After two years of uncertainty living under the pandemic, we expected we’d finally be seeing a ‘new normal’ in Asia by now. However, before this had a chance to emerge, the region was hit by another challenge – inflationary pressure – and it’s affecting both consumers and brands.
As a result, we’re seeing cost of living and FMCG price increases across most key markets in Asia now, along with a slowdown in volume sales as shoppers’ confidence is impacted. However, despite this we’re still expecting FMCG to grow in 2022.
Understanding how Asian shoppers will react to price and inflationary pressure will help brands to determine their growth strategies. Shoppers tend to demonstrate a range of different behaviours during uncertain times across FMCG categories. These can lead to the following trends:
- Shoppers increasing or reducing the overall category volume bought
- Shoppers increasing or reducing choice of segments
- Shoppers switching channels
- Brands increasing or reducing reliance on promotions
- Shoppers switching brands or moving to private label
- Changes in product mix (segment, pack sizes)
- Brands gaining or losing buyers.
The data already shows evidence of behaviour changes. In Mainland China, shoppers are trading down to cheaper products, while lower income households across Asia are rationalising spend by cutting their category repertoires. Retailers are expanding their private label ranges beyond personal and home care categories.
Frequency in most markets is unlikely to recover to pre-COVID levels anytime soon, which makes protecting and winning each shopping trip key. Promotions will help to generate more spend and trips, so driving these effectively will be very important.
There are early signs of a slowdown in ecommerce growth in south-east Asia, which means that as shopper mobility increase ecommerce offers will need to be differentiated to drive incremental reach. Asian consumers are likely to continue value proximity channels for convenience and cheaper prices; therefore the right pricing and promotion mechanisms will be vital to drive more traffic in the modern trade channels.
Download our detailed report to learn everything about inflation in Asia, and contact our experts for insights on how brands can cope, and continue to reach consumers during these times.