In recent years, in many Asian markets, demographic and economic trends have coincided to create staggering growth for retail chains. Yet, while number of locations and foot-traffic is certainly growing, it is questionable whether this sharp increase in quantity of customers is being reflected in the quality and amount of spend per customer.
One clear example is in Indonesia, where the number of Convenience/Mini-market (CVS) stores have more than quadrupled since 2008. However, a recent study that G&M worked on with Deka Marketing Research clearly reveals that Indonesia’s retailers may be missing out on major opportunities when it comes to attracting and retaining the right “quality” of customers. It’s our belief that many of these issues are likely to found in other retail chains in other markets, and that part of the fault lies with the kind of research often being delivered to retailers. Here are a few key facts to illustrate what we saw in Indonesia:
- 8% of CVS visitors enter and leave without purchasing anything at all. This is not just people popping in and out and not finding the one item they wanted – many spend quite a long time in-store.
- Modern Indonesian CVS stores generally target the younger and ‘top-end’ socio-economic target group, and usually they succeed in getting such shoppers. Yet this does not guarantee more spending – in fact, older and SES “C” shoppers spent, per shopper, more in-store than younger, SES “A”.
- Recall/participation in in-store promotions was very low. If promotions are going on, people are not aware of them. Yet, when a shopper did participate in a promotion, their total shopping spend doubled. Better, more exciting, promotions are likely to be of major benefit in driving shopper spend in Indonesia.
- Most people are going into the store and buying precisely, and only, what they intended to buy. The number of items bought is usually low. Stores are failing to drive discretionary spend and impulse purchase (a key source of additional return elsewhere in the world)
- Most shoppers use multiple stores, yet spending in their “most often” store was notably higher than elsewhere. Similarly, we saw a direct positive correlation between amount spent and shopper’s rating of the store chain and their visit.
This, and other results in the study convinced us that CVS/Mini-market retailers in Indonesia have many opportunities to improve spend per shopper. Put simply, a greater focus on who is spending on what and when, and more creative thought about how to encourage shoppers’ to buy more, could pay dividends. It also seems clear that pre-store marketing and chain imagery is clearly very important, and have a surprisingly direct impact on spending and chain preference. We suspect many of these patterns will be apparent in other markets.
Interestingly, many of the issues identified were common to both “main street” international chain convenience stores (7-Eleven, Circle K, Lawson) and locally owned more “residential” mini-market chains (Alfamart, Indomaret). Almost all the stores in this broadly defined channel are attracting more shoppers, yet most of them seem to be missing opportunities to build more loyal and profitable shopper bases. (There are, however, some noticeable key differences between chains with spend per shopper in the highest ranking chain being almost double that of the bottom ranked chain).
G&M Would like to thank DEKA Marketing Research for permission to share some of the findings of this study. Founded in 1993 DEKA is one of Indonesia’s leading independent research agencies, working with many major international and local clients.
If you’d like more information on the Indonesian CVS/Mini-Market Report, please email us at firstname.lastname@example.org