Shopper Digest: A Year in 2023
We have to admit that 2023 was beyond our expectations. While inflationary pressure hit us hard in 2022, we anticipated the market to ease down at the beginning of the year. Yet, we are witnessing the momentum of price concerns continuing throughout the year, only registering value growth in in-home spending with the inflated overall pricing again.
We have repeatedly shared with our clients that shoppers are spending cautiously, opting for less pantry loading and more just-in-time purchases. The rise of proximity and specialized channels confirms shoppers' shift to focus on buying what is needed and meaningful to them.
We have also emphasized the importance of shopper currency, where shoppers are constantly evaluating three costs - money, time, and energy - when purchasing in-home groceries. While many have opted to hunt for the best deal, there are also purchases that show appreciation for convenience, quality, and experience. We believe the polarity of shoppers' behavior will become more obvious if the market conditions continue. It's becoming even more difficult to generalize shoppers' movements as a whole, even within a specific category, moving forward.
Who tends to have a bigger chance of winning?
We noticed familiarity is a key factor when it comes to shoppers' selection. In order to ensure what they spend is worthwhile, shoppers are taking less risk in buying unfamiliar products. Bigger brands tend to have an advantage in this, as they have a wider reach, meaning more shoppers are familiar with the brands and what they can deliver. This advantage has helped them secure more existing shoppers (from not trying other brands more often) and attract new shoppers (including those buying the category for the first time).
We mentioned in our Shopper Excellence Summit 2022 that penetration is the core driver to grow market share within the category. When brand penetration becomes higher, the loyalty of the brand will increase accordingly. This holds true in 2023, and we believe it will be the same for 2024.
Interestingly, brand penetration doesn't always come together with an increase in trade promotions. In fact, Malaysia is one of the markets in Asia with the highest percentage of promotional buys for in-home grocery purchases. With the over-flooding promotions in trade, it becomes a hygiene factor for shoppers when making their choices and selections.
The brand message, in this case, plays a more important role in capturing shoppers' interest. Shoppers need to know how a brand is relevant to their lifestyle needs. A brand should emphasize how it can clearly address their target audience's specific pain points or resonate with their target audience's values in life.
Is there a "national" brand for Malaysia?
To gauge the opportunity a brand has in terms of penetration, we took a quick look at the latest figures. Maggi, as usual, remains the most penetrated brand in our market, with 90.3% penetration, followed by Milo at 82.2%. The rest of the brands register not more than 70% penetration, including both global and local brands. [Insert Figure 1]
Additionally, only 97% of brands in the market register less than 50% penetration, and more than 80% of the brands have less than 20% of the population buying.
What it means for us is that there is still plenty of room for any brand to recruit more shoppers. We are also seeing local brands becoming more evident in the list, signaling higher acceptance of local products in shoppers' repertoire. On the other hand, we are seeing the recovery of global brands in many instances, as they are always aggressive to grow despite the already large market presence. We believe branding, in this case, plays a big part in winning more shoppers.
In short, identifying who your core target audience is, finding the right message to promote, and focusing on recruitment in trade will be the key to increasing your market share in 2024.
Source: P10 2023 Peninsular Malaysia In-Home Panel database, Worldpanel Division, Kantar Malaysia