Traditional trade is here to stay…..
More than half of the world’s population lives on less tan 2 USD per day in developing countries. This segment still buys and sells in retail stores, which are far smaller and much less sophisticated than the glitter and technology of modern retailing. The word traditional trade is collective representation of these small, simple stores.
A recent study by Kantar Worldpanel Vietnam in four key cities found that 82% of in home FMCG sales are through general trade stores (Provision Stores, Ma & Pa, Wet Markets, Specialty Stores), with modern trade representing the remaining 18%.
…….but it’s changing.
Emerging markets young and large population is reshaping the way trade is being conducted:
e-commerce is booming, growing faster than modern trade in most markets in Asia.
Mobile phone penetration in the Asia-Pacific region (excluding China and India) reached 110 percent in the first quarter of 2015 ( Ericsson Mobility Report, On the Pulse of the Networked Society)
Smartphones are going to overtake feature phones in Asia. Smartphone penetration reaches 49.2% in Malaysia, 42.8% in Thailand, 40.4% in Indonesia, 41% in Vietnam and 28.3% in India (survey by emarketer.com, released in Sept 2015)
The distribution channels that consisted on FMCG, distributors, sub-distributors and retailers are shortening, foreign ownership and control of the import and distribution process is increasing, information throughout the chain is becoming more transparent as DMS evolve and payments are being made using cashless transactions (bank transfers, diect debits).
Retailers, Provision Stores, Ma & Pa, Wet Markets, Specialty Stores are being left aside from this process, as they are too widespread, too small (individually), less sophisticated and generally cash only family run businesses.
From our various studies, in particular in Vietnam, where we have followed distributors and retailers in their daily activities, we have found that smart phones could be the missing link between these retailers and the supply chain.