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Last year undoubtedly brought unprecedented changes to the global retail scene. Due largely to the COVID-19 pandemic, consumer behaviors have since changed and retailers were forced to pivot the ways they sell and reach out to consumers.
According to Euromonitor International, the global retail industry suffered more than 3.5 percent sales decline in 2020. However, it expects Asia to bounce back with six percent growth in 2021. With 2021 already underway, the following drivers and trends are expected to shape the retail markets across Asia.
1. Ongoing pandemic
The chief impetus for retailers will be the ongoing pandemic. What started as a health crisis has also now become a major financial crisis for markets across Asia. Retailers had to come to terms with short-term shocks and now need to focus on working on longer-term cost implications for their businesses.
2. Longer shelf life
Throughout this “fluctuating” period, brands are faced with dealing with the shelf life of their existing products. For example, in strict quarantine areas, almost all retail outlets were asked to shut down without warning. Even those areas and malls not under quarantine orders have seen a substantial drop off in customer traffic.
3. Fixed and variable costs
During this pandemic, fixed costs like rental, fixed salaries, utilities and other overheads, can threaten a business’ survival or severely limit its options. To overcome this, businesses need to transform their fixed costs into variable costs through a process known as variabilization. Converting fixed to variable costs is an option to reduce the need for money and most fixed costs can potentially be converted into a variable cost.
4. Dramatic eCommerce growth
Over in Asia, we have witnessed rapid technological adaption by both sellers and buyers that would normally have taken years to develop. As consumers were either restricted in their movement or chose to stay home to stay safe, many went online to cater to their food needs and daily supplies. We believe that a more dynamic retail trade management will continue to develop as retailers synergize eCommerce with their in-store marketing activities.
5. Seasonal shopping
Finally, seasonal shopping will continue to drive retail. Like the rest of the world, retailers in Asia chalk up increased sales volume during the festive seasons. Especially over in multi-cultural Asia with its diverse range of celebrations, this will continue to be a major attraction for consumers.
According to Bain & Company, Asia-Pacific generates about three-quarters of the retail industry’s global growth. The region is expected to continue this trend with eCommerce to playing a key role. Euromonitor International projected that eCommerce will grow by almost nine percent over the next four years in Asia with eCommerce intermediaries, marketplaces, delivery platforms and social media services as the main drivers.
2. Innovative physical stores
However, physical outlets will remain a critical part of the shopping journey with innovation and leveraged experiences in physical stores to become key to better serve more informed and connected shoppers. We can expect to see more of the “click-and-collect” options as these platforms offer shoppers the flexibility to browse items online before purchasing in-store. Simultaneously, shoppers have the option to browse in-store before purchasing items online and opt for home delivery or in-store collection.
When you look at your market portfolio and opportunities, it is important to look beyond your home market. With geographic boundaries virtually non-existent, your products can be accessed anywhere across the globe.
3. Omni-channel retail
There would likely be increased adoption of digitization in retail trade management as omni-channel retail will continue to break down the barriers between shopping online and in-store. The way businesses receive an order, customers make payments and delivery will continue to evolve. Ernst & Young said that almost 60 percent of businesses surveyed in Southeast Asia will be looking to digitalize their business through online sales and engagement in eCommerce platforms.
4. Strategic partner
This will also be a good time to rethink product assortment: simplify and rationalize where less is more. Pushed by the pandemic, retailers are looking for new business partners to help them increase product assortment. They are becoming more focused on niche products and establishing ties with local suppliers that help to shorten their supply chains. This will also be a good time to revisit the need for partnership exclusivity as a strategic business advantage in the markets you are present in
The strategies for future success for retailers in Asia will be very different from those that powered the industry’s historical progress: what got us here will not keep us here. It is important to be agile, have a mindset flexible enough to shift and pivot when required.
The key here is to ensure that you can pivot with your business partner and that they continue to provide you with options as each market continues to evolve. Be it due to the pandemic or evolving consumer behaviors, the landscape has changed dramatically for retailers. It is time to face that fact and start adapting to survive the challenges ahead.