Future of retail in the Asia-Pacific

02 December 2020

The retail sector in Asia-Pacific is undergoing rapid changes. This means that now is the time to focus on and prepare for the current and upcoming trends in retail across Asia. The Bain webinar looks at the key macro shifts that retailers need to know and prepare for, while the two articles from Vogue and BBC focus on the trends in luxury retail in Asia.

Future of Retail in Asia-Pacific: How to Thrive at High Speed

Imagine a world where networked ecosystems are universal, where boundaries blur and all retailers network in an open ecosystem. The mobile screen becomes the new store front, social platforms dominate the consumer purchases and physical cash becomes a historical artefact. Stores become simply show-rooms for high involvement purchases or pick up points for immediate consumption; everyday items and staples are only sold online. The new industry standard for last-mile delivery is same hour, same day; and artificial intelligence sets prices, allocates inventory and optimises product flows. This is the future of retail in Asia-Pacific. In this webinar, Bain Partners, Melanie Sanders and Kanaiya Parekh, discuss the six macro shifts that retailers need to be prepared to address to stay competitive in these rapidly changing markets.

Asia Pacific will continue to be the retail growth engine, contributing at least 77% of the Global retail growth. It is also a home to a rising number of Top 10 global retailers. This means that Asia-Pacific is vital for retail businesses, and its importance will continue to increase. The webinar shows six macro shifts that are driving accelerated retail evolution and that businesses need to know about in order to adapt their operation. The shifts include polarising consumer needs (demand for value versus luxury); the fragmenting path to purchase (increasing digital engagement through social media and app usage, and accelerating social commerce); the changing asset landscape (online overtaking physical expansion); the rising bar for last mile fulfilment; the rise of ecosystems (new competitors and business models, and acceleration of ecosystem partnerships); and the need to adapt at pace. To be successful in this changing retail landscape retailers will need to reinvent their value proposition (through differentiation, digitisation and personalisation of customer journey), increase social commerce presence and participation, rethink assets and operations, and build capability and partnerships.

Watch the full webinar on the Bain website.

Luxury’s big geographical pivot to Asia

Luxury retail will undergo many changes in the near future with many luxury brands refocusing on Asia, opening fewer offline stores and cutting spending. In particular, China is expected to account for 28% of global luxury consumption by 2025, along with Japan and Korea these three markets will be the focus and key regions for opportunities of luxury brands. China is expected to become the top priority for luxury brands due to increasing consumption. Within China, Beijing, Shanghai and Shenyang are expected to continue to be the top three markets for premium luxury stores, however other first- and second-tier Chinese cities will also grow in demand for luxury goods. Other regions in Asia will also create opportunities for luxury brands. For example, Vietnam will offer opportunities thanks to its young population and a growing middle class. Despite these growing opportunities, some markets across Asia will be a poor investment for luxury retail brands. This includes markets such as Hong Kong, which continues to present challenges for luxury goods due to its political instability and closed borders. To take full advantage of the growing opportunities and due to low tourist numbers, luxury brands are advised to rethink their business models, which means that they need to offer online retail options while still maintaining their physical stores for local consumers.

Read the full article on the Vogue Business website

Singles Day: Luxury brands jump on China's mega shopping event

Luxury brands are also finding success in China’s largest annual online shopping event on the 11th of November, known as the “Singles Day”. With the help of e-commerce platforms, such as Alibaba, luxury brand retailers have had a record number of sales during this year’s shopping event. As sales of luxury brand goods decline in Western markets, these businesses are starting to reinvest and engage with Asian markets. The increasing sales of luxury goods in Asia can also be attributed to the utilisation of live-streaming sales, which enable global brands to sell their remaining stock which was unsold due to lockdowns. In particular, China has become an important market for luxury goods due to its fast economic recovery from the pandemic. Due to the fears surrounding the pandemic, more people are also purchasing luxury goods as they want to ‘live in the moment’. These factors show increasing opportunities for luxury brands in Asian markets.

Read the full article on the BBC website

Other stories in this edition of Asia Echo: