2. THE MANY FACES OF
TRADITIONAL TRADE
IN SOUTHEAST ASIA.....
mom-and-pop stores
sari-sari stores
杂
货
店
cửa hàng tạp hóa
chap foh tim
kedai runcit
corner grocery store
杂
货
店
Small shop round the corner
Tu-ra-kij-ka-pleek-bab-dang-derm
chap foh tim
sari-sari stores
杂
货
店
kedai runcit
corner grocery store
kedai runcit
chap foh tim
Small shop round the corner
WARUNG
WARUNG
sari-sari stores
kedai runcit
WARUNG杂
货
店cửa hàng tạp hóa
chap foh tim
ran-show-huay
ran-show-huay
3. DO YOU UNDERSTAND THE
CHARACTERISTICS
OF THESE SHOPS?
DO YOU KNOW
HOW SHOPPERS
BROWSE AND BUY?
DO YOU KNOW
HOW THE
SHOPKEEPER THINKS
AND WHAT MAKES
HIM TICK?
4. IV MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
Samuel1
, a sales leader of a major FMCG manufacturer in
Vietnam, was faced with a challenge: servicing Vietnam’s slew
of traditional trade stores with limited resources. In order to
prioritise the multitude of traditional grocery stores scattered
across the country, he ordered a store segmentation project
which enabled him to group outlets based on claimed sales
performance. Based on the store segmentation result, his sales
force was directed to stores representing the biggest sales
potential. But Samuel was dissatisfied with the outcome; the
classification of outlets appeared inaccurate, and staff lacked
insight into which products they should push in each store.
1
Real case, but name has been changed
Samuel’s dilemma is not unique. In fact, it’s a fairly common
challenge. Many FMCG sales teams lack fundamental knowledge
on the traditional trade landscape, such as the location (where) of
the stores which represent the biggest opportunity, products (what)
which offer the largest potential, and promotional activities (how)
which will yield the maximum conversion.
Such insights are critical to developing a comprehensive sales
strategy which takes local market nuances into account. Due to the
sheer diversity of Southeast Asia’s retail sector, a one-size-fits-all
approach is rarely sufficient.
Indeed, brand building and sales development can be achieved by
combining shop, shopper and shopkeeper insights into an effective
segmentation to truly drive activation across the various shopper
touchpoints along their path to purchase. A multi-lens view approach
is required in order to win the hearts of both the shoppers and the
shopkeepers.
HOW
SHOPKEEPER
WHAT
SHOPPER
WHERE
SHOP
6. 2 MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
PLANNED OR IMPULSE PURCHASES, GROCERY STORES ARE
A BIG PART OF TRADITIONAL TRADE
Source: Nielsen Home Panel Data – FMCG 78 Categories | % Spending | Indonesia Urban +
Java Rural | MAT 2015 we 14 June
By and large, shoppers visit traditional trade stores due the proximity
to their homes, and a large proportion of purchases in traditional
grocery stores are planned, from catering to ‘everyday needs’ to top-
up shopping and even main shopping.
The planned shoppers regard their local grocery store as a pantry
extension, buying their daily cooking, homecare or personal care
needs. Such purchases are planned in advance and the majority of
shoppers have already made their brand choice before they enter the
store. Importantly, planned shopping implies the potential for bigger
basket size or offering new pack formats within the repertoire of
regularly shopped brands.
Yet, having elements of both impulse and planned in traditional trade
stores can open up immense opportunities. Modern trade has an
edge over traditional trade on variety, selection, promotional activity
and high quality premium products. Traditional trade can replicate
these by more frequent rotation of new products, adding variety
within impulse categories, or having promotions by day of week to
entice shoppers.
TRADITIONAL
TRADE
SUPERMARKET
IMMEDIATE CONSUMPTION
WINDOW SHOPPING
MINIMARKET
TOP UP
MEAL FOR TODAY
MAIN SHOPPING
HYPERMARKET
30%
5%
25%
39%
12%
13%
35%
35%
3%
7%
35%
33%
18%
5%
7%
45%
28%
12%
5%
TRADITIONAL TRADE FOR DAILY MEAL SHOPPING
WHILE MODERN TRADE IS MORE FOR PLANNED MONTHLY TOP UPS
12. 8 MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
WINNING
STRATEGIES
FOR STORE
SEGMENTATION
FMCG manufacturers have long been segmenting consumers
and shoppers into homogeneous groups, and developing specific
products to appeal to specific segments has helped manufacturers to
achieve new levels of performance. In the same way, manufacturers
now realise the same principles of segmentation can be applied to
retail stores to help their sales teams to be more successful.
There are three typical approaches used to group and prioritise
stores – using location attributes, performance attributes, and a
combination of store performance and physical attributes. Each
approach has its benefits and limitations, and ideally an approach
should be selected based on budget, resources and level of
sophistication of the sales organisation.
LOCATION ATTRIBUTES
Dividing stores into regions or areas by store density, GDP,
population density, economic class or income level enables efficient
planning of sales force numbers by region and provides guidance
on brands/SKUs to be pushed in each region. For example, a strong
GDP per capita makes a market attractive for companies to push
mass premium ranges.
Modelling across multiple data sources will help identify high
potential provinces/districts that would help realise potential with
lower cost of reach.
PLATINUM GOLD SILVER BRONZE
DISTRICTS
Source: Nielsen District Level Distribution
Prioritisation, Illustration
IDENTIFY HIGH POTENTIAL
DISTRICTS FOR HIGHER
REACH AND LOWER COST
14. 10 MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
HAS COOLERS/
CHILLERS
3 READY-TO-EAT
CATEGORIES
STOCKS WATER
STOCKS BUTTER
Source: Nielsen Store Targeting Analysis, Illustration
COMBINED ACTUAL STORE PERFORMANCE AND
PHYSICAL ATTRIBUTES
Defining store tiers based on actual performance together with
tangible store attributes, such as presence of defined POS material,
brands, variants, local vs. multinational manufacturer products,
enables us to target the right store tier. Based on those tiers, the
entire store universe can be segmented.
EFFECTIVELY REACH CATEGORY STORES THAT MEET YOUR NEEDS
16. 12 MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
Sufficient shopper insight helps to drive brand, pricing and in-
store promotional activities efficiently. Shopper profiles based on
demographics, behaviours, needs and psychographics, provide key
indicators of the products to be placed and the promotions that
should be implemented, as well as the price strategy to apply given
shoppers’ price sensitivity. Understanding missions and store choice
helps to identify the right categories and pack sizes to focus on.
Further, understanding what shoppers are buying based on their
mission type assists in defining product placement, and providing
insight, while shoppers’ conversion triggers provide invaluable
insight for brand and supporting point-of-sale material visibility.
Conversely, building a greater understanding of shopkeepers helps
to win their hearts by providing value not only to their business,
but also to their personal situation. The profile of the shopkeeper,
based on the same four areas, can be indicative of the type of sales
call needed and which personal incentives will be most impactful.
Meanwhile, understanding the business needs of traditional grocery
shopkeepers and owners, which often gravitate around efficiency,
longevity, differentiation and community, is a strong indicator for
choice of products and in-store activities to be implemented. And
understanding how the operations are being run helps to identify
value-add activities that reduce operation time and costs incurred by
the shopkeeper.
18. 14 MAXIMISING TRADITIONS | THE SHOP. SHOPPER. SHOPKEEPER | OCTOBER 2015
MAXIMISING
TRADITIONS IN
SOUTHEAST ASIA
Achieving productive store visits is a priority for sales force leaders
across the world, and especially so in countries which are still
dominated by traditional trade, and where there is an enormous
number of stores in the universe.
Efficiency can only be obtained through a rigorous approach that
involves a prioritisation of outlets, and a focused approach to
ranging and promotional activities within those outlets.
Too often, sales force knowledge is limited to store size, location and
performance when creating store clusters. While these attributes
are effective in directing sales efforts toward the right stores, they
provide limited insight into which strategic objective should be
reached in each cluster.
To develop and implement thorough, impactful strategies, it is
critical to incorporate shopper and shopkeeper dimensions into
segmentation parameters, either sequentially or simultaneously.
Traditional trade is a complex and highly competitive channel that is
here to stay for the foreseeable future. Understanding the dynamics
across the three critical pillars of shop, shopper and shopkeeper is
critical for manufacturers to become dominant market leaders.
2020
2012
1999
MODERN TRADE
DEVELOPING MARKETS (ASIA)
TRADITIONAL TRADE
DEVELOPING MARKETS (ASIA)
57%
44%
27%
56%
73%
43%
Source: Nielsen Retail Index, Share of Packaged FMCG Sales
TRADITIONAL TRADE IS HERE TO STAY