Leading FMCG brands in mainland China have to constantly recruit new buyers as fickle consumers rarely demonstrate loyalty to specific products, according to a new report. Consultancy Bain & Co and research firm Kantar Worldpanel analysed the behaviour of 40,000 households from 373 cities over a two-year period.
They examined shopping behaviour in categories
including beer, juice, baby milk, carbonated soft drinks, biscuits, chocolate, skincare, shampoo, kitchen cleaners and detergents. Baby milk was the only category where brands did not see a high
rate of churn. In the other sectors, between 40% and 80% of customers for the top five brands were effectively new each year, with chocolate, skincare and shampoo among the hardest hit.
In the case of Procter & Gamble's shampoo brand Head & Shoulders, for instance, overall customer numbers were more or less stable over the two years assessed, but 45% of buyers in the first year did not return in the second. "The more [mainland consumers] buy a category, the more brands they buy," James Root, Bain partner, told the South China Morning Post. "It's the exact opposite of what marketers want to hear. "There's an enormous pressure to re-recruit new shoppers every single year," he added.
The best way of tackling the issue, the report said, was by increasing penetration, which had been shown to correlate with the success of leading brands. "There is overwhelming evidence that if I want to win, I'll need penetration," Root said. "It's not going to work if I try to get a small group of people to buy more often."
Foreign brands appear to be losing out to local brands on this score, with indigenous products often dominating in the food and beverage sector. One exception is baby milk powder, largely as a result of several safety scandals involving Chinese brands. Overall, the report noted, foreign brands had lost share in 15 of 26 categories assessed, a trend that was particularly pronounced in oral care, cosmetics and juice.