Rationalising for better value
The inflation wave hit the FMCG industry without exception, and the Home Care and General Care categories have had to manage the impact and response from consumers. As prices increase, shoppers are looking for for better value to help them adjust their spending.
After a stable performance last year, consumer spending on Home Care has increased by 4% due to inflationary pressures. Necessities categories such as Detergent and Dishwash are the ones that stabilized while smaller categories are challenged as shoppers save up for the essentials.
Consumers are managing rising prices by buying less in volume and shopping less often and it happens across social economic class with upper and middle-class consumers are not cutting back as much as lower-class consumers.
Across regions, they are allocating more budget to Home Care purchases compared to last year as the price increase, especially in Sumatra and Outer Islands. However, both regions still managed to have stable volume growth.
But while this this sector is in growth, brands must not get complacent and now is not the time to generalise. Each demographic is responding differently to the economic situation, so demands different approaches from brands too. As well as segmenting different consumer profiles to attract them, brands need to identify each category’s highlights and performance.
1. Winning share of wallet across demographic groupsDuring challenging economic times, justifying your brand’s value to consumers is crucial as they are re-prioritise the needs for home care and focus on the essentials for across social economic class. Focusing on core variants while delivering better value for money is still important to win in this sector as the growth not just seen on the new product development only, but also in existing products, especially for core variants in both the affordable and premium brands.
2. Optimise price-pack strategy in specific channels and regions As proximity channels are still the most important in Indonesia, it is important to identify the right price and pack size for consumers. In addition to channel, it is also important to pinpoint the winning strategies across regions as consumers have different preferences when it comes to price and pack size. Shoppers in Java, for example, are spending less on dishwasher products than those who live outside Java, so brands need to create different pricing strategies to match shoppers’ expectations.
FOOD FOR THOUGHTS
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3. Work on extended functions innovationConsumers immediate response to the changing economic situation has been to re-prioritise spending in Home Care, and focus on the essentials. Although, brands still can leverage to innovate on the unique and value-added benefits to help customers justify the product value. As it seen from well-accepted innovation from the leading Detergent and Dishwash brands who are innovating with dual functionality in their products, attracting up to 6 million new buyers this year. To win share of wallet, brands can focus on these categories while delivering relevant NPD.
Personal Care: Finding opportunities amidst the changes
Personal Care is a broad yet unique sector from Kantar’s panel data perspective as it is highly influenced by the needs and preferences of users. For example, babies do not use regular adult soaps while kids (above 5yo) might use their parents’ soap. This chapter will focus on General Care categories, while Baby and Beauty categories are available to read in a separate note.
Overall the Personal Care sector experienced incremental value growth this year due to price increases and inflation. The Beauty category is driving this growth, with consumers are still increasing their cash outlay for Make Up and Skincare through expensive products and premiumization. General Care is starting to see signs of recovery this year following the pandemic, with consumers reprioritize General Care by seeking for smaller pack and lessen the purchase frequency.
Mature categories in General Care are also recovering as consumption increases. While last year most of General Care category experience an upsizing movement, this year each categories has different rationalization in purchase. For example, smaller formats like sachets provides alternatives in Shampoo, while medium and big packs are the one that still growing in Liquid Soap which have helped the categories growing positively during this year.
FOOD FOR THOUGHTS While penetration is still the king in the equation of growth formula for brands, consumption is also a determining factor as your brand needs loyal buyers to strive and grow. Find out more
#1 Optimise pack and price strategyIn 2021, consumers upsized during the transition between stay-at-home and the return to mobility. In 2022, consumers rationalised their purchases in different ways in each of General Care categories. • In the Soap category, liquid is the only format that grew consumption, driven by growth of larger pack sizes attracting 1.5 million households.• Basic toothpaste had significant growth (up to 30%) in value and volume, again through larger pack sizes.Having a product range that can cater for different consumer choices is no longer a constraint, but an opportunity.
#2 Communicate your brand valueGeneral Care is one of the few segments with lower price sensitivity and a clear product proposition. Several brands in both the value and premium tiers experienced faster growth, but this is dependent on the brand communicating their values effectively to consumers.Winning shoppers’ hearts might seem difficult in this competitive market, but it is not impossible. Brands can either target consumers’ needs, or the other way around; showcase their unique selling point. One successful story comes from a local premium Body Care brand that gained around 900k new buyers in 2022 despite its 202 average price index.
#3 Leverage channel opportunitiesIndonesian consumers are open to shopping in more than one channel, with almost 70% of buyers purchasing General Care in more than two channels. Brands must ensure they are available across channels so they do not miss purchase opportunities.This includes availability in general trade and minimarkets and also digital commerce, which provides opportunities to grow more quickly and reach more shoppers. In this hybrid world of offline and online stores, brands must look to embrace both rather than choosing one or the other.
This chapter uses Kantar's panel FMCG data per Oct 2022. Watch the webinar version for this chapter here
