Online Growth Slows, Convenience Stores Rise
Beijing-February 28, 2019-Nielsen's latest "China Shoppers Trend Report - Convenience Stores" shows that the number of modern channel stores has increased rapidly, with the number of supermarkets (+10%), small supermarkets (+9%) and convenience stores (+14%) maintaining a strong growth trend in the past three years, while the number of hypermarkets has shown a negative growth trend (-1%). Convenience stores have gradually distinguished themselves from other offline channels by characteristics of "convenience" and " wide range of products"
"Convenience stores are one of the fastest growing formats in China's retail market. Chinese consumers are not only pursuing higher quality goods, but are also demanding unique products which they can purchase quickly and conveniently. While actively providing a better shopping experience, brands must remember that different channels need to adopt different marketing strategies," Nielsen China Vice-president Brady Ni said.
The Nielsen report shows that the online penetration rate has remained on the rise in the past 12 months, with 59% of shoppers saying they have patronized online channels in the past month, 7% up from the same period. In the past 12 months, the penetration rate of convenience store shoppers was 56%. Among them, shoppers aged 25-49 are the main group of convenience stores (70%), most of whom are married, and men (53%) are slightly more than women (47%). Most shoppers are middle-to-high income (47%) and highly educated white-collar workers (49%).
The shopping frequency of shoppers online and offline has declined over the past 12 months compared with the same period last year, but convenience stores have sprung up and the shopping frequency has increased at a constant rate for 3 consecutive years, with sales increasing by 15%. The phenomenon that shoppers reduce the number of shopping calls for retailers and brands to be more vigilant. Under the premise that life is busy, the time originally spent shopping may need to compete with other recreational activities including playing games and browsing video websites. Among convenience store shoppers, 39% visit convenience stores 1-3 times a week, 33% are high-frequency convenience store shoppers. High-frequency shoppers are relatively younger (25-34 years old), have higher academic qualifications (university or above), have higher monthly household income and are more single. Convenience store brands should pay attention to the middle and high frequency shoppers in order to make marketing plans to maintain and improve shopping frequency according to their characteristics.
Convenience and Variety Bring Experience
First
Nielsen’s research found that “easy access” has become a common
requirement of shoppers for offline channels. 42% of supermarket shoppers, 71%
of convenience store buyers and 56% of traditional grocery store buyers all
believe that “easy access” is the primary driving factor for them to
choose the channel. Secondly, “time-saving product search” and “extensive product choices” have an evident driving effect on the
shopping behavior of online and offline channels.
The importance of "having a dining area in the store" for convenience stores has increased significantly compared with the same period. In addition to basic shopping needs, shoppers' demands for "providing a pleasant shopping experience" have also increased significantly.
Both the shopping experience and shoppers' demands for "easy access" reflect the theme of "miniaturization" and "specialization" in the development of shopping channels. With the help of good development trends both inside and outside, convenience store operators should confirm brand positioning in the fierce competition. Compared with hypermarkets/supermarkets, "products with high quality and high-end brands" and "efficient cashier and checkout services" are more important in the competition of convenience stores. In addition, the "good service of shop assistants" also deserves more attention.
Fresh food products provided by convenience stores are different from supermarkets and hypermarkets and have unique attraction to consumers. 37% of customers have bought fresh food products in convenience stores, of which Oden (38%) and packed lunch/sandwich/rice ball/salad/small packaged Oden (37%) are the most popular, while western snacks and canned food are the most sensitive to promotion.
Consumers Have More Diversified Choices and Pay Less Attention to the Price
Nielsen found that shoppers prefer to shop in different convenience stores rather than in only one or two convenience store brands. More shoppers have visited convenience stores of more than 3 different brands in the past four weeks, which are more diversified and scattered than the convenience store brands visited in the same period. In addition, the number of convenience store shoppers who visited the new store in the past six months has decreased slightly compared with the same period, but the overall trend is still on the rise. Among the main factors that attract shoppers to visit the new store, "there are new stores opening nearby" (48%) plays the most important role, reflecting the importance of convenience store location. Secondly, "pass by a convenience store that can attract me" (28%), "good reputation" (27% ) also affects the popularity of the new store to varying degrees.
Convenience store shoppers mostly purchasing good for emergency needs, and their price sensitivity is lower than that of shoppers from other channels, and has decreased year by year for 3 consecutive years. At the same time, its attention to promotion is also on the decline. Shoppers are more inclined to buy products with promotion in their favorite brands and less likely to change their choice of brands because of promotion. Among the key categories of convenience store purchases, liquid milk (20%) is the most sensitive to promotion, followed by chocolate (19%), yogurt (18%) and ice cream (18%), so convenience store promotions should focus on these key categories of popular product brands. Cultivate shoppers' loyalty is the key to increase convenience store channel sales.
"As convenience stores are relatively small in terms of shelf space and have fewer items on display, new products are more likely to be seen and attract shoppers' attention. We’re also seeing that consumers are increasingly visiting convenience stores to take a break from work, or to casually shop for a new and interesting product to try. Some of these young, mid to high income consumers are visiting convenience stores several times a day, so the channel is very important for brands looking to engage with this demographic." Ni said.
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