Five top trends set to shape Asia’s grocery retail sector in 2020
According to Nick Miles, Head of Asia-Pacific at IGD, Asia’s scale, pace of innovation and growth prospects mean that it’s one of the most exciting regions for food and consumer goods in global retail.
Here are the five key themes he expects to shape the market and influence retail strategy.
1) Shopper-focused formats
The one-size fits all retail format has little place in Asia, according to Miles, who predicts that mediocre stores that fail to excite customers are doomed to fail.
“Stores that are relevant, efficient and different will stand out and win in an increasingly competitive landscape,” he said, noting that ranges are increasingly being tailored to the location of the store, and additional space devoted to new categories and services that drive footfall.
“Retailers are experimenting with new formats, flexing store footprints, designs and layouts to better appeal to how people want to shop in 2020.”
Ranges are being tailored to the location of the store, while we’re seeing space provided to new categories and services that drive footfall.
Top example: Miles says a great example of this is FamilyMart, which has opened its largest convenience store in Manila, Philippines.
“The store targets busy employees and office workers, with foodservice options central to its offer. In addition, co-working space and function rooms are also available.”
2) Established retailers accelerating online
IGD forecasts Asia’s online grocery market to grow to US$295bn by 2023, leading online grocery growth globally.
However, much of this has been driven by pureplay e-commerce specialists.
“As demand grows, established retailers are increasingly recognising the need to invest, to build capability and adopt new solutions,” said Miles.
“Retailers are investing more in their operations and forming partnerships to drive both online capacity and capability, with enhanced last mile delivery solutions and supply chain automation aiding profitability.”
Top example: Miles highlights that Aeon has partnered with UK online grocery retailer Ocado to develop its online grocery business in Japan. Ocado will build automated warehouses where robots fill customer orders ready for home delivery. Aeon will also launch a new online business using the Ocado Smart Platform.
3) Health, wellness and sustainability
This may not be a new development, but Mles believes that Asia’s young and growing middle classes will drive this trend further in 2020.
“Retailers and manufacturers are responding with improved health and wellness ranges and reformulated products, new solutions to showcase nutritional benefits and product sourcing information, plus a greater focus on initiatives that reduce environmental impact,” he said.
Top example: Miles draws attention to Central Retail in Thailand, which stopped giving out plastic bags around the middle of 2019, six months before the government enforced its ban. The retailer also asks shoppers to bring their own containers for salads and rewards them with discounts.
4) Making shopping social
Social commerce is the ability to sell seamlessly through social platforms, but also how businesses can use peer-to-peer communication to drive sales.
Miles states the retail market in Asia offers many social platforms that have increasing levels of capability through which to sell products.
“New selling techniques are growing in importance and emerging all the time, while new apps and solutions are being developed,” he said.
Top example: Alibaba ramped up its social efforts for 11.11 in 2019, with over 17,000 brands using live streaming and key opinion leaders to relay product information. Miles added that Alibaba is also testing AI-powered real-time translation for live streaming.
5) Digital stores of the future
Around 84% of trade in Asia will remain in physical stores by 2023, but Miles argues they need to adopt new technology to stay relevant.
“Digital is helping retailers accelerate omnichannel, transform processes and enhance the shopping experience. Increasingly digital technology will allow retailers to deliver a much more personalised in-store experience,” he added.
Top example: Lotte in South Korea has collaborated with P&G to install interactive product recommendation screens around its stores. The screens help drive incremental sales and interaction with the brand.
Miles concluded: “It’s clear from these trends that retailers must continually excite shoppers with in-store activity during 2020. Plans must be relevant and different from those of your competitors and deliver increasingly tailored solutions for shoppers.
“In addition, increased collaboration will unlock further online growth, with established retailers looking to collaborate with businesses that will help them drive sales, profitability and capability.
“Finally, brands are using social media in lots of ways to engage shoppers, providing a fantastic opportunity for manufacturers to sell via this channel, collect valuable shopper intelligence and to test and learn to see what works.”