HOW ASIA’S
RISING
RETAILERS
ARE
RESHAPING
FMCG
ISSUE 2 2017
CONTENTS
Introduction
The power partnerships driving FMCG
growth in Asia
Responding to demographic change
Ageing populations, shrinking households
Adapting to the change in mealtimes
Smaller package sizes – and an appetite for experimentation
Diierentiating amongst older shoppers
03
04
Bringing convenience and community together
Bridging the gap between modern and traditional trade
Shrinking stores to grow FMCG share
Convenience stores as community hubs
Driving down prices through competition for shelf space
08
Fusing o?ine and online
Ordering online
Targeting promotions through technology
Optimising the supply chain
The secrets of successful retailer partnerships in Asia
13
Reassuring on Safety and Quality17
Demonstrating values and social purpose19
Product innovation and speed to market21
Providing a shopping experience23
Conclusion 25

58
51
38
90
1222
1141
851327
PHILIPPINES
TAIWAN
SOUTH KOREACHINA
VIETNAM
THAILAND
PEN. MALAYSIA
INDONESIA
Consumer Reach
Point 2016
THE POWER
PARTNERSHIPS DRIVING
FMCG GROWTH IN ASIA
Marcy Kou, CEO of Kantar Worldpanel Asia
Some of the fastest-growing FMCG brands on the
planet are to be found in the markets, convenience
stores, supermarket aisles and kitchen shelves of Asia.
However, the growth on ooer in Asian markets remains
far from evenly distributed. Multinational brands
continue to lag behind the dramatic advances made by
their local competitors – and few show signs of closing
the gap.
Glance at the ranking of the world’s most chosen
consumer brands compiled by Kantar Worldpanel, and
you quickly notice that, across Asia, no two markets
choose the same FMCG brand most frequently. Most
are dominated by those that have emerged within their
own borders. It’s a trend that sees multinational brands
often struggling to compete eeectively in some of the
fastest-growing markets on earth. And it leaves
marketers urgently asking themselves what local
brands have that their rivals struggle to match.
A large part of the answer lies in the brand and value
propositions that local brands represent: expertly
attuned to the emotional and functional needs of their
customers, and with business models that support
INTRODUCTION
03
more accessible pricing. Most analysis of their success
focuses on these elements. However, there is a third
driver of their dominance that is equally signiicant. The
rise of local Asian FMCG brands has taken place
alongside an equally dramatic rise for local retailers. The
partnerships formed by these two types of Asian
champion are fundamental to their success: they help to
make local brands more mentally available than
multinational rivals; and they support innovative retailer
strategies that are both anticipating and responding to
Asia’s changing shopping habits.
In this report, we will explore this hidden dimension of
the rise of Asia’s FMCG brands. We will reveal the local
retailers that increasingly act as gatekeepers to rapid-
growth markets, the types of partnerships they seek,
and the ways in which local businesses are responding.
Through interviews with local retailers themselves, we
will explore the particular shopping habits and drivers of
success of consumers in diierent Asian markets. We
will reveal that no strategy for replicating the success of
Asian FMCG Brands can be complete unless it also
replicates their approach to retail.
Korea
Vietnam Rural
0%40%60%100%
21%79%
22%78%
24%76%
29%71%
30%70%
36%64%
80%20%
China
Vietnam Urban
Taiwan
Indonesia Urban
Local/Regional Brands
Global Brands
Source: Kantar Worldpanel-FMCG-2016
RESPONDING TO DEMOGRAPHIC CHANGE
As the average age of populations increases, the average
size of households tends to decrease. In Korea, for example,
the proportion of single-person households is growing at
between 4% and 5% per year and currently stands at 27.9%
of all households. And it’s not just a changing age proole
that is shrinking the size of Asian households. Across the
region, rapid urbanisation is drawing young people to cities,
and from extended family homes to smaller living spaces
either occupied alone or shared with a partner and young
family.
Smaller households shop diierently and for diierent reasons.
Where wives and mothers once planned around a weekly or
monthly shopping event, smaller households prefer to buy
what they need, when they need it. When all members of the
household are working, cooking and eating habits quickly
start to change. Eating out is an aaordable luxury that’s
increasingly important to young, urban populations and
represents a growing share of food consumption. Meals are
less likely to be planned and shopped for in advance; more
likely to take the form of ready meals picked up on the way
to and from work. Fresh food, picked up to be cooked and
eaten on the same day, is increasingly important to retailers
looking to increase footfall at their stores.
Rapid demographic change is a deening feature of the retail landscape in Asia. Ageing populations
and urbanisation are combining to reshape the rhythms of shopping. They aaect how frequently
people shop, how far they are prepared to travel when they do, the products they buy and the brands
they choose to buy them from.
Asia’s rising retailers know that their continued success depends on anticipating their customers’
changing needs – and this can have signiicant implications for their supplier relationships.
04
RESPONDING TO
DEMOGRAPHIC CHANGE
AGEING POPULATIONS, SHRINKING
HOUSEHOLDS
ADAPTING TO THE CHANGE IN MEALTIMES
In China, the fresh food supermarket Yonghui has innovated
in response to these trends by diversifying its stores to fit
diierent types of eating habits. Its new formats include stores
that combine restaurants with supermarkets, neighbourhood
convenience stores that ooer fresh ingredients for the evening
meal within walking distance, and an app-based delivery
service that promises to deliver fruit, vegetables and chilled
products to customers’ doorsteps within 30 minutes. This focus
on freshness and quality has helped the brand to expand from
an initial launch in Fujian province in 2001 to reach 580 stores
across 19 provinces today.
Fresh food has always been a key element in Yonghui’s
positioning. However, it also has a growing role for traditional
retail brands that have previously focused on dried goods that
can be bought cost-eeectively in bulk. In Taiwan, PX Mart has
used a growing fresh food ooer to increase the frequency of
visits from its traditional customer base of housewives.
RESPONDING TO DEMOGRAPHIC CHANGE
05
Success amongst ageing shoppers isn’t just driven by smaller
and more convenient package sizes. It also springs from a
recognition that this demographic incorporates a diverse
range of shopper types – and shopper needs. Korea’s rapidly
growth health and beauty retailer, Olive Young, is
committed to providing an ageing population with suitable
shopping choices that are aligned with current trends.
Meanwhile, in Taiwan, PX Mart has not taken its traditional
base of older shoppers for granted. The brand is aiming to
develop a diierentiated product range to meet the diierent
needs of consumers at diierent ages, including greater
choice when it comes to healthy food options.
When shoppers make short, daily trips to pick up single-use