Asia’s grocery market will add $1.2 trillion in sales — more than Africa, Europe and Latin America combined — and will enjoy a CAGR of 6.6%.
“With China, India and Japan all in our top five, Asia’s grocery market continues to be in rude health thanks to growing populations and shoppers with more disposable income,” said Jon Wright, head of Retail Insight of grocery research group IGD.
IGD said that the current retail climate makes it an important time to seize opportunities.
At a recent retailers’ convention in Kuala Lumpur, Joanne Denney-Finch, chief executive of IGD, said: “It’s a revolution in what products are sold, how they are sold and how they are made. It’s driven by technology, social and culture change and the economy, all marching together.”
She singled out the three ‘As’ — Aldi, Amazon and Alibaba — as “particularly powerful forces of change”. She said that big stores will remain important but will appear very different.
“They’ll be more inspirational, featuring more fresh food and new products and more ways to taste, learn and discover. Retailers will be working extra hard to differentiate,” she said.
Other characteristics include stronger links with local communities, with spaces for local initiatives and small companies.
“Tomorrow’s retailers will also compete fiercely over health, with strict nutritional standards for every product they sell. And they’ll be super-strict over provenance and ethics,” she said.
For companies to win in this “revolution”, they must learn to “deal with short-term pressures while building for a different future”.
Her five tips are: staying completely focused on the customers and constantly adapting to their changing needs; paying more attention to technology; getting assistance from suppliers; doing the ordinary, extraordinarily well and consistently; and keeping in mind the quality of the people.
Trends and opportunities include more people living alone today, who tend to buy little but often. Another is shopper ‘patriotism’.
“People are also passionate about their local culture: this is good for companies with strong local credentials (not necessarily a local company),” she said.
She highlighted that suppliers are also affected by the changes in retail, and need to collaborate with retailers. Shoppers nowadays prefer tailor-made products, and new, flexible factory technologies make smaller scale production runs viable.
Most importantly, she said technology and social media have become “the new gateway to consumers”. She said that technology will increasingly also guide people in-store.
Shirley Zhu, programme director at IGD Singapore, said Asia’s largest online grocery retailers are forecast to grow on average 34.6% a year. Asia’s e-commerce growth is driven by several reasons such as demographic shifts, increasing internet and smartphone penetration, and improved logistics.
She said the region’s top eight online retailers are from China, Japan and Korea — countries with high adoption of online shopping and advanced supply chains. These markets consistently see huge sales each Singles’ Day.
She shed light on four successful models of Asian online retailing: bricks and clicks retailers, such as Tesco grocery home shopping in Thailand and Malaysia; online marketplaces, such as Alibaba in China and Coupang in South Korea; pure play online grocers, such as RedMart in Singapore and Yiguo in China; and delivery and concierge shopping services, such as JD’s Daojia and HappyFresh in Southeast Asia.
Nonetheless, Zhu pointed out that shoppers will always want to touch and experience the product, so there will always be a need for bricks and mortar stores. Thus, the online shopping experience will keep improving and physical stores must evolve and innovate to remain relevant.
Last but not least, Denney-Finch said having the right people with the right attitude and skills is what makes things go smoothly.
“If you don’t invest in skills this year, then next year’s issues will be even bigger and more urgent,” she warns.
The global grocery retail market will add $2.7 trillion in sales up to 2022. Global growth will be driven by several factors including inflation, population growth and increased consumer spending on grocery products.