cvs need for speed
TRANSCRIPT
March 2015
GIVING VIETNAMESE CONSUMERS WHAT THEY WANT
THE NEED FOR SPEED
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DO YOU HAVE THE RIGHT OFFER?
• Our lifestyles are changing
• Working adults are strapped for time
• Students need a place to hang out
• Males and females shop differently
• CVS and minimarts for HCMC
• Minimarts for Hanoi
• CVS threatens
Traditional grocery; minimart fast-replacing wet markets
• Food & Beverages reign in CVS
• Fresh and value-for-
money winning in minimarts
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Shaping your business for tomorrow
WHAT is the new Vietnam convenience offer
WHERE is the convenience
footprint in Vietnam
WHO is the Vietnamese
consumer
CONVENIENCE IN VIETNAM TODAY
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WHO is the Vietnamese
consumer
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4 BIG CONSUMER TRENDS
IT’S ALL ABOUT ME
CONNECT ME TO THE
WORLD
I’M ON THE MOVE
I HAVE THE POWER TO BUY
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2030 2013
Asia will be the home of
3 BILLION middle class
The projected middle class in
Latin America is
313 MILLION
The middle class in Africa
and the Middle East is
projected to
DOUBLE
ASIA IS GETTING RICHER WITH PURCHASING POWER FOR THE FIRST TIME
Sources: Nielsen Analysis, Boston Consulting Group
Vietnam’s middle class
set to
DOUBLE BY 2020
(2014 to 2020)
12M to 33M
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Income is relative across countries
17%
20%
16%
15%
22%
44%
33%
59%
20%
15%
17%
37%
46%
42%
35%
52%
35%
33%
Singapore
Malaysia
China
Thailand
India
Philippines
Vietnam
Indonesia
Asia
Less than $5,000 $5,000 - $19,999
17%
14%
13%
20%
25%
14%
10%
35%
17%
49%
38%
56%
37%
44%
31%
34%
31%
47%
34%
48%
31%
42%
31%
55%
55%
34%
36%
Singapore
Malaysia
China
Thailand
India
Philippines
Vietnam
Indonesia
Asia
I've been able to spend freely
I've been able to live comfortably, and bought some things just becauseI liked them
I've only had enough money for shelter, food and basics
ANNUAL INCOME SPENDING FLEXIBILITY
…AND VIETNAM IS PART OF THIS STORY
Sources: Nielsen Global Survey
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57% population below 35 years old
YOUNG POPULATION
Sources: Data results of the Viet Nam Household Living Standards Survey 2012 – VN GSO Statistical Yearbook of Vietnam 2013 – VN GSO Vietnam Urbanization Review 2011 – World Bank Nielsen Vietnam Pocket Book
ALL SET TO SOAR
HIGH LABOR FORCE 13% increase in labor force participation
HIGHER INCOME
44% increase in monthly income per capita (2010 vs. 2012)
MORE EXPENDITURE
32% growth in monthly total consumption expenditure per capita (2010 vs. 2012)
SMALLER HOUSEHOLD SIZE From 4.44 to 3.85 people/ household (2002 vs. 2012)
URBANISATION
30% urbanisation rate with 3.4% growth rate per year
QUALITY
73% willing to pay more for higher quality
39% considering health as top concern in life
HEALTH
MORE EDUCATED 1.6 times more college/ university graduates (2006 vs. 2012)
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WITH HOUSEHOLDS SHRINKING, NEW OPPORTUNITIES ARISE
Source: Viet Nam Household Living Standards Survey 2012 – VN GSO
4.4 3.8
SMALLER PACKAGING
SHOPPING MISSIONS NOT
FORMATS
ON-THE-GO LIFESTYLE
VN AVG # IN HH
2015 2000 future
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Source: Monthly income per capita: GSO 2012 Occupation structure & Urbanization rate: Rural Census 2011
Education level: Nielsen Rural Syndicated Study 2009 & Nielsen Rural 2014
MEET 4 KEY CONVENIENCE SHOPPERS IN VIETNAM
STUDENT
FIRST JOBBER
WORKING MOM
23%
18%
16%
HOUSEWIFE
9%
Source: Nielsen Vietnam Convenience Store Study
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CONVENIENCE STORES
SUPER/HYPER
TRADITIONAL GROCERY
WET MARKET
UNDER 24 YEAR OLDS 58% 27% 20% 16%
WHITE COLLARED/PROFESSIONAL
36% 26% 20% 21%
STUDENT 23% 11% 6% 4%
THE SHIFT STARTS WITH STUDENTS AND PROFESSIONALS
Source: Nielsen Shopper Trend – Vietnam 2014 Base: All shoppers HCM and HN (n=1000) Demographic questions (Age, Occupation)
N.B. Sample size for minimarts are too small to be displayed
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WHAT STUDENTS WANT…..
NEW DAY START!
9am–12pm
12–2pm
5–9 pm 2–5pm
Source: Observations/website
Khanh and Dat
Enjoy frozen soft drinks + cool teas during their short breaks
QUICK FIX
Rice and fruit juice from the store are as good as those made at home
NOURISHMENT
Light food such as instant noodles to sustain vitality till end of day
RECHARGE ENERGY
Sweet foods such as ice cream and soft drinks to keep energy levels up
RELAX
Chill out with buddies
on the way to school…
5–9am
HEALTHY KICK OFF
Buy sandwiches and fruit juices to get ready for a long, active day
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HOW WORKING FEMALES SHOP……
NEW DAY START!
5–9am 9am–12pm
12–2pm
5–9 pm 2–5pm
Source: Observations/website
Hoa
HEALTHY KICK OFF She enjoys a fresh juice from the CVS situated at her office
QUICK FIX
For lunch, she goes for the hot pot/rice at the CVS
NOURISHMENT brings her kids to school…
MEAL PREPARATION
minimart
On the way home, Hoa passes by a minimart to pick up fresh vegetable and meat
In the evening, she drops by at the nearby minimart for shampoo, detergent, yogurt and snacks for her children
FILL-IN NECESSITIES
minimart
On the way to school, Hoa stops at the CVS next door to buy bread-and-milk combo for the children
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WHAT CONVENIENCE MEANS TO WORKING MALES….
NEW DAY START!
5–9am 9am–12pm
12–2pm
5–9 pm 2–5pm
Source: Observations/website
Long
QUICK KICK OFF
REVITALISE
NOURISHMENT rushing to work…
UNWIND
FILL-IN NECESSITIES
He grabs bread and RTD tea and rushes to the office where he eats at his desk
Enjoys a hot coffee to stay alert
Replenishes at mid day with Vietnamese rice and frozen soft drink
Drinks some cool tea to wash away the hectic morning
Picks up personal care items running low such as toothpaste, deodorant…all ready for a new dynamic day
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16 Source: Nielsen Global Survey of Consumers Shopper Behavior 2013
Males are more likely to shop in convenience than females
EMBRACE CONVENIENCE OF BUYING ONLINE
FAST FOOD IS ON THE GO
FRESH AND FREQUENT
of shoppers like to shop every day to provide fresh and healthy food for their families 30% 23%
CONVENIENT OFFERING
LOCATION IS MOST IMPORTANT
Consumers in Thailand find location as most important
In Philippines
1 in 5 eat fast food
at least once a week
37% of Asian consumers will buy groceries online
HEALTHY SHOPPING IS TOP OF MIND
will pay more for foods that promote healthiness
57% 84%
51% 2014
ASIAN CONSUMERS ON THE GO What’s important to them and how they shop
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7.4
0.9
3.1
1
5
1.7
4.8 5.3
HYPER/SUPER PERSONAL CARE CVS ONLINE
2008 2013
During the past 6 years, Chinese shoppers have cut their Hypermarket trips by 30%
Source: Nielsen Shopper Trend 2013 – average trips per month
-32% Vs. 2008
Trips
+89% Vs. 2008
Trips
+55% Vs. 2008
Trips +430% Vs. 2008
Trips
CONVENIENCE IN CHINA
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NEXT UP: E-CONVENIENCE?
Hours per week
Consumers in Asia Pacific are among the most connected in the world
Source: Survey of Internet users Nielsen Cross Platform report
VIETNAM
15.5
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WHAT WE KNOW: CONVENIENCE MEANS DIFFERENT THINGS TO DIFFERENT SEGMENTS
AGE
WEALTH
HOUSEHOLD SIZE
LOCATION
EDUCATION
ACCESS TO TECHNOLOGY
ACCESS TO PRODUCTS
MILLENNIALS
LOW INCOME
SINGLE UNIT
RURAL
LOW
LIMITED
SILVER TIDE
TRADITIONAL/ MODERN TRADE
MILLIONAIRES
FAMILY UNIT
URBAN
HIGH
24/7
E-COMMERCE
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WHERE is the convenience
footprint in Vietnam
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CONVENIENCE FOOTPRINT IN ASIA IS EXPLODING
X = Growth since 2004 Source: Nielsen Retail Census
2.7 X
2 X
2 X
1.4 X
3 X
3 X
1.5 X
CHINA
KOREA
THAILAND
TAIWAN
MALAYSIA
PHILIPPINES
SINGAPORE
Number of Stores In 2014
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147
863
304
130
428
116 12
321
98
259
1082
300 236
523
112 17
421
89
348
1452
313 326
547
100 15
602
94
CVS Minimart Super/Hypermarket
CVS Minimart Super/Hypermarket
CVS Minimart Super/Hypermarket
URBAN HCMC HANOI
2012 2013 2014
Number of Modern Trade stores in Vietnam
Source: Nielsen Retail Establishment Survey (RES)
SLOWLY BUT SURELY, VIETNAM TOO
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Chain MM Independent MM Chain CVS
24/7 Fixed hours
Source: Observation/ website
A LOOK AT CONVENIENCE FORMATS IN VIETNAM
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REGIONALIZED APPROACH IS A MUST Clear-cut distinction between CVS and MM in HCMC but blurred in Hanoi
HCMC
IMPULSE SOLUTION FRESH FOOD EVERYDAY
ALL-IN-ONE SOLUTION FOR EVERYDAY NEEDS
ALL-IN-ONE SOLUTION FOR GROCERY NEEDS
CVS MINIMART
HANOI
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Source: Nielsen Shopper Trend – Vietnam 2012 and 2014 - Which of these types of stores have you visited in the past 7 days? - On average, how often would you shop at the following type of store? - Which of these types of stores would be the one where you normally buy most of your food and grocery items?
SHIFT FROM TRADITIONAL TO MODERN TRADE
WHERE DO CONSUMERS SHOP? (%)
HOW OFTEN DO THEY SHOP? (AVERAGE PER MONTH)
CHANNEL SPENT MOST IN? (%)
2012 2014 2012 2014 2013 2014
WET MARKETS 90 85 23.2 22.4 53 47
TRADITIONAL GROCERY 81 64 10.8 8.6 11 7
SUPERMARKETS 62 60 3.0 2.8 34 40
CONVENIENCE STORES 5 11 2.1 3.6 1 2
PERSONAL CARE 11 9 0.8 0.9
MINIMARTS - 4 - 2.7
COSMETIC SHOPS 6 4 0.7 1.1
CASH AND CARRY 4 3 0.8 0.9
DEPARTMENT STORES 3 1 0.6 0.6
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FREQUENT VISITORS (Visiting at least 2–3x/ week)
OCCASSIONAL VISITORS (Visiting less than 2–3x/ week)
Source: Nielsen Study at CVS/MM 2015 – Quantitative How often do you visit each of the following channels?
CONVENIENCE STORES
MINIMARTS
81% VISIT TRADITIONAL GROCERY SHOPS
85% VISIT WET MARKETS
65% VISIT TRADITIONAL GROCERY SHOPS
67% VISIT WET MARKETS
TRADITIONAL GROCERIES AND WET MARKETS ON ALERT
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28 Source: Nielsen Study at CVS/MM 2015 – Qualitative
SUPER/HYPERMARKET
TRADITIONAL GROCERY
MARKET STALL
STREET VENDORS
EATERY
QUICK SERVICE RESTAURRANT
CAFÉ
TEASHOP
STREETSIDE HAWKER
TRADITIONAL GROCERY
TEASHOP
CAFÉ
On premise On the go
Stock-up/Fill-in Daily shop
WET MARKET
TRADTIONAL GROCERY
Depending on Shopper Mission…..
POTENTIAL THREAT TO OTHER CHANNELS TOO
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86%
Source: Nielsen Study at CVS/MM 2015 – Quantitative What items did you buy today?
TODAY, FOOD AND BEVERAGE IS DRIVING CVS SALES
buy either food or beverage 51%
of food buyers also buy
beverage items
62% of beverage
buyers also buy food items
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EXPERIENCE
CONVENIENCE
IMMEDIATE DELAYED
IMMEDIATE CONSUMPTION IS KEY TRIGGER IN CVS
Source: Nielsen Study at CVS/MM 2015 – Quantitative and Qualitative What best describes your main purpose of this shopping trip? Which shopping channel(s) fit with the following statement?
KEY NEED STATES Specific functional and emotional benefit
• Meal preparation • Necessity fill-in
• Good service from staff 85% • Fresh everyday 22%
Daily shop/fill-in: 14%
• Quick Fix
• Quick to get in and out 82% • Clear store layout to find
products 82% • Long operating hours: 86%
Urgency: 6% • Pick me up • Recharge
• Stock availability assurance 46% • Quick billing 78%
On-the-go and just-in-
time meals: 47%
• Unwind/Relaxation/Self-indulgence • Fun time together/Family bonding
• Fun time together 66% • Joy and relaxation 64% • Neat and clean environment 92%
On premise: 26%
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EXPERIENCE
CONVENIENCE Source: Nielsen Study at CVS/MM 2015 – Quantitative and Qualitative What best describes your main purpose of this shopping trip? Which shopping channel(s) fit with the following statement?
KEY NEED STATES Specific functional and emotional benefit
• Meal preparation • Necessity fill-in
• Good service from staff 90% • Fresh everyday 53%
Daily shop/fill-in: 55%
• Quick Fix
• Quick to get in and out 81% • Clear store layout to find
products 90% • Long operating hours: 85%
Urgency: 13% • Pick me up • Recharge
• Stock availability assurance 48% • Quick billing 79%
On-the-go and Just-in-time meals: 19%
Home stocking and consumption
• Freedom to browse 93% • Quality assurance 71% • Wide assortment 74%
Stock up: 9%
DAILY SHOPPING NEED IS THE REASON FOR MMS
IMMEDIATE DELAYED
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WHAT is the FUTURE of the
convenience offer
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ENORMOUS OPPORTUNITY IN VIETNAM What is the right offer in each area?
Number of People per Convenience Store
Convenience stores are now truly convenient in many countries
1,835
2,300
5,261
5,556
7,040
7,300
21,000
37,000
69,000
KOREA
TAIWAN
HK
THAILAND
MALAYSIA
SINGAP…
CHINA
PHILIPPI…
VIETNAM
Source: Nielsen Retail Census
(% OF POPULATION)
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EARLY SENTIMENTS: AGGRESSIVE AND AMBITIOUS
"Citimart’s strategy will not only stop at supermarket but also open small-format stores, minimart to explore all market segments.”
Ms. Nguyễn Thị Ánh Hòa
Investors of Citimart
“Vingroup with a plan to develop 100 supermarkets, 1000 convenience stores till 2017, aims to create jobs for 20000 Vietnamese labour ”
Mr. Lê Khắc Hiệp Vice President of Vingroup
“Co.op Foods target to open 30 stores till the end of this year (2011) and open 150 stores moare up to 2015” Ms. Nguyễn Thị Tuyết Hoa
Deputy Director of Saigon Co.op
“Up to now, Vietnam only had 400 stores. Meanwhile, with population of 60 millions, Thailand has 10.000 (convenience) stores; Japan has up to 50.000 stores for 130 mil people. Therefore, my forecast is Vietnamese market size will be bigger than Thais and in ten years times, number of (convenience) stores can reach to 15.000 nationwide”
Mr. Kigure Takehiko CEO of FamilyMart
Source: Nielsen Study at CVS/MM 2015 – Qualitative
“We have invested in the channel 2 years now. CVS chains are doing successfully by recruiting the youth as their shoppers. Vietnamese youngsters catching up quickly with this new trend is quite surprising. While independent minimarts, the transition between traditional trade and modern stores, are impacting super/hypermarkets”
MT manager A multinational FMCG company
RETAILERS MANUFACTURERS
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SUPER/ HYPER
TRADITIONAL GROCERY
WET MARKET
+ + +
- + +
- + +
- - +
- - -
- + +
GAP BETWEEN CONVENIENCE RETAILING V.S. OTHER CHANNELS
CONVENIENCE WILL DRIVE MODERN TRADE
% agree with imagery statements
CONVENIENCE
ASSORTMENT
ASSURANCE
FRESHNESS
PRICING
JOY/ EXPERIENCE
+: ADVANTAGE
-: DISADVANTAGE
Source: Nielsen Study at CVS/MM 2015 – Quantitative Which shopping channel(s) fit with the following statement?
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36 Source: Nielsen Study at CVS/MM 2015 – Qualitative
MORE THAN 1 DEFINITION OF CONVENIENCE…..
PRIVACY
Free to browse without disturbance
ACCESSIBLE
Just one step from home/school/office
Easy browsing – Quick billing
QUICK AND EASY
AVAILABILITY
Long opening hours, esp. for fresh food
Ready-to-eat And Ready-to-cook
READILY MADE
ALL IN ONE
One place for all solution
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DIFFERENT FOLKS, DIFFERENT PATHS OF PURCHASE Vietnam
IMPULSE DECISION
BIG SPEND
FREQUENT VISIT
MORE F&B OPPORTUNITY
EXPECTATION TOWARDS PRODUCT
PLANNED DECISION
SMALL SPEND
OCCASIONAL
LESS F&B OPPORTUNITY
EXPECTATION TOWARDS SERVICES
More F&B, especially RTE More services (Promotions/ Loyalty program/Free delivery)
HIGH ON VISITING CVS
HIGH ON VISITING MM
EXPERIENCE NEED
CONVENIENCE NEED
STUDENT FIRST JOBBER WORKING MOM HOUSEWIFE
Source: Nielsen Vietnam Convenience Store Study
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WHAT’S THE WINNING STRATEGY?
CRITICAL SUCCESS FACTORS
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FOOD ON THE GO
EXTENDED SERVICES AND HOURS
COMPETITVE PRICING
HIGH QUALITY
WIDE PRODUCT CHOICE
SPEED OF SERVICE
FRESH
PERSONAL
LOCAL
CHANNEL FORMATS ARE STARTING TO BLUR Consumer need for convenience is common link
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HOW DO YOU DIFFERENTIATE AND GROW IN THIS COMPETITIVE MARKET?
NEW CONVENIENCE
FOOD ON THE GO
FRESH
COMPETITIVE PRICING
EXTENDED SERVICES
AND HOURS
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CONVENIENCE PROVIDING SOCIAL MEETING PLACES IN SINGAPORE
Competing directly with Quick Serve Restaurants and Coffee Shops in all markets
Source: Observations/websites
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Upgraded 2nd generation ibon Printing/Scan event tickets/transportation
tickets besides household bill payment
Provide tablet in sitting area Customer can access to 7-Net
to shop more
In-store media Sports/TV commercials
INNOVATIVE IN-STORE EXPERIENCES ALREADY HERE
Source: Observations/websites
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IN-STORE DECORATION BY CVS
CVS WITH BIGGER SIZE
DIFFERENTIATE WITH STYLE OR SIZE…..
Source: Observations/websites
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Providing convenience in “fresh”
INDIVIDUAL FRUIT AND VEGETABLES
READY-TO-COOK INGREDIENTS
CONVENIENCE MOVING INTO FRESH IN TAIWAN
Source: Observations/websites
Catering to the everyday needs of small households
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RESPONDING TO INCREASING DEMANDS OF HEALTH-CONSCIOUS CONSUMERS
THE #1 VIETNAMESE
CONCERN
READY TO DRINK MILK/YOGHURT
CHEESE
HEALTHY BEVERAGES
TRADITIONAL SNACKS
PRE-CUT FRESH FRUITS
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OPPORTUNITY FOR PRIVATE LABEL TO GROW Quality and assortment gaining importance……
Hot-selling imported snack
(of some countries)
Local favorite drink/snack
Imported product
(electronic devices,
personal care)
New tea drink Frozen food
Source: Observations/websites
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Shoppers increasingly expect Convenience + Low Prices
INCREASED FOCUS ON MEETING SHOPPERS’ NEED FOR VALUE IN TAIWAN
Source: Observations/websites
SEASONAL PROMOTION: on RTD and RTE by theme/activity
TOTAL STORE PROMOTION: Gain points when you spend > $60
PAY BILLS AND GET COUPONS
BUNDLE PROMOTION: Meal + drink
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TOTAL STORE PROMOTION A MUST-DO TO INCREASE BASKET SIZE IN VIETNAM Provides everyday needs, and diversify promotion mechanism
Source: Observations/website
SEASONAL PROMOTION: on food and beverage by theme/activities
BUNDLE PROMOTION: Meal + drink
TOTAL STORE PROMOTION: Get discounts/gifts by paying bills
OTHER CREATIVE PROMOTIONS
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• Spend $3 at any 7-Eleven store to get a stamp
• Get one figurine at $3.90 with 8 stamps or redeem one figure with 24 stamps
• Cheers LinkPoints Issuance: Every $1=2points
• Min Purchase $10 at Cheers / Esso Cheers, $20 at FairPrice Xpress
• Cheers LinkPoints Redemption: All purchases
RETAILERS THEME MECHANISM
• Free registration • 1st purchase over 30.000 VND ,
shoppers got gift from B’s mart
LOYALTY PROGRAMS WILL GROW IN IMPORTANCE
Source: Observations/website
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BUYING BEYOND TRADITIONAL IMPULSE ITEMS
CONVENIENCE – BEYOND AN IMPULSE DESTINATION In Thailand
79%
13
OF URBAN SHOPPERS SHOPPED IN CONVENIENCE IN THE LAST WEEK
TRIPS/MTH
6% MORE EXPENSIVE THAN HYPER
IN THAILAND, CONVENIENCE IS ONLY
IN OTHER COUNTRIES, E.G. SINGAPORE, IT’S UP TO 30% MORE EXPENSIVE
MAKING
19% OF THAI SHOPPER VISITS TO CVS FOR EVERYDAY NEEDS
Sources: Nielsen Shopper Trends and Retail Measurement Services
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PROVIDING SERVICES THAT MAKE LIFE EASIER IN KOREA
Increasing shopper spend and frequency
POSTAL SERVICE
MOBILE PHONE
GIFT CARD
ATM TAX
PAYMENT LOTTERY PAYMENT SERVICE
TICKET PICK-UP
RTE /FRESH
Source: Observations/website
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CONVENIENCE OF THE FUTURE: MORE THAN FMCG
฿
PAYMENT SERVICE
FRESH FOOD READY-TO-EAT
DINE-IN
LOYALTY PROGRAMME
TICKET PICK-UP
GAS STATION
ATM WIFI
Source: Observations/website
From bill payment to having a hot meal, more services are being added…..
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MAKING SHOPPERS’ LIVES TRULY CONVENIENT A day in the life of a shopper around CVS
Small sized vegetables
Get coupons by paying bills in CVS
NEW DAY START!
08:45 am 12:30 pm
13:30 pm
18:00 pm
21:00 pm
Freshly brewed coffee
15:30 pm
19:30 pm
Late night snack
Pre-cut fruit
Pre-cooked home meals
Rice Lunchbox Meal
Bundle Promotion: Meal+ Drink
ATM
Pick up theatre tickets
Source: Observations/website
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FAST BECOMING AN ENABLER TO BUSY LIVES
A hangout venue for young shoppers
A time saver for working females
A convenient location for
working males
MORE THAN JUST A CONVENIENCE STORE
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CONVENIENCE IS MOVING BEYOND A STORE FRONT
EATING ON THE GO
SOCIALISING
WEEKLY SHOP
INNOVATE BEYOND CPG
SHOPPING ON THE GO
PRICING AND RANGING TO
RIVAL SUPERS
EASE OF ACCESS
FRESH FOOD
ARE YOU READY TO EVOLVE?
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THE FUTURE OF CONVENIENCE
Move beyond the big cities to
capitalise on consumer purchasing
power
Convenience is not a store format –
it’s a consumer need
Digitalise your offering to be
truly convenient, anywhere, any time
