Economic Observer Network reporter Li Xiaodan On April 13, Nielsen IQ released “2023 China’s Retail Market Recovery Outlook” and “Brand Action Manual: Embracing Sustainable Change”.
How will the consumer market develop in 2023? Song Ye, managing director of Nielsen IQ China, said that in 2023, China’s economic recovery and various local governments’ measures will vigorously boost consumer confidence and lay the foundation for consumption recovery. As the primary demand, and the consumption behaviors of people with different financial status are also different, so using omni-channel integration to create targeted multi-level shopping scenes and empowering consumption upgrades with product innovation can further stimulate the overall vitality of consumption recovery; in addition , The transformation of the brand to a sustainable business model also opens up a new development direction for product innovation and retail innovation in 2023.
“2023 China’s Retail Market Recovery Outlook” pointed out that in 2023, the sales of domestic catering and key enterprises will increase by 6.8%, and the sales of fast-moving consumer goods by major modern channel retailers will increase by 5.3% during the Spring Festival, reflecting the huge overall consumption potential; China Consumer confidence is also gradually picking up. 48% of Chinese consumers believe that compared with 2022, household income in 2023 is expected to be better.
According to the outlook report, there are four elements that are the key to determining the recovery of consumption. First of all, recovery of economic development and improvement of consumers’ consumption ability and willingness to consume are the basic conditions for consumption recovery; secondly, understanding consumers’ consumption mentality, needs and behaviors under real conditions is the beginning of promoting consumption recovery; thirdly, creating products that satisfy consumption The consumption scenario that consumers demand is the soil to stimulate consumption vitality; fourth, providing products and prices that meet consumers’ expectations and needs is the key to facilitating transactions.
The report shows that even if China’s retail market faces multiple challenges in 2022, there are still structural growth opportunities for FMCG. In 2022, the omni-channel sales of beverages, casual snacks, alcohol, pet food and vitamins will all increase compared with the previous two years, of which 91% of category growth comes from price increases, and 64% of category growth comes from consumption upgrades , which proves that categories that meet consumer needs have growth space and vitality that can be captured at any time.
Will “price adjustment” and “consumption upgrade” remain the main drivers of growth in 2023? Nielsen IQ further combined the retail verification database and the latest consumer research insights, and found that consumers have low price elasticity for healthy daily miscellaneous categories represented by fresh fruits and vegetables, fresh meat, and dairy products, and price increases will not be greatly reduced. Consumers’ willingness to purchase. But in contrast, leisure consumption such as snacks, sweets, drinks and wine will be more affected by price fluctuations. If prices still rise in the next three months, consumers will consider reducing purchases of such products. type product. Therefore, category differentiated pricing combined with different promotional strategies can drive overall growth.
It is worth noting that sustainable development will lead new consumption trends. According to the survey, 40% of consumers with low price sensitivity believe that a sustainable/environmental protection lifestyle is the most important to them; 28% of consumers have consciously taken actions to change their consumption patterns. Although some industry pioneers have taken measures such as using degradable raw materials, unlabeled packaging, and even developing carbon-neutral products, there is still a considerable gap in the domestic market to support the practice of sustainable living concepts. Years of product innovation and retail innovation opened a new direction of development.
With the proposal of China’s “3060 Double Carbon Target”, ESG assessment and corporate practice have received attention. The Ministry of Ecology and Environment requires that by 2025, a mandatory disclosure system for environmental information will be basically formed. Enterprises will disclose environmental information in a timely and truthful manner in accordance with the law, and strictly implement supervision and punishment measures. In this context, enterprises must plan their own sustainable development roadmap and accelerate the switch to “green mode”.
The report “Brand Playbook: Embracing Sustainability Change” notes that consumer enthusiasm for sustainability has been growing for more than a decade. Frequent events and climate change have challenged existing business models.
Taken together, drivers such as rising consumer demand, cost surges due to climate change impacts, tighter regulation and enforcement will force brands to transform and commit to truly sustainable business models over the next five years, which is no longer the case. The question of whether a brand is needed or not has become part of measuring corporate governance performance.
Therefore, Nielsen IQ suggests that brands can pay close attention to relevant laws and regulations, actively reduce risk factors such as supply chains, remove obstacles for consumers to choose sustainable products, eliminate price premiums, invest in reputable third-party certification, and work together. Starting with the action plan, accelerate the rebranding process to adapt to the green transformation of FMCG, reduce the financial impact of climate change, and align with consumer expectations.
Nielsen IQ research shows that consumers demand open and transparent understanding of all components of brand sustainability. 77% of consumers demand that the government strengthen supervision, 69% of consumers believe that sustainability has become more important than two years ago, 76% of consumers believe that it is important for companies to actively reduce carbon footprints, and 78% of consumers believe that brands There should be complete transparency into the supply chain. For Chinese companies, the biggest policy challenge is the different regulations around the world, and the biggest technical challenge is the lack of high-quality data.
For consumers, affordability is the biggest barrier to choosing sustainable living, 41% of consumers think sustainable options are too expensive, and 46% of consumers want sustainable brands to be more competitive in price. Brands therefore need to offer more affordable, accessible, and responsible alternatives, meaning sustainable product premiums will be more difficult as consumer expectations shift to new benchmarks, and in the near future, sustainability will no longer be Is a “luxury” or differentiated service. Brands need to recalibrate their pricing, and sustainable measures may be less profitable in the short term, but will become a more cost-effective norm in the medium to long term.
At the same time, brands are entering an era of regulatory scrutiny and consumer skepticism. If a brand is not transparent or is found to be overly promoting sustainability, there will be negative consequences. 77% of consumers said they would stop buying” Greenwashing” brands; 75% of consumers want the government to force companies to pass third-party certification. Investing in reputable third-party certification, joining sustainable development foundations and industry organizations will become one of the future trends of enterprises. In summary, consumers in 2023 will demand that brands be responsible for promoting sustainable development in the world.
Brands will also diverge in responding to sustainable change, with some companies actively driving organizational progress while others lag behind, so it is critical to start a sustainable process and adapt to change now. Zhang Wei, Business Director of Nielsen IQ China, said that the next five years will be a critical transition period for brand transformation. By continuously improving the accuracy of data to reflect the most authentic retail market picture, help brands cope with the opportunities and challenges of transformation, and empower brands to achieve sustainability. increase.
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