SINGAPORE: A focus on modern retail means that many FMCG brands are missing out on sales, since traditional trade still accounts for almost half of retail sales across Asia, and up to 70% in some countries.

A white paper from researcher Nielsen – Maximising Traditions – The Shop. Shopper. Shopkeeper – highlights the continuing importance of traditional retail channels and argues that brands are missing out on potentially significant sales growth through a simple lack of penetration in these channels.

In 2014, traditional trade channels accounted for 47.9% of retail sales across Asia. Modern retail was divided between supermarkets (17.2%), hypermarkets (14.4%), minimarkets (9.3%) and convenience stores (5.3%), with drug stores taking a further 1.8%.

In some markets, however, traditional trade remains dominant. According to Connie Cheng, Nielsen's Executive Director of Shopper Solutions for Southeast Asia, North Asia and Pacific, traditional trade accounts for up to 70% of all retail sales in Jakarta and Ho Chi Minh City.

"While there's been a headlong rush into the hypermarket and supermarket retail formats throughout most of Southeast Asia, there are untapped loyalties between brands and consumers shopping at traditional trade stores on every street corner, in every town, village and city," she told Marketing Magazine.

"The key to maximising sales through traditional trade channels is to focus on the relationships between the shopkeeper and the shopper," she added.

With that in mind, brands ought to be looking at greater consumer segmentation and talking to shopkeepers to tap their local knowledge of consumer behaviour when they're at the warung in Indonesia, the Philippines' sari-sari, Malaysia's kedai runcit or Vietnam's cử a hàng tạp hóa.

Food-related purchases are common everywhere – daily meals, snack foods and beverages for immediate consumption – but laundry and personal care items are among the most frequently bought items at traditional stores in Indonesia, the Philippines and Vietnam.

"There's an unfortunate and unnecessary disconnect between the desires of brand managers, who may think that bigger is better, and the demands of shoppers utilising Southeast Asia's most popular channel for purchasing groceries," Cheng stated.

"Traditional format stores are as relevant now as they have ever been," she said. "Bigger doesn't always equate to better."

Data sourced from Marketing; additional content by Warc staff