Retail in Asia


APAC countries emerge as strong contenders in global retail market

Five nations from the Asia-Pacific (APAC) region are among the top 15 economies that retailers should prioritise when establishing their presence, according to the 2023 Global Retail Development Index, a newly released survey by Kearney identifying the most promising retail markets around the world.

These nations include India, China, Malaysia, Indonesia, and Bangladesh.

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According to the survey, APAC boasts a robust retail growth trajectory. While China and India remain obvious choices for global investors due to their market size and escalating consumer base, several other compelling opportunities have emerged among neighbouring APAC nations.

Keeping an eye on dynamic opportunities

Indonesia has been identified as one of the top APAC economies for retailers to focus on for expansion. Pictured: Jakarta, Indonesia. Source: Shutterstock

China continues to lead the way with its innovative technologies, experiential retail concepts, and highly digitised market. India on the other hand benefits from a large working population, rapid urbanisation, and government initiatives which propel the growth of e-commerce and modern retail formats.

In Southeast Asia’s emerging markets, Indonesia capitalises on a burgeoning middle class, expanding infrastructure, and increasing urbanisation, creating a thriving market for both traditional and modern retail players. Malls and shopping centres are highly favoured retail formats in Indonesia, and Lippo Malls, the country’s largest mall operator, currently manages 70 malls, with plans to open at least 30 more in the near future. International players like Aeon Mall, GS Retail, and Central Retail also plan to expand their presence in Jakarta and other key cities.

Another example of an emerging market experiencing remarkable retail sector growth, Bangladesh’s ready-made garment export industry has attracted major international brands, contributing to its economic expansion (approximately 16 percent of its GDP in FY 2022). According to Kearney’s report, the retail sector in Bangladesh is undergoing a transformation with the entry of new players and the expansion of existing ones.

Beyond the top 15 countries named in the index, the Philippines and Cambodia, placing in the top 50, also exhibit significant potential for growth, driven by their growing middle-class populations.

The Philippines in particular has witnessed a rise in affluent consumers, with per capita income levels growing at a faster rate compared to the rest of APAC. Several luxury brands have opened multi-concept stores and flagship stores in the country: In 2023, Prada entered a joint venture with Stores Specialists Inc, a leading retailer of luxury brands. Ayala Malls welcomed a string of luxury flagship store re-openings, including Gucci, Tiffany & Co., and Cartier.

Cambodia meanwhile witnessed a significant expansion in modern retail space, with over 39,000 square meters added in the first half of 2023, primarily comprising malls and retail podiums. Phnom Penh has experienced a retailing boom, with 51 completed retail stores and 72 ongoing construction projects. Prince Group, a prominent supermarketer, has plans to open 150 stores by 2024. Thailand’s Tesco Lotus has also expressed interest in entering the Cambodian market.

Beyond APAC: Is Middle East the next global retail hotspot?

Downtown Dubai, United Arab Emirates. Source: Shutterstock

Retail growth in many nations across the Middle East and Africa (MEA) is experiencing a rapid pace, thanks to an expanding, younger, urban, and increasingly affluent population.

This trend is expected to continue not only in the present but also for the foreseeable future.

Projections suggest that the total disposable income in MEA nations will double by 2040, highlighting the significant economic potential and opportunities that lie ahead for the retail sector. With a favourable demographic profile and rising prosperity, MEA nations are poised to sustain their fast-paced retail growth, making them attractive markets for retailers to target.

Key trends: Macroeconomic uncertainty, e-commerce landscape impacting consumer spend and preferences in APAC

Amidst persistent macroeconomic uncertainty, global economic recovery is proceeding at a gradual pace. This uncertainty has had a notable impact on consumer behaviour, as consumers navigate inflationary pressures. In response, consumers are opting for more affordable alternatives, favouring local products and private label items.

Forecasts indicate that e-commerce is expected to grow at twice the rate of physical retail, signalling a shift in the retail industry’s landscape.

At the same time, retailers in developing markets are increasingly focused on omni-channel strategies. The trend is particularly pronounced in developing markets, where retailers are actively investing in omni-channel capabilities to cater to the demands of tech-savvy and digitally connected consumers.

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“This year’s GRDI reflects the diverse retail potential among emerging economies in Asia. From established powerhouses like China and India to rising stars such as Indonesia and Vietnam, each nation offers distinct opportunities and challenges for retail investment in the region,” said Siddharth Pathak, Asia-Pacific co-lead for Kearney’s consumer and retail practice.