Sep 3, 2018

Convenience rules for Korean consumers

Koreans want faster and more personalised service, as e-commerce expands into fresh-food categories and home meal services.

Convenience rules for Korean consumers

As part of our Asia's Top 1000 Brands report's deep dive into Korea's top brands, Nielsen has provided this look at the market's economic and consumer backdrop.

In 2017, South Korea’s economy remained stable with GDP growth at 3.4%, with strong exports in the semiconductor market aiding performance. Despite interest rates increasing, adding to household debt levels, consumers feel more optimistic about personal finances and it being the right time to buy than they did in 2016.

In the offline FMCG retail channel, Convenience continues to perform strongest across Modern Trade channel with growth at 9.7%. Its strong performance is due to the introduction of a variety of new formats and themes to ensure their offering is tailored to consumers’ need of close proximity, introducing services such as Bakeries, Fresh food, Stationery etc.

With South Korea purported to be one of the lead markets in e-commerce, its trajectory continues especially via mobile phones given their convenience. E-commerce has become the predominant shopping channel for Baby categories such as diapers and milk powder as well as paper and personal care products. However, recently it has started expanding into other grocery categories and fresh food as online retailers focus on quality control (vital for fresh food categories) and delivery service enhancements.

Home meal replacement (HMR) is another growth area fueled by the increasing number of single or double working household and their need for convenience. Continuous investment in quality is driving HMR (+9.7% for the year). In the past, price and convenience were the key factors behind HMR growth but consumer expectations are evolving and products with superior quality, premium positioning and overall customer experience as showcased by premium brands/franchises are driving new growth.

Looking forward, consumers are demanding more personalised and faster services. In Food categories, there is increasing demand for categories offering a more personalised experience whilst providing convenience. Consumers’ preferences are also changing from a historic focus on value, to brands positioned as “safe” based on natural and organic ingredients.

At the same time, demand for private brands is on the rise as retailers improve their credibility in offering quality products. This implies a new source of growth for private brands in relevant categories and a watch out for manufacturers in this space. Manufacturers and retailers should strive to understand consumer purchasing on the mobile platform and the various decision making factors that drive purchase.

Looking ahead, with population growth slowing and an increasing proportion of aging consumers, Korean companies continue to look outside its borders for new pockets of growth both within the region and beyond. International consumer acceptance of Korean brands continues to grow showcasing that diversity and success is possible beyond home borders. 

Related Articles

Just Published

23 hours ago

Purpose, laughs, and boppable tunes: Spikes jury ...

SPIKES ASIA X CAMPAIGN: Presidents and members of several Spikes Asia juries share the top trends they spotted in the jury Zoom rooms, with video examples.

23 hours ago

Crash Course: How to tell engaging short-form stories

To round off a week of creativity-themed content during Spikes Asia X Campaign festival, this Crash Course provides useful tips on how to build story arcs and create thumb-stopping campaigns for short-form.

1 day ago

Lessons from Tesla, Apple and yoga (yes, yoga) in ...

SPIKES ASIA X CAMPAIGN: Creatives need to drive relevance for sustainable options, instead of virtue-signalling about sustainability, argues Gulshan Singh of FCB Interface.

1 day ago

Spikes Asia Awards 2021: Campaign's contenders 3

As the juries make their final selections ahead of the March 1 winners announcement, Campaign Asia-Pacific's editorial team has once again scoured through the 2021 shortlist to pick out the work we expect to win.