Recovery of consumer spending power~Ready for smarter buyers
The economy has finally come to a recovery in 2010 after the depressing recession and inflation between 2008~2009. Rapid growth of dinning out population, department anniversary sales, as well as CNY shopping energy also reports ice-breaking records, various media also identifies the recovery of consumer spending power. Yet, does this fact reflect that consumers are willing to spend with no hesitation?
Household average shopping frequency breaks record high in the past 5 years – Economy Recovery
According to research from Kantar Worldpanel, on average Taiwanese household shops 89 times in 2007 for FMCG while it went down to 87 times in 2008 during financial crisis. It can be seen that consumers are likely to decrease their shopping frequency for saving money during economic downturn. By early 2010 when the economy has observed upturn, shopping frequency of Taiwanese households rebound to 93 times which is even greater than it was before, this clearly indicates the revival of consumer confidence and desire for shopping after such constrain period.
I LOVE Shopping - Smart Shoppers aren’t Fathead
Inflation has worsened since mid 2010 when price up is observed everywhere. According to government reports regarding to living costs, things such as foods, utilities and transportation fuel, have been on a steady increase while salary remain stable. In other words, consumers’ actual spending power isn’t really improving even in a recovering economy. Consumers’ spending patterns, therefore, have developed into some interesting changes under these circumstances.
Plan for Shopping! Focus on Anniversary Sales or Promotion Season
According to data from Financial Supervisory Commission, credit card transaction in October 2010 was 10.3 billion more than same time last year, the growth power is largely driven by the hot sales during department stores anniversary sales.
Study from Kantar Worldpanel found that consumers have concentrated their purchase on the promotion period. In other words, they are more likely to plan ahead and make their purchase at more appealing prices during promotion season. For instance, importance of anniversary sales for skincare counter brands in a year accounts from 36% in 2006 to 46% in 2010. More positively, given the attractive discount or promotion bundle pack and successful education about skin care, the sales performance of the overall beauty market reaches the record high again in 2010 and Department Store Anniversary turns to be a critical opportunity for growing the market.
New Value for Private Label – High quality with Low Price is Preferred
Observation from Kantar Worldpanel shows that up to 80% of Taiwanese households ever purchased private label in 2010, 14% more than 5 years ago. While most other hypermarket has relatively flat performance, Costco and 7-11 both enjoy 50% growth rate in terms of their private label offerings which make them the star player in this particular field.
The trend indicates that price isn’t the only factor determining consumer’s decision on the Private Label. Brand equity as well as customer relationship building along with the concept of “value more than the money” are the key charm for private label.
Shop with Efficiency – Internet Shopping is hot on wheel
It can be seen that internet shopping is a fast growing channel with nearly a quarter of Taiwanese households ever shopped FMCG online in 2010. Apart from growing importance of food categories, facial skincare and female underwear both enjoyed 50% of yearly growth rate from consumer’s pocket.
Interestingly, most consumers are not cutting down but still increasing their spending onto physical channels besides online shopping. This clearly indicates that internet shopping enlarge the market pie by stimulating consumer’s shopping desire through its convenience, price, and variety without encroaching physical channel.
To sum up, with the pressure of growing CPI, consumers are changing their purchase behavior by carefully selecting when, what, and where to spend their limited budget in order to get the best deal. Therefore, understanding the market trend to select the right promotion timing, communication strategy, as well as the sales channel, will be the critical factors for manufactures to win the battle in 2011.
*To quote data from this article for any purpose, please specify that the source is from "Kantar Worldpanel Taiwan"