maintaining its steady growth of 15 per cent compared to its 2010 number, followed by Super/Hypermarkets as a distant second at 6 per cent growth. Traditional Trade, however, was affected by a steep 34 per cent sales decline in affected areas in December 2011, nevertheless, the overall whole year growth still remained positive at two per cent.
 Nielsen’s Market Pulse also indicated the shift in the share of overall FMCG sales value from each type of store. Traditional Trade experienced a decline in share of contribution by three per cent in the past three years; however, the segment still remained the leader with more than 50 per cent contribution to the whole market. Super/Hypermarkets kept a steady pace at 26 per cent contribution for the past three years, and Convenience Stores was racing from its 16.9 per cent share in 2009 to 20 per cent in 2011.
 “In the past decade, we have observed a steady increase of popularity for Convenience Stores,” explained Yongyut. “Shrinking household size, urbanisation, and zoning regulatory enforcement for larger stores, we believe, contribute greatly to Convenience Stores’ rapid expansion. Our study also showed that the top five main reasons for consumers to visit this type of store are all about finding ready-to-consume products and selections of media, whereas promotions and membership played a less important role.”
 According to Nielsen’s Retail Index, there had been 3,250 convenience stores in Thailand in 2001 with a market share of 8 per cent. By 2005, the number had gone up to 5,026 stores with an 11 per cent market share, and continued to grow to 9,052 stores in 2011 with a 20 per cent share.
 A shift in consumers’ shopping behaviour was also observed in Nielsen’s Market Pulse. The study showed that consumers with lower income tended to do more purchasing at Supermarkets, while ones with upper-level income geared towards Hypermarkets. However, despite the differences in the choice of retailers, both groups had increased their basket size per visit compared to the previous year by 6.6 per cent for lower income, and 9.3 per cent for upper level income; while decreasing the frequency of their visits by 2.1 per cent and 6.5 per cent respectively.
 The study also indicated an interesting contrast in consumer preferences. While “value for money” remained the key consideration, “premium positioning” also gained popularity amongst Thai consumers.
 “Consumers are willing to trade up for premium product, if they are convinced of the added benefits,” commented Yongyut, “although value for money is still the main purchasing trend, we have observed a significant growth in premium segment where added health benefit plays an important role in influencing consumers’ decision.”