China Economic Herald and China Development Network reporter Cui Liyong reported
NielsenIQ (NIQ), the world's leading consumer research and retail monitoring company, released its 2024 China Consumer Outlook (hereinafter referred to as the "Report") on April 12. According to the report, in 2024, Chinese consumers will be most concerned about health, self and family well-being, and plan to increase spending on education, domestic travel and daily necessities, with 65% of respondents optimistic about their future financial situation, compared to 54% in the Asia-Pacific region.
The report is based on NielsenIQ's online survey of 16,000 consumers in 23 countries from December 2023 to January 2024, covering China, Asia Pacific, Europe, Latin America, the Middle East, Africa and North America. Among them, China reported 1,100 respondents.
According to the latest data from the National Bureau of Statistics, with the effectiveness of various macro policies, the national economy continues to rebound, and market sales continue to recover, with the total retail sales of consumer goods reaching 8,130.7 billion yuan from January to February 2024, a year-on-year increase of 5.5%, of which the retail sales of goods are 7,182.6 billion yuan, a year-on-year increase of 4.6%, and the national online retail sales of physical goods are 1,820.6 billion yuan, a year-on-year increase of 14.4% At the same time, the foundation for recovering and expanding consumption still needs to be consolidated, and residents' spending capacity and confidence need to be further improved.
"We have observed that in the past year, Chinese consumers have undergone multiple tests, and consumers have paid more attention to price reasonableness while focusing on product performance, quality and brand reputation," said Ke Zunjian, Managing Director of NielsenIQ China. In the era of cost-effectiveness, FMCG retailers and brands need to explore opportunities in the different perceptions of consumers, formulate more accurate pricing and promotion strategies according to the performance and price growth trends of different categories, and seek new growth opportunities. ”
Focus on cost-effectiveness Consumers expect value for money
Overall, Chinese consumer confidence has picked up. According to the report, financial repayment, basic survival, and quality of life are the three core consumption pressure points of Chinese consumers in 2024, with 50% of respondents saying that their financial situation has improved, and only 13% of consumers feel that their family's financial situation has deteriorated compared to a year ago, down from 16% in the survey at the beginning of 2023. In terms of expectations for the future, 65% of respondents believe their household income will improve by the end of 2024, which is higher than the Asia-Pacific average of 54% and higher than the expectation of 48% of Chinese consumers for the same period in 2023.
Rational consumption has become the mainstream of China's consumer market. Compared with the survey conducted in early 2023, the economically weaker consumer groups have shown signs of rebound, with the overall proportion of consumers who are more sensitive to price increases, from 20% to 35% for those who care about low prices, the proportion of "budget-conscious" consumers who value value value for money and compare prices on multiple platforms has increased from 28% to 30%, and the proportion of "leisurely consumers" who are free to consume and pursue advanced value has increased and the overall proportion of "business as usual" consumers who maintain their spending habits and prefer brands to buy brands decreased from 52% to 35%.
In addition, in terms of purchasing methods, 86% of Chinese consumers have changed the way they buy FMCG products to control their spending, 37% of Chinese consumers choose to shop online to get more discounts, 30% of respondents will stock up on goods when they are on sale, and 25% of respondents will go to discount stores and low-cost stores more often.
NielsenIQ (NIQ) 2024 China Consumer Outlook
The economic slowdown, rising food prices and job security are the top concerns for Chinese consumers in the next six months, and in terms of consumer behavior, Chinese consumers' concerns about health, self-improvement and family happiness have climbed to the top of the list, and self and children's education are the most willing areas for Chinese consumers to consume. At the same time, the willingness to spend on fresh food and health products remains strong, with 36% of Chinese consumers planning to increase their spending on groceries and household goods, with fresh food and health nutrition and fresh meat being the top three.
NielsenIQ (NIQ) 2024 China Consumer Outlook
Reshaping the six consumer values Focus on health and rational consumption
According to the report, Chinese consumers are spending wisely while cultivating new spending habits, redefining six consumer values for 2024: lifestyle at home, avoiding waste, health prevention, stress management, budget planning and the pursuit of convenience. Among the consumers surveyed, 30% of the respondents prefer to live more at home and go out less, 40% say they only buy what they will use to avoid waste, 50% prefer to be active in health care to prevent health problems, while 27% of consumers say that the pressure is generally greater than ever, 29% of the respondents plan ahead before shopping to control spending, 35% say that most of their daily shopping is done online, and the emergence of new consumer needs and value systems will also bring new growth opportunities for FMCG companies.
Wenhe Lee, head of NielsenIQ China Retail Insights & Analysis, said that after the epidemic, Chinese consumers' values have changed significantly, and their expectations for products and prices in the FMCG market have also undergone fundamental changes, with consumption tending to be rational and healthy, and the FMCG retail market has entered the "cost-effective era" As overall market growth slows, consumption downgrading and cross-category consumption will continue to be the main money-saving strategies for consumers, which will pose a challenge to the profitability of FMCG companies, which need to learn to seize the share of competitors in the face of declining new demand and look for growth points from consumers' new concerns.
Taking the health category as an example, with the continuous improvement of consumers' health awareness, the health category continues to recover and diversify, NIQ data shows that the sales of the offline market in February increased by 14.2% year-on-year, and during the Spring Festival, the main health, trend and other elements of the single product have achieved good market sales growth. Among the top 10 factors affecting Chinese consumers in 2024, 70% of respondents ranked healthy living and preparing for retirement as the highest priority, of which 38% of consumers ranked building, maintaining or improving health as the top priority, Chinese consumers have a positive attitude towards products that take into account physical and environmental health, 82% of respondents said they would choose products that are more beneficial to health, 75% said they have started taking vitamins or supplements, and 73% Against the backdrop of starting to consume relaxation and anti-stress products, FMCG companies need to leverage the right channels, product innovations, and price tiers to meet consumer demand for health and longevity products.
NielsenIQ (NIQ) 2024 China Consumer Outlook
Winning in 2024 Five Growth Strategies to Help FMCG Companies Break Through
In 2024, NielsenIQ proposes five key growth strategies to help FMCG companies grow resiliently: expanding the concept of value, maximizing time at home, relentless innovation, unleashing channel vitality, and enabling retail and AI-driven collaboration.
NielsenIQ (NIQ) 2024 China Consumer Outlook
The report notes that in the context of increasingly polarized price tiers, lower price tiers and compelling online and offline promotions continue to resonate with consumers, who must demonstrate value for money propositions regardless of whether they upgrade or downgrade due to economic conditions.
Li Wenhe reminded that in the case of a slowdown in the market, the "promotion" of FMCG companies should focus on the balance between sustainability and profitability, pay attention to their long-term profitability, and should use "innovation" to promote growth, NIQ data shows that innovation can bring exponential impact, when innovation drives sales growth, the company's overall sales growth is 1.8 times more likely, taking health products as an example, 59% of consumers in APAC are positive about new or innovative products that help meet their health and wellness needs, up to 77% in China.
In 2024, sporting events such as the Olympics and the European Championships are expected to increase people's time at home, leading to marketing opportunities related to the big event cycle, with 58% of Chinese consumers planning to spend the same amount on home entertainment this year as in previous years, but sales in categories such as beverages and snacks typically soar during these events.
At the same time, with the popularity of omni-channel, FMCG companies should accurately grasp people's purchase channels, and new channels such as discount stores and content e-commerce have maintained above-market growth. Consumers are currently meeting their needs through a variety of channels, which means that growth will come from a balance of online and offline omnichannel strategies, Lee said. Brands must reach consumers wherever they are, tailor their marketing and product strategies to their needs, differentiate themselves with a wide range of products at a higher price level, and leverage tools such as AI to expand collaboration and customize.