Traditional markets remain despite e-commerce growth

CEBU, Philippines - Yes, e-commerce is making waves in the global market.

But it looks traditional trade is still prevalent in the Philippines.

Based on Kantar Worldpanel’s Winning Omnichannel – an annual report on FMCG (fast-moving consumer goods) trade channels – hypermarkets and supermarkets are still deemed fast growing as trade channels in the Philippines.

The report said the Philippine hypermarkets and supermarkets accounted for about 30 percent of all purchases made in various channels in 2016, a growth still considered significant.

"In developing regions where modern trade would be the next practical step, traditional and other formats (comprising door-to-door, cash and carry and pharmacies) are still performing well," said Kantar Worldpanel, a global expert in shoppers' behavior.

FMCG trade done through this channel is still growing faster in the Philippines, according to Kantar, with a 52 percent value share in consumer trade in 2016.

The Philippines, Argentina, Brazil, Ghana, Taiwan and Vietnam are the countries where traditional trade is still growing strong, based on the Kantar report.

Stéphane Roger, global shopper and retail director at Kantar Worldpanel, said: “Channels which traditionally dominated the field – supermarkets, hypermarkets, drugstores – are in steady decline worldwide. Step forward the ‘new order’: e-commerce and discounters, cannibalizing the big retailers with their promise of convenience and lower prices."

“Technology is fast changing the way people shop and, with e-commerce and discounters set to continue their march at the expense of large format retailers, there is an urgent need for retail reconfiguration across the world," Roger said.

Across the globe, the Kantar report revealed the shrinking market share of supermarkets and hypermarkets.

Globally, 2016 hypermarket and supermarket FMCG value sales grew by just 0.7 percent, while online spending grew by 26%; discounters by 5.1 percent and cash and carry by 4.1 percent.

The share of hypermarkets and supermarkets is predicted to reduce further, to just 48 percent of global FMCG spend by 2021, with e-commerce set to grow to 7.5 percent and discounters 6.5 percent.

E-commerce

The share of grocery shopping conducted online continues to rise, particularly in the world’s most advanced e-commerce markets, such as South Korea, China and the UK.

Meanwhile, the countries with the slowest growing e-commerce include France, Argentina, Japan, and surprisingly, the U.S.

Discounters are the second-fastest growing channel in 2016 with 5.1% value growth. Discounters saw the highest value growth in Colombia –124 percent – where over 600 stores were opened in 2016. Following Colombia are Argentina, Brazil, the U.K., and Ecuador.

Countries where discounters experience slow growth include Japan, Spain, Chile, Portugal, and France. (FREEMAN)