NIQ lessons from the world of modern retail trade

Erik Vágyi
managing director
NIQ

According to Erik Vágyi, managing director of NielsenIQ 2023 was the year of survival in the FMCG sector, paired with a cost of living crisis. In 2024 the global economy seems to be slowly stabilising, with a small positive influence on the retail sector.

Consumer confidence is improving

A recovery in consumption is already visible in 41 out of 61 countries, with two-thirds of countries entering a volume growth phase. In contrast to Europe, Hungary was still the odd one out at the beginning of the year, with retail sales figures for the period July 2023 – June 2024 still showing a 1.7% decline in volume.

The good news is that after a period of volume sales drop up to 10%, the last few months have been less tragic, with the latest quarters showing volumes of 0% or plus 0.2%. Consumer optimism seems to be improving month by month, and Hungary has finally returned to the pre-inflation confidence level of 83 points.

When consumer confidence strengthens, it is reflected in consumption after 6-12 months. Although we aren’t consuming more for the time being, Hungarians are more open to visiting new shops, with 20-27% eager to discover new stores.

Innovation is the key to growth

The first “lesson” is that innovation can be a potential source of growth. According to a recent study from the US, manufacturers whose cycles emphasise innovation are twice as likely to grow than those that don’t. However, the sad reality is that one in four new product launches has a negative impact on overall brand sales. If innovation is well-founded and the implementation is good, the result can be a great success.

“Another example from the US shows that in beauty care innovative products account for half of total volume sales after a 3-4 year cycle”,

explains Erik Vágyi.

It is important to stress that it isn’t only premium brands that can innovate. Speciality products such as organic, organic, plant-based, lactose- and gluten-free foods have produced above-average growth recently. While the overall market is at minus 1.7% in volume, there has been an outstanding growth in the speciality categories, for instance demand for plant-based products has surged by 11%.