Grocery shopping in developing markets
 

Grocery shopping in developing markets

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The global financial crisis has brought into sharper focus the long-term shift in economic power towards the developing world. Global consumer product companies are embracing this underlying trend and ...

The global financial crisis has brought into sharper focus the long-term shift in economic power towards the developing world. Global consumer product companies are embracing this underlying trend and the mantra of reaching the next one billion customers in emerging markets.
To help companies turn their ambitions into reality, we've conducted a research project to understand the differences in shopping behaviour around the world. The research also highlights some of the issues western consumer product companies and grocers should consider, before launching in developing markets.

Study:

The study consisted of 5,375 consumers in the UK, US, Brazil, China, India and Nigeria. All questions were asked through a survey taken via the mobile Internet and we used our own panel of respondents.

Key considerations for developing markets:
In developing markets people are more inclined to use public transport or walk, therefore smaller sized products and low cost basket sizes will have more appeal.
Local brands and stores should not be underestimated - shopkeepers are the gatekeepers and even the best conceived consumer strategies need their support to succeed.
Setting up shop in close proximity to where people live is a critical success factor, as is having access to a local distribution network. To give the data a human perspective we also asked respondents to take a picture on their mobile of their main grocery store, the transportation they use to get to the store and their grocery shopping.

The images provide a stark contrast in lifestyles around the world.

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Grocery shopping in developing markets Grocery shopping in developing markets Presentation Transcript

  • Grocery shopping in developing marketsCountries include: UK,US, Brazil, China, India and NigeriaMarch 2012
  • Background summary to the researchThe Developing Market Opportunity:The global financial crisis has brought into sharper focus the long-term shift in economic power towards thedeveloping world. Global consumer product companies are embracing this underlying economic trend, and themantra of reaching the next one billion customers in emerging markets has been widely adopted.Turning ambition into reality in developing markets, however is not always straightforward. Emerging marketsrequire a different focus and recognition so a one size fits all strategy is not appropriate.Case Study:In India P&G’s Gillette brand historically focused on selling their lower end razors, but the vast majority of menstill shaved with double-edge razors, a century-old technology that tends to cause far more cuts. The fact thatGillettes global products failed to address billions of emerging markets low-income consumers, wasnt seen as aproblem as long as growth in core markets was robust, but recently they have had to reverse this decision.P&G sent a team to India to conduct ethnographic research and observe consumer behaviour. This clean-slateneeds assessment yielded key insights about how the Indian male shaver differed from his western counterpart.He was typically far more price-sensitive, but critically he also shaved himself in a completely different way.P&G leveraged these insights to develop a new shaving tool to meet the specific needs of the Indian consumer.They also built a fully Indian tailored business model and now have over 50% market share in India.Source: P&G case study: Harvard Business Review April 2012
  • On Device Research Grocery Shopping Case Study:Whilst ethnographic studies can yield in-depth insights they can also be very expensive and timeconsuming. However as developing markets are heavy users of mobiles, these devices can be also beused as research tools for understanding behaviour and results are returned very quickly.To understand shopping behaviour around the world and highlight some of the issues western consumerproduct companies and grocers should consider before launching in developing markets, we conducted asmall scale research study using the mobile research methodology and our own panel of respondents.Methodology:We asked 5,375 consumers in the UK, US, Brazil, China, India and Nigeria a series of questions abouttheir grocery shopping habits and behaviour, through a survey taken via the mobile InternetWe also asked respondents to take a picture on their mobile of the store they carry out their mainshopping, the transportation they use to get to the store and their grocery shopping and send it to us.The images provide a stark contrast in lifestyles and provides an interesting insight into people’s lives. View slide
  • Summary Where they shop - In developed markets people mainly use supermarkets to carry out their main grocery shopping, in developing markets however, people use their local market or local store. Business Impact: In developing markets local brands and stores should not be underestimated. Having a good relationship with local shop keepers is critical because even the best conceived consumer strategies need the shopkeepers’ support to succeed – basically you need to make it worthwhile for them to stock your product. They are also likely to have low-cost supply chains that are hard to match, so understanding the local conditions and ways of doing business is important. Why they shop - The store being in close proximity to people’s home is the main reason why people choose to shop in a particular grocery store. Business Impact: In developing markets the concept of going to out of town discount stores is not a reality, so setting up shop in close proximity to where people live is key, as is tapping into a good distribution network – for many setting up in emerging market countries, access to a distribution network is a critical success factor. For example, when L’Oréal first entered China, it followed a strategy of buying Chinese brands to leverage the good relationships those brands enjoyed with local retailers. This then provided a platform for L’Oréal’s Paris brand to penetrate the market.Source: L’Oréal case study: Ernest Young Emerging Markets Report Q4 2010 View slide
  • SummaryTransportation - People in developed markets are more likely to use a car to get to their grocery store,however in developing markets they are more inclined to use public transport or walk.Business Impact: If people in developing markets are walking or using bicycles to get to grocerystores, then they are not going to be able to carry large volumes, therefore tempting discount offersof multiple product buys that are popular in developed markets will not work. So smaller product sizesis important and this can also help to reduce the cost of items.Switching - The location of the grocery store and low prices are the two main factors that wouldencourage people to switch stores across all markets.Business Impact: To get people to switch in developing markets you have to bring your products tothem, by placing them in central locations.Going in at lower price points is also appealing for shoppers. Many in developing markets will get paidweekly as opposed to monthly, so they are less likely to carry out a big monthly shop which iscommon in developed markets - buying more often and at lower price points will be their strategy.
  • Where they shop - In developed markets people mainly use supermarketsto carry out their main grocery shopping, in developing markets howeverpeople use their local market or local store in their neighbourhood. What type of store do you mainly shop at to buy groceries for yourself and your family? 70% UK US Brazil China India Nigeria 60% 50% 40% 30% 20% 10% 0% Supermarkets/Hypermarkets Discount Stores / Mass Local market Local store MerchantsSource: n=5375 Countries: UK, US, Brazil, India, China and NigeriaJanuary 2013
  • Why they shop - The store being in close proximity to people’s home isthe main reason why people choose to shop in a particular grocerystore. Variety of products is also important in Brazil & China Why do you carry out your main shopping at this particular store? 70% 60% UK US Brazil China India Nigeria 50% 40% 30% 20% 10% 0% It’s a close Low prices Good Favourite Many different Advertising distance to promotions/ products are products to home discounts available choose fromSource: n=5375 Countries: UK, US, Brazil, India, China and NigeriaJanuary 2013
  • Where people shop around the world Local Store in India Supermarket in US Local Store in Nigeria Local Store in Brazil Supermarket in UK Nigeria China
  • Where people shop around the world Supermarket in Nigeria Supermarket in Brazil Supermarket in UK Supermarket in US Local store in Nigeria Supermarket in US
  • Transportation - People in developed markets are more likely touse a car to get to their grocery store, however in developingmarkets they are more inclined to use public transport or walk. If you (or someone in your household) goes grocery shopping, what is the most common way to get there?80%70% UK US Brazil China India Nigeria60%50%40%30%20%10% 0% Private vehicle/car Public transport bus Walk Taxi BicycleSource: n=5375 Countries: UK, US, Brazil, India, China and NigeriaJanuary 2013
  • If you use a car for shopping you’re more likely to shop in asupermarket, where as if you walk or use a bicycle as your modeof transport for shopping, you’re more likely to shop locally. Type of store vs transportation used to get to store60% Supermarkets/Hypermarkets Local store Local market50%40%30%20%10% 0% Private vehicle/car Public transport bus Taxi Walk Bicycle Transport used to go grocery shoppingSource: n=5375 Countries: UK, US, Brazil, India, China and NigeriaJanuary 2013
  • Transportation used to go grocery shopping Bike in Nigeria Car in US Car in UK Bike in NigeriaPublic transport Nigeria Motorcycle in India Car in US Public transport UK Car in US
  • Switching - The location of the grocery store and low prices arethe two main factors that would encourage people to switchstores across all markets. Advertising places a minimal part. What would tempt you to switch to another store? UK US Brazil China India Nigeria70%60%50%40%30%20%10% 0% It’s closer to Low prices Good On the route Many Favourite Advertising home promotions/ from work to different products are discounts home products to available choose fromSource: n=5375 Countries: UK, US, Brazil, India, China and NigeriaJanuary 2013
  • Grocery shopping around the worldGrocery Shopping in Brazil Grocery Shopping in US Shopping in China Shopping in Nigeria Grocery Shopping in US Grocery Shopping in Nigeria
  • Grocery shopping around the world Grocery Shopping in Nigeria Grocery Shopping in UK Grocery Shopping in US Grocery Shopping in Nigeria Grocery Shopping in UK Grocery Shopping in US
  • Purchasing, Frequency & Spend
  • Brazil & NigeriaBrazil:Purchasing - 43% of females make the grocery purchasing decisions in the house, with 40% sharing inthe decision making. 53% shop for 4+ people, 47% buy grocery shopping for 1-3 peopleFrequency - 27% go grocery shopping daily, with 38% visiting at least twice a weekSpend - 34% spend over R$100+ on their weekly grocery shop with 26% spending R$61 – R$100Nigeria:Purchasing - 37% of females make the grocery purchasing decisions in the house, with 34% sharing inthe decision making. 59% buy grocery shopping for 1-3 people, 41% shop for 4+ peopleFrequency - 24% go grocery shopping daily, with 48% visiting at least twice a weekSpend - 43% spend over N150+ on their weekly grocery shop
  • China & USChina:Purchasing - 43% of females make the grocery purchasing decisions in the house, with 33% sharing inthe decision making. 85% buy grocery shopping for 1-3 peopleFrequency - 21% go grocery shopping daily, with 62% visiting at least twice a weekSpend - 31% spend between 71-150 yuan on their weekly grocery shop with 37% spending 151+ yuanUS:Purchasing - 62% of females make the grocery purchasing decisions in the house, with 29% sharing inthe decision making. 47% buy grocery shopping for 1-3 people and 49% buy for 4-9 peopleFrequency - 17% go grocery shopping daily, 26% visit 2-3 times a weekSpend - 22% spend under $50 on their weekly grocery shop with 51% spending $51-$100
  • India & UKIndia:Purchasing - 54% of females make the grocery purchasing decisions in the house, with 29% sharingin the decision making. 56% buy grocery shopping for 1-3 people and 37% buy for 4-9 peopleFrequency - 24% go grocery shopping daily, 49% visit at least twice a weekSpend - 44% spend under Rs200 on their weekly grocery shop with 24% spending Rs201 – Rs500UK:Purchasing - 63% of females make the shopping or grocery purchasing decisions in the house, with28% sharing in the decision making. 53% buy grocery shopping for 1-3 people and 39% buy for 4-9peopleFrequency - 24% go grocery shopping daily, 50% visit at least twice a weekSpend - 36% spend under £50 on their weekly grocery shop with 35% spending £51-£80
  • Summary Where they shop - In developed markets people mainly use supermarkets to carry out their main grocery shopping, in developing markets however, people use their local market or local store. Business Impact: In developing markets local brands and stores should not be underestimated. Having a good relationship with local shop keepers is critical because even the best conceived consumer strategies need the shopkeepers’ support to succeed – basically you need to make it worthwhile for them to stock your product. They are also likely to have low-cost supply chains that are hard to match, so understanding the local conditions and ways of doing business is important. Why they shop - The store being in close proximity to people’s home is the main reason why people choose to shop in a particular grocery store. Business Impact: In developing markets the concept of going to out of town discount stores is not a reality, so setting up shop in close proximity to where people live is key, as is tapping into a good distribution network – for many setting up in emerging market countries, access to a distribution network is a critical success factor. For example, when L’Oréal first entered China, it followed a strategy of buying Chinese brands to leverage the good relationships those brands enjoyed with local retailers. This then provided a platform for L’Oréal’s Paris brand to penetrate the market.Source: L’Oréal case study: Ernest Young Emerging Markets Report Q4 2010
  • SummaryTransportation - People in developed markets are more likely to use a car to get to their grocery store,however in developing markets they are more inclined to use public transport or walk.Business Impact: If people in developing markets are walking or using bicycles to get to grocerystores, then they are not going to be able to carry large volumes, therefore tempting discount offersof multiple product buys that are popular in developed markets will not work. So smaller product sizesis important and this can also help to reduce the cost of items.Switching - The location of the grocery store and low prices are the two main factors that wouldencourage people to switch stores across all markets.Business Impact: To get people to switch in developing markets you have to bring your products tothem, by placing them in central locations.Going in at lower price points is also appealing for shoppers. Many in developing markets will get paidweekly as opposed to monthly, so they are less likely to carry out a big monthly shop which iscommon in developed markets - buying more often and at lower price points will be their strategy.
  • Want to ask your own research questions? Contact us today: Sarah Quinn sarah@ondeviceresearch.com @ondevice Follow us on SlideShareSign up to our newsletter for more free reports ondeviceresearch.com
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