Personalisation, online expansion and unmanned outlets: The future of food retail in Asia?

Chayadi Karim, research analyst at Euromonitor International, said grocery stores continue to reduce in size as consumer analytics and shopper data will lead to more purposeful or targeted product supply decisions, catering to specific audience groups.

Hence, this would reduce the need to have large stores or outlets supplying everything under the sun.

Furthermore, unmanned stores and shopper personalisation are the ‘next big things’ in the grocery retailing space.

“Other than the fact that it helps grocery retailers reap huge savings in labour costs, it also plays very well to the ‘convenience’ factor that is so desired by many Asian consumers,” ​said Karim.

Growth and decline​

Euromonitor data shows, for convenience stores, supermarkets and hypermarkets in Singapore, the respective retail values in 2012 across Asia Pacific were US$151,271.9m, US$539,760.5m and US$139,490.9m.

In 2017, they were US$152,040.9m, US$556,267m, and US$153,828m.

In Asia Pacific, overall, convenience stores have increased in retail value by nearly US$770m (0.5%). Supermarkets grew US$16,506.5m (3%), and hypermarkets grew US$14,337.1m (10.3%), over the period.

Despite the apparent statistical growth in Singapore and Asia Pacific, many supermarkets in South East Asia especially have been struggling with poor sales.

Stores that have been shut down include some of pan-Asian retailer Dairy Farm International’s Cold Storage, Giant and Hero outlets in South East Asia​.

Group chief executive Ian McLeod had said, in Malaysia, consumer spending has generally been weak, while they have seen emerging competition from independent discount retailers and e-commerce in Singapore.

In Asia Pacific the truly significant growth was in hypermarkets, but Karim said this didn’t spell doom and gloom for convenience stores.

“Our data shows that, across Asia, these formats are still growing and prove to be an essential fixture for many Asian consumers,”​ he said.

“However, I would admit that these retailing formats have significant challenges ahead of them.”​

Weathering the storm​

Karim said, the singular common challenge for all these grocery retailing formats across Asia is the rising popularity of online grocery retailing.

He said there are three main reasons for this growing trend.

“The increasingly mobile-connected Asian consumers, a relatively barrier-less industry, and the huge value Asian consumers place on convenience ​— these factors are especially prevalent in large Asian countries such as China and Indonesia, and it is also where we see the highest growths in online grocery retailing,” ​said Karim.

“The convenience store concept might face stiff competition as more Asian consumers shop for more categories of goods online, but it definitely is a retailing format that will prove relevant in Asian countries.”​

According to Karim, convenience stores are also test-beds for grocery and online companies to try out novel retailing formats, such as unmanned stores, or new technologies such as shopper personalisation through the use of consumer data and analytics — something that is increasingly growing in retail.

We also recently reported, grocery and retail research group IGD said convenience stores will be the fastest-growing bricks and mortar channel in Asia​, overall, in the next five years.

This comes on the back of retailers expanding their networks and shoppers changing their purchasing habits, and retailers catering to that.

IGD said Asia’s leading convenience retailers are predicted to grow at a rate of 6.6% per year up to 2022.