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The RE in Retail – Evolving scenes from Singapore’s consumer goods landscape

This was a sponsored post by Nielsen under the Master Report series.

The word on the street: The fast-moving consumer goods (FMCG) retail market in Singapore is gradually facing its demise. According to Nielsen Singapore’s “FMCG Trends Q4 2018” report, Singapore’s total FMCG size contracted by 0.5%; food by 0.3% and non-food by 0.9% from 2017 to 2018. This has resulted in the total market going soft from SG$4.28 billion to SG$4.26 billion. Coupled with lower footfall and increasing overheads, the heat is on for brands and retailers to contend for a share in the retail landscape. Ecommerce takes centre stage with an astounding 52% growth rate for 2018 in contrast. Is FMCG retail lining up for its final curtain call in the fast-evolving consumer goods landscape?

While signs are pointing towards eCommerce’s emergence and dominance, there is a silver lining in the clouds. “Ecommerce has opened up a whole new shopping world, providing consumers with access to much greater assortment and value opportunities, and helping to satisfy their increasing demand for convenience,” said Raymond Cheung, executive director of retailer vertical at Nielsen Singapore. “Amid this backdrop, offline retail still retains its stronghold in 93% of total FMCG sales, and businesses should optimise their offerings to the various channels.”

Despite these challenges, supermarkets saw sales growth of 0.3% in 2018, and convenience stores by 1.5%. These pockets of growth may seem elusive, but they remain untapped. How can we put on a fresh pair of lenses to re-look and rethink retail to unlock growth for FMCG?

Reviving categories, refreshing products

Innovation matters. It can drive profitability and growth, while also helping companies stay relevant to shoppers and building long-term loyalty. Although there’s not one single formula for innovating well, there is a repeatable science behind it. More than ever, consumers want more new products on the market that are affordable, healthy, convenient and environmentally friendly.

According to Nielsen Singapore’s Retail Data 2018, the growth in personal care categories was attributed to a strong performance in natural and organic product types. Singaporeans are becoming increasingly conscious about not only what they put in their bodies, but what they put on their bodies as well, which has given rise to the demand for products made with natural ingredients (that is, with plant extracts, or without artificial ingredients). In fact, “natural and botanic” products contributed to 25%, 13% and 11% of sales for hair colourant, haircare and facial care respectively. And, in most of these categories, the “natural and botanic” segment is growing ahead of its non-natural counterparts.

 

“With sustainability and naturals gaining momentum with consumers, brands need to understand the impact of ingredients and the level of scrutiny that consumers apply to products that they purchase,” said Heike Friedrich, head of retail measurement services at Nielsen Singapore.

“Connecting the dots and finding the balance between what’s healthy for the environment, and healthy for the consumer can give brands the edge in the evolving sustainability space.”

Innovation in the snack category is concurrently driving growth, with 12.8% of sales coming from new products alone in 2018.

Commonly associated as an impulsive category, for most people snacking is a daily habit. More often than not, one that is indulged in several times a day, driving a huge demand for products to satisfy this insatiable consumer need. Local flavours such as salted egg, chilli crab and laksa variants of snacks have garnered a sizeable following since their inception in the Singapore market. Flavours more commonly associated with chips, barbecue and sour cream have also seen different iterations in biscuits in the past year.

If there is one overarching lesson in this work, it is that successful innovation defies quick fixes, simple solutions or formulaic reductions. Successful innovation is a journey of learning and ongoing improvement. More than ever, companies need to fail fast, and learn fast.

 

Rethinking promotion

Promotions work don’t they? From popular promotional pricing options in-store such as markdowns to bundle pricing, promotions are deemed to drive sales uplift. In Nielsen Singapore’s “Shopper Trends Report 2019”, 48% of shoppers highlighted they go the extra mile to buy groceries at the lowest price, while 61% claimed to take advantage of a special offer or deal (a 6% decrease from 2018 respectively).

Facing multiple flash sales and daily offers, promotions are gradually losing effectiveness as shoppers are inundated with offers in-store. A more targeted promotional approach is necessary to identify items that truly need promotion; rather than to leave money on the table for promotional items that do not generate significant sales uplift.

“Understanding the channel dynamics of specific categories is crucial for brands to succeed. When optimised, the range of considerations involved – from pricing strategies and promotion allocations to considering which retail partners to engage – culminate in a co-ordinated strategy that eliminates ineffective spending and maximises impact,” Nielsen’s Cheung said.

Restart retail

While the advancement of eCommerce is a threat, the opportunities are there for brands and offline retailers to retaliate by increasing touch-points with consumers, and instil in them the joy of the physical shopping experience.

Experiential retail is a strong shopper magnet, where a majority of shoppers indicated their preference for customer service and well-organised storefronts with pleasant ambiences.

“Seventy five per cent of Singaporean shoppers enjoy the act of grocery shopping, a growth of 4% from the previous year, with 68% also claiming they buy more than what they initially planned to buy when they step into stores,” Cheung noted. “By focusing on customer experiences, brands and retailers can curate a personalised shopping and retail experience that can resonate with the consumer.”

Nielsen’s Omnichannel Intelligence Dashboard (OCD)

Nielsen’s Omnichannel Intelligence Dashboard is a holistic solution that enables businesses to synthesize both offline and online channel insights, by combining retail market data and digital shelf in an online interactive dashboard. With weekly data feed of all Consumer Packaged Goods (CPG) and Non-CPG across key retailers and e-tailers, brands and retailers can get an extensive understanding of assortment, price, promotion, and reviews at their fingertips.

Nielsen Retail Measurement Services

Nielsen’s retail measurement purchasing data offers comprehensive and timely information on market shares, competitive sales volumes and insights into distribution, pricing, merchandising and promotion. By combining this detailed information with professional consultative services, it offers valuable insights and expertise that help fast-moving consumer goods brands and retailers improve their manufacturing, marketing and sales decisions.

Read More:

The Master Report: Getting to truly know and understand your retail consumer