The Future of Retail in Asia
A Knowetic take on what does the Euromonitor Top 100 Retailers In Asia 2021 report reveal
In what has been perhaps the most tumultuous year of organised retail ever, 2020 saw retail change in more ways than one. At one level e-commerce received a boost, a boost which was forecasted to be achieved 5-10 years from now (depending on which market you were speaking of). On the other, adoption of technology by shoppers pushed retailers to undergo a massive digital transformations in all aspects of their business. It was not just about upgrading the front-end website or creating a shopping app, but also digitise areas which would have the cascade effect on the business. From digitising logistics and supply chain to production and manufacturing. All this in much lesser time than thought earlier as possible.
While overall, as per the report, Asia’s retailing industry registered a 4% sales decline in 2020, its future prospects continue to remain strong.
Asia, as a region, is second only to Latin America & is predicted to see the highest value sales CAGR for retailing during 2020–2025, with digitisation, connectivity and demographics being key growth drivers in the region’s evolution as an innovation hub post-pandemic. The region reported double-digit growth in e-commerce in 2020. World-class mobile connectivity, a tech-savvy consumer & proximity payment, all of them contributing to it.
Asia is also home to some of the most promising markets in the world. India for its massive domestic consumption-driven economy, Japan and South Korea for their advanced technologies and China has its burgeoning middle class. These four countries also find a spot in list of the World’s Top 10 countries having the highest e-commerce potential (according to Euromonitor International’s E-Commerce Readiness Model).
The report also proves the old age that one size never fits all. Each country in the region has grown with diverse channels & platforms leading there & thereby creating their own unique models. Live streaming is a game changer in China, while Indonesia and the Philippines witnessed a surge in social commerce through WhatsApp, Instagram and Viber. India too has seen many models develop and social commerce platform Meesho turning a unicorn this year, shows the potential of creating unique business models.
What does the list reflect
The Top 10 ranking has China stealing the show with 4 positions, following by Japan with 3 and Korea with 1. US Giants Amazon and Walmart take the other 2 spots.
Japan has a strong presence at no 3 & 4 with AEON Group & Seven & i Holdings (one of their brands is the popular retail concept, 7Eleven stores) and Family Mart Uny at No. 10. While US Giants take up 7th and 8th position respectively with Amazon & Walmart, Korean fashion & beauty conglomerate, Shinsegae Co Ltd comes in at No. 9.
Indian retailers secure 3 places – Reliance Group at 67, its recent buyout Future Group at 76 and Avenue Supermarkets at 97. However, in the India Top 10 list, these 3 players occupy the 4th , 5th & 6th position trailing behind Walmart (with its brands Flipkart & Myntra) and Amazon. I am hoping to see the combined retail entity of Reliance & Future Retail in the Top 50 of this list!
Covid impact has been for all, no exceptions!
Covid hit everyone equally – all countries saw a decline in overall consumption leading to low overall sales. Followed by a massive boost to the e-commerce segment.
Tourists fuelled markets like HongKong & Singapore saw sharper declines, specially in the luxury segment. These markets also saw panic buy as almost all goods including essentials are imported from outside the country.
India & Malaysia not only saw one of the highest growth in e-commerce and adoption of channel by new users, they were also the countries where one saw a rise in demand at local retail stores or mom-n-pop stores as they are popularly called.
The Future of Retail
This lists reflects two realities – grocery retail (daily needs) are big business even if they offer low margins. And e-commerce is here to stay!
Innovation will also be key to success as newer models of retailing come into play and customer adapt to them. One such success story is Pinduoduo, a Chinese agriculture-focused e-commerce platform. Their innovative group-purchase business model, recorded sharp growth of 78% in value sales making it one of the biggest beneficiaries of the e-commerce boom in the region.
The secret sauce to success is not so secret any more – agility of response, ability to change business models and having a ear to the ground has never been more needed than now.
Knowetic has helped its retail client grow during the pandemic with a strategic approach and implementation of digital transformation tools. Do get in touch with us to know how we applied our KYC model to grow our client’s business by 5x within the first 4 months of the pandemic. Today, after 12months, the growth now stands at 12x!
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