Retail in Asia

In Trends

APAC retail outlook: Optimism grows despite rising costs

The Asia-Pacific retail sector recovery continued to gain momentum in 2022, with a recent study compiled by CBRE revealing that half of respondents surveyed witnessed sales surpassing pre-pandemic levels in the second half of 2022.

SEE ALSO: China retail sales in December dip 1.8 percent

The only APAC market to eschew such increases was mainland China, due to pandemic restrictions, which were in place at the time of the survey, thanks to the nation’s zero-Covid policy.

Using the CBRE Research 2023 Asia-Pacific Retail Survey issued this month, Retail in Asia breaks down the key trends for APAC retailers and brands in 2023.

Retail sentiment turns positive

According to CBRE’s survey, some 72 percent of APAC respondents said they are positive about their sales outlook for 2023, with optimism being driven by the rebound in international tourism across the region.

Headwinds still remain, however, with rapid rate hikes and economic uncertainty weighing on consumer confidence in recent months, with businesses preparing for a more cautious attitude from consumers moving forwards, especially when it comes to big-ticket items.

Offline shopping recovers

Shoppers are returning to physical stores in increasing number as the pandemic eases, according to CBRE.

Spurred on by an increase in football in central business district (CBD) areas and a return to the office, almost half of retailers surveyed said they predict a portion of online spending to shift back to physical retail in 2023.

Retailers were, however, divided on whether footfall would return to pre-pandemic levels, with just 43 percent saying they believe footfall will return to before the pandemic figures.

CBRE data suggests that retail foot traffic will continue to improve, now that mainland China has finished its zero-Covid policy.

Cost inflation set to remain a challenge

While inflation in the APAC region is expected to ease in 2023, some 87 percent of retailers expect operational costs to continue to rise; 67 percent are predicting labour short shortages; and 66 percent of respondents believe it’s going to more expensive to run an online business in 2023, due to the rising costs of new customer acquisition and logistics.

Comparatively, global issues such as currency fluctuation and supply chain disruption ranked relatively low among the list of retailers’ main concerns.

The CBRE Research Asia Pacific Retail Flash Survey was conducted from November to December 2022. A total of 87 respondents were surveyed: 30% were from Greater China; 29 percent from Southeast Asia; 22 percent from the Pacific; and 19 percent from Asia/Asia-Pacific.