Something old, something new: Traditional, modern and online retail channels all serve a purpose when it comes to stocking Southeast Asian pantries

Something old, something new: Traditional, modern and online retail channels all serve a purpose when it comes to stocking Southeast Asian pantries


Rapidly shifting consumer lifestyles and preferences have seen the continued rise in the popularity of modern trade stores in most Southeast Asian countries and growing willingness to adopt digital shopping channels.

Nielsen’s Future of Grocery Report, which polled more than 30,000 online respondents in 60 countries, highlights the growing importance of modern trade retail formats in developing markets such as the Philippines and Vietnam. In the Philippines, 42% of consumers bought their groceries at supermarkets more often in the past 12 months. More than two thirds of Vietnamese consumers (34%) shopped at hypermarkets more often and 29% bought their groceries in a supermarket more often than they did 12 months ago.

Convenience stores are also gaining traction across the region, with more than a quarter of Filipinos (27%) shopping for food and groceries at a convenience store more often in the past 12 months, along with 22% of Vietnamese, 21% of Thais and 15% of Indonesians compared to 14% globally.

While large format stores like supermarkets and hypermarkets, which are already dominant in developed markets around the world, will play a growing role in consumers’ store repertoire here in Southeast Asia’s developing markets, conversely, smaller formats claim considerable share, and for manufacturers this means their distribution efforts must rely on a mix of both channels. Understanding where consumers are shopping which categories provides critical insight to guide market-by-market distribution strategies.

In the most developed markets of the ASEAN region, the growth in modern retailing channels has been at the expense of open-air markets or wet markets. Going against that trend was Indonesia, where the wet market narrowly leads the supermarket. Some 26% of respondents (compared to 24% for the more modern channel) say they will spend more time shopping at a market in the next 12 months.

Nielsen’s Future of Grocery Report also looks at the importance of online shopping and how retailers are integrating digital channels into the shopping experience. The experience of shopping for groceries in a physical environment is well-engrained in Southeast Asian cultures. Forty-three percent of consumers in the Philippines find grocery shopping to be an enjoyable and engaging experience, along with 34% of Indonesians, 32% of Vietnamese and 24% of Malaysians, compared to just 22% of consumers globally.

But consumers across the region show a growing propensity to shop online for certain categories. Health and beauty and household cleaning items are particularly popular, with consumers across Southeast Asia indicating their intention to buy items such as body wash and shampoo and conditioner online within the next six months.

Other digital-led elements are popular among Southeast Asian consumers, such as shopping online for home delivery, which is especially popular with Vietnamese consumers – 28% of Vietnamese consumers use this channel compared to 25% globally. And while just 12% of consumers globally are likely to log in to a store’s Wi-Fi with a smartphone to receive more information and offers while in-store, almost one in five Filipinos (19%) report doing this.

Online and mobile coupons were more popular with Indonesian shoppers (21%) than the global average (18%). Indonesians have also been quick to adapt to the virtual supermarket experience. The first virtual supermarket was introduced by Tesco in a South Korean subway in 2011. Today, 17% or Indonesian shoppers have used a virtual supermarket, compared to 13% of global respondents.

Savvy retailers will look to provide a digital strategy that includes interaction at each point along the path to purchase. The most successful retailers and manufacturers will be at the intersection of the physical and virtual worlds, leveraging technology to satisfy shoppers however, wherever and whenever they want to shop.

This article is based on insights contained in the Nielsen Future of Grocery Report.