Nielsen
Jul 22, 2019

Few brand loyalists among HK shoppers, who are easily swayed by value, utility

As FMCG growth slows, marketers in Hong Kong face a populace that's not reluctant to switch brands if they see a good reason to do so.

Few brand loyalists among HK shoppers, who are easily swayed by value, utility

NIELSEN MARKET SNAPSHOT

Hong Kong is one of the leading international financial centres and capital markets in Asia with an open trade eco-system and service-oriented workforce fuelling consumption and steering this economic powerhouse. However, in recent times Hong Kong has felt the effects of the global economic slowdown, translating into more cautious investor sentiment, which has impacted the market.

The first quarter of 2019 recorded an annualised GDP growth of 0.6%, compared to a 4.6% GDP growth during the same period in the previous year. The overall trend in declining exports in Hong Kong is similar to other Asian markets, and contributed to the further weakening of GDP in the first quarter.

Within the FMCG sector, Hong Kong has experienced three consecutive quarters of slowing in nominal value growth (1.2% in Q1 2019; 1.3% in Q4 2018; 3% in Q3 2018 and 5.9% in Q2 2018). Despite softer overall growth rates there are some bright spots, with growth in categories such as personal care (up 6.3% at 16.4% share of FMCG), health products (up 6.2% at 8.4% share of FMCG) and dairy, bakery and frozen foods (up 5.1% at 10.8% share of FMCG) far outstripping the average 2.8% growth in the first quarter of 2019 for all the FMCG categories.

In Nielsen’s recent study on consumer loyalty towards brands, we found that in Hong Kong, 28% of consumers love trying new things and only one-tenth (9%) of consumers are strong brand loyalists. Given this context, 28% of consumers are swayed by value for money when it comes to switching brands or trying something new, likewise, price reductions and promotions could influence a quarter of consumers (25%) towards new brands. A further 22% of consumers say that they could be convinced to try new brands if it offers better utility and greater convenience. These three influencers (value for money, price reduction/promotion, and more convenience) are similarly impactful for consumers, followed by superior quality and function which are important influencing factors for nearly 14% of consumers.

When it comes to preference for brands by categories, survey results reveal that 19% of consumers prefer one to two brands across skincare, staples and sanitary protection categories. Notably, sitting in the middle of the brand switchers and the brand stalwarts are 63% of consumers who are open to trying new brands, but usually stick with their regular repertoire. This group are more cautious but can be moved to experiment, and represent a marked opportunity for brand owners to hone in on the factors influencing brand switching in order to appeal to new consumer sets.

In the current environment of growing brand choices available to consumers, the marketplace has become increasingly competitive. For manufacturers and retailers to remain relevant they will need to serve solutions that appeal to consumers’ needs both in-store and online.

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