Thanks to a rising middle class, rapid urbanisation and a striking increase in internet connectivity, the centre of gravity in the global retail sector is increasingly shifting towards the Asia Pacific region. This briefing will explore how the demographic and economic shifts within Asia Pacific are impacting the development of the region’s retail sector by viewing the intersection of these forces through the lens of three distinct subregions - East Asia, South Asia and Southeast Asia.
This report comes in PPT.
Thanks to a rising middle class, a shift towards urban living and increasing digitalisation, Asia Pacific remains the largest region globally in terms of retail sales - and its share of sales is continuing to expand rapidly. With Asia Pacific also serving as the world’s laboratory of retail innovation, the region’s central importance to retailers and brands is now incontrovertible.
While East Asia - which encompasses China, Japan and South Korea - continues to grow richer, more urban and more connected, its ageing population is creating new challenges for retailers there. Despite this, East Asia’s importance to global retail is irrefutable, thanks to the massive Chinese market and its status as the source of most mobile e-commerce innovations.
Despite its enormous population, South Asia has historically punched below its weight in global retail. In India, the world’s most populous country and the most dynamic retail market in South Asia, a fast-growing middle class, an enormous population of young consumers and a vibrant economy are finally starting to unlock its true potential.
Southeast Asia - which encompasses Indonesia, Vietnam and the Philippines, among other markets - is now the most dynamic region in all global retail. Rapid urbanisation, an expanding middle class and an unprecedented e-commerce boom - supported by Southeast Asia’s love affair with livestreaming - are powering remarkable growth in retail sales across the region.
Powered by favourable demographic shifts, Asia Pacific’s importance to global retail will continue to grow thanks to the digital transformation of the region’s retail sector. Although China is in no danger of losing its title as Asia’s retail champion, India and the large economies of Southeast Asia are poised to remain the fastest-growing retail markets within the region.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.
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