Bruno Lannes: Keeping Up with China's Shoppers at Two Speeds

Read the transcript below.

BRUNO LANNES: This is the sixth year that we have been doing the China Shopper Report, and there are three main trends that we have observed in this year's report. First, FMCG growth continues to slow down. And as part of that slowdown, we see a divergence in growth rate between categories, channels and brands that we have named two speed.

We see categories like packaged water and yogurt growing double digit. And we see other beverage categories like CSD and like juice and ready-to-drink tea declining single, low double digit. And at the same time, we see channels growing very fast, like convenience stores, and even exploding, like digital, while big box retailers are declining.

Second, we have observed that the growth rate in food and beverage is much lower than the growth rate in home care and personal care, and we were wondering why. And the main reason is because Chinese are not cooking at home anymore, or much less.

They are, in fact, using delivery services to get food to their home or to their office or dining out. And therefore, they are not visiting stores in the same way as before to buy the food that they need to be able to cook at home.

And as a result of that, you see new concept stores, new supermarket stores that have half of their space dedicated to food and beverage like before, but the other half is dedicated to dining areas and delivery services so that they can actually deliver the new demand from those consumers.

And third, despite all the changes that we have seen and that I have described, the slowdown in FMCG, the two speed and the explosion of digital, we see the engagement of consumers with brands not changing. Their purchase frequency continues to be very low, and that's very surprising. Given the number of solicitation that they receive, you would expect them to buy a lot more online a lot more frequently, and that is not happening.

Similarly, with the ease of replenishment online, you would expect them to be a lot more loyal to brands, and this is not happening either. So despite all these changes, the good news for marketeers is that they need to continue to focus on penetration: They need to do it in a digital way, but the fundamentals of what they have to do has not changed.

Read the Bain Brief: Keeping Up with China's Shoppers at Two Speeds