Europe spend 4 percent more

In November 2015 GfK organised their Kronberg conference in Hungary for the second time. International and Hungarian experts shared their thoughts with participants on macroeconomic trends and their influence on consumption.

Thomas Bachl, GfK Group’s regional director responsible for Central and Eastern Europe was the first speaker. He told that the world’s economy kept expanding in 2015, driven mainly by the 8-percent GDP growth in China, where a 6.3-percent expansion is expected in 2016. The Eurozone only produced a 1.5-percent economic growth in 2015 and the growth rate won’t exceed 1.6 percent in 2016 either.

As for economic growth at global level, after the plus 3.1 percent in 2015 it is likely that there will be a 3.6-percent improvement in 2016. According to data from GfK, the population of the 42 European countries participating in the purchasing power index survey had 4 percent more money to spend last year than in 2014. There are huge differences in the purchasing powers of different countries and regions. For instance Europe’s 10 wealthiest countries have 1.5 times more money at their disposal than the European average.

It seems that FMCG volume sales are unable to increase further at global level: sales have been decreasing in terms of quantity practically since 2010, although in the first half of 2015 sales managed to go up a bit from the 0 percent level. Changing consumption habits pose a great challenge to retailers, e.g. the number of buying occasions has been reducing since 2002 in both Western and Eastern Europe. Those born around the year 2000 eat more and more often in restaurants or on the go. In the European FMCG market the conquest of private label products came to a halt, with PL sales growing only a little. At the same time a smaller proportion of consumers are switching to cheap economy brands, due to the low inflation rate and the economic recovery. Discounters’ positions are strengthening but hypermarkets still have the biggest share in sales.

E-commerce’s share in FMCG sales is only 3.9 percent but it is growing dynamically, e.g. 28 percent more (in value) FMCG products were sold online in 2014. What is the main motivation of consumers when buying FMCG products online? Lack of time, comfortable shopping and no real need for diversity.

Rita Csillag-Vella, client service director of GfK told in her presentation that Hungary has been 31st in the European purchasing power ranking for 3 years now. Households started to spend more on FMCG products in 2014 and this trend continued – although at a lower level – in 2015. Discount stores are retail’s ‘favourite’ format, because they are the best in increasing penetration, keeping consumers and building loyalty. 89 percent of consumers go shopping to discount stores.