Asia’s Immense Population Presents Challenges And Opportunities
Home to over 4.5 billion people, Asia represents a colossal market for retail, offering extensive opportunities for brick-and-mortar and online retailers. While the Chinese consumer market is a key part of this region, the Asian retail market as a whole is experiencing unprecedented growth, primarily driven by the region’s vast population, the rapid rise of megacities, increasing urbanisation pressures, and the innovative response of technology.
This growth is not only redefining the retail landscape but also creating unique challenges such as high property prices and the need for efficient use of space. In response, technology is playing a crucial role. Innovations in e-commerce, digital payments, and logistics are catering to the growing demand for convenience and efficiency. Retailers are leveraging technology to provide seamless online-to-offline experiences, meet the fast-paced lifestyle of urban consumers, and offer services directly to their doors.
The Evolution of Retail in Asia: ‘New Retail’ and Digitisation
The concept of ‘new retail’ is revolutionising consumer experiences in Asia, particularly driven by the region’s rapid urbanisation and digital transformation. With the population trend shifting from rural to urban, new logistical challenges have arisen, which ‘new retail’ seeks to address the needs of the changing APAC consumer. This new retail model is not limited to shopping but encompasses consumer services including finance, transportation, and entertainment.
Leading the charge in this transformation are Chinese e-commerce giants like Alibaba and JD.com; which are integrating online and offline shopping experiences. Alibaba’s investments in various sectors across Asia, including e-commerce platforms like Lazada and online Indian grocer Bigbasket, signify its commitment to expanding ‘new retail’ throughout the region. Even fundamental retail outlets such as Chinese supermarkets are having to respond to these changes. Similarly, JD.com’s investments in Southeast Asian markets further demonstrate the growing influence of Chinese e-commerce in the region.
One Region, Many Markets
‘International localism’ is one of the consumer trends of Southeast Asia. Online shopping allows consumers to buy beyond national borders. As it is, Chinese consumers are already shopping widely across the globe, especially within Asia-Pacific. According to Alibaba, of the 1.48 billion transactions during Single’s Day 2017, much went to the 60,000 overseas participating brands out of a total of 140,000. What’s more, Mintel research reveals that a fifth of Chinese online consumers of imported food products have purchased online from Japan and South Korea. Meanwhile, consumers living outside of China are shopping from the e-commerce heavyweight—especially those residing in East and South Asia.
Technological Opportunities In Asian Retail
The integration of technology in retail, such as scan security and cashless payments, is changing consumer habits in Southeast Asia. Mintel’s research on Asian consumer digital trends indicates a significant number of consumers in Indonesia and Thailand are using smartphones for various services like food pre-ordering and beauty services.
However, the human element remains crucial, as evidenced by the remote assistance feature in the Chinese unmanned convenience store BingoBox. The combination of new communications technology, staffless stores and cashless payments has enabled retailers to service more consumers than ever before.
E-commerce is expected to see exponential growth, becoming a critical component of Asia-Pacific’s economic growth and shaping consumer spending patterns across the region. China’s e-commerce market is already a core player in leading penetration and innovation both regionally and with a growing global influence.
Retail + Entertainment = Retailtainment
Brands are increasingly investing in experiences that engage consumers. Dubbed ‘Retailtainment’ these offerings blend retail with entertainment to provide memorable experiences and make retail stores an event destination. These novel retail strategies also provide a compelling reason for the consumer to choose one brand over another.
Cross-brand partnerships, such as the Chinese collaboration between fast food retailer KFC and the video game CrossFire, meant the Colonel Sanders character could appear as an in-game figure, while items from the KFC menu appeared as usable items in the game. Offline, the mobile platform allowed players to compete in hyperlocal events with other players in the same KFC store. KFC also organised an on-site competition in one of its outlets in Shanghai where two advanced CF players competed for the ‘Ultimate CF King’ title. This event was live-streamed on several popular platforms in China.
Lego launched its first ‘Retailtainment’ flagship store in Malaysia in 2021. Lego offers retail, discovery, and importantly play, in an innovative store format.
Encompassing the integration of digital technology in retail, the convergence of various consumer services, and the blending of retail with entertainment, these trends are set to redefine the retail landscape, driven significantly by Chinese e-commerce innovations and the growing demand for integrated consumer experiences.
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