ASIA Retail Industry Trends 2022
Photo by Andrea Piacquadio
The total retail sales in ASIA is predicted to hit $10.94 Trillion, out of which $3.32 Trillion will come from e-Commerce that is roughly 30.4% of total retail sales in ASIA, and digital buyers will reach 1.5 Billion people in 2022 as per eMarketer predictions. Looking at these numbers it is imperative that retailers focus on creating new shopping experiences to attract consumers, generate new revenue streams for profitability, and develop fulfilment muscles to reduce frictions, and increase convenience for consumers.
A McKinsey study reveals both Indian and Chinese consumer sentiments are showing highest optimism about the economy, they plan to spend more, and continue to explore new shopping experiences online and offline. Let’s dive into top 5 trends that will shape ASIA retail industry in 2022.
1. Sustainability, Sustainability, Sustainability
We cannot deny that sustainability has become a strategic priority not just in Retail but across many industries. Consumers have increasingly been paying attention to brands sustainability practices from sourcing, to packaging, to delivery, and circular economy. Resale and second-hand markets are fueling the next growth potential within millennial and gen Z specifically in the Fashion industry. Brands and Retailers must have a clear strategic priority, and execution plans in order to keep the consumers engaged and loyal.
A Wunderman Thompson study reveals 89% of world-wide respondents suggested that companies and brands should do a lot more to reduce their carbon footprint, and 88% suggested that sustainability should be a standard business practice. In general, millennials and gen Z are likely to shop more with brands and retailers who have put sustainability in practice.
2. Social Commerce & Live Streaming
As consumers flock online as their primary shopping channel due to the pandemic, they are looking for new experiences that will excite them in their shopping journey. This has accelerated growth in Social Commerce with services like Live Streaming, Facebook Shop, Instagram Shop, Pinterest, Google Shopping, and TikTok investing in commerce capabilities on their platforms. China has been leading the way in social commerce sales and it is predicted to reach 14.3% of total China retail sales by 2023. The US has picked up on social commerce and it is predicted to reach 4.9% of total retail sales in the US by 2023 as per eMarketer report.
A great example is Albertsons, a major US grocer, partnering with Pinterest, a leading platform for food discovery and inspiration, to drive inspiring shopping experiences. Consumers generally search for meal ideas on Pinterest, and Albertsons creative contents showing different meals, recipes, and how to videos, which consumers can add the ingredients to their cart and seamlessly check out and the meal-kit would be delivered at their doorstep. We can expect to see more partnerships between retailers and social media platforms in this space going forward.
3. Retail Media
During the last 18 months retailers have been forced to innovate in a short span of time to bring their business completely online and be able to deliver the products to the customers in the time and location that they prefer. This has increased operating costs for retailers and they are still finding ways to make their online channel more profitable.
Retailers can’t rely on their profitability by selling products online alone. They must rethink their approach of monetizing their online business with multiple revenue streams and one of the most promising ones is Retail Media or Retailer’s Advertising Platform. With Retail Media, retailers will be able to gain additional revenue by selling digital advertising placements to Brands and CG companies. The pandemic has already pushed CG companies to spend more marketing dollars online. Amazon’s advertising revenue is forecasted to reach $39.45 billion by 2023 as per eMarketer report.
4. Evolving roles of physical stores
Retailers must rethink their physical store strategy. Physical stores have been impacted the most during the pandemic. Some stores had to change operating hours while some had to completely stop the operations for a period. Retailers have repurposed some stores to be delivery nodes and converted them into dark stores. When it comes to the decision-making criteria. Retailers must consider the strategic importance of the store location, and its profitability. Depending on how high, low the metrics are, retailers must consider renegotiating their lease or close down, reassess the role of the store, open as usual or transform and grow.
A Raydiant report reveals one of the top reasons for consumers to return to physical stores is they enjoy the experience and touch and feel of physical products before purchasing with a combined 59% of respondents in the US. Retailers who continue to provide digital experiences, reduce friction points, increase self-service and contact-less technologies will win the consumers back to the stores.
5. Supply Chain & Fulfilment
Consumers now have even higher expectations; they are expecting same day delivery for essential as well as non-essential products. In China 30 minutes delivery has become a norm if you live within 3 kilometers radius of the stores or fulfilment centers. Retailers have tested many different options from click & collect, curb-side pick-ups, and partnering with delivery platform providers, for example, Central Group Thailand partnered with Grab to deliver meals to consumers, Instacart in the US has partnered with Best Buy, Staples, and others for same day delivery option. The objective behind these initiatives is to deliver the goods to consumers the fastest way at the lowest cost possible.
With the trend of consumer demand for online shopping growing rapidly, we are seeing major investments in both Macro and Micro Fulfilment technologies. You would see in public news announcements that AEON in Japan has partnered with Ocado, and Coles in Australia has partnered with Witron and Ocado on fulfillment and last mile delivery capabilities due to the surge in online orders and home deliveries.
In summary, these are top trends that we see in the industry. But they are not limited to these 5 areas. There are a lot more innovations around Metaverse, AR/VR, and Web 3.0. Many retailers are also investing in building Retail Health Services. This is a high growth area that we will seeing booming going forward. As we slowly move towards the post pandemic world, ASIA will be growing steadily. The overall vaccination rate in ASIA has reach 68% with people who are either fully vaccinated or partially vaccinated. Singapore is leading in the region with 87% of people who are fully vaccinated, followed by China with 84% of people who are fully vaccinated as per Our World In Data Org. With this progress we will see more people returning to office, and consumers spending more money on travels and leisure as they are sitting on piles of cash.
Sources: eMarketer Retail Sales Forecasts | eMarketer Social Commerce Report 2021 | Coronavirus (COVID-19) Vaccinations - Statistics and Research - Our World in Data | Deloitte Report | Wunderman Thompson Report | Albertsons Cos. Makes Another Major Digital Move With Social Media Giant | Progressive Grocer | Grab and Central Partnership | Instacart and Best Buy Partnership | Raydiant Report | AEON and Ocado Partnership