The global retail industry faces what some analysts in the industry consider to be a fairly attractive outlook given its projected near term growth rates. Already, the sector successfully hurdled a serious–and yet to be reversed–economic downturn in the West, even yielding positive growth in 2011 in spite of the recession’s dampening effects.
Retail Growth in Emerging Markets
Much of this growth is attributed to the robust domestic consumption in emerging economies in Asia, Latin America, and Eastern Europe. According to the 2011 Global Retail Development Index, global retail sales per capita posted a 90 percent growth over a ten-year period from USD 2,000 to USD 3,850. What this suggests is that on the average, people around the world has almost doubled their budget for acquiring consumer goods compared to their purchases ten years before.
Vibrant Retail Markets in Asia
Affirming the performance outlook for the sector, Credit Suisse recently released a report that lists what the institution believes are the “brands of tomorrow”.
For the next decade, Asia is perceived to remain attractive as an underserved market for international retail players. Currently valued at USD 1 trillion, the Asian retail market is expected to perform at an annual growth rate of 9 percent, eventually reaching a value of USD 2 trillion by 2020, as forecasted by Asia Times Online.
For international retailers, Asia represents a thriving market that will allow them to generate the revenues required for sustained corporate growth. Already, agile players have learned to customize their operational models to suit local preferences. This is manifested by the growing autonomy and power of regional managers, especially when it comes to calibrating business processes according to key variables in the local market.
Brick and Mortar Stores Still Strong
Additionally, transactions involving the establishment of brick and mortar stores are expected to be brisk in key urban locations as physical presence still matters to most Asian consumers. Even then, some analysts in the industry expect smart retailers in Asia to aggressively capitalize on other channels such as social media and mobile simply because the volume of connected Asian consumers is growing by the minute and is already greater than the total number of online consumers in all other continents combined.
Certainly, the increased interest in Asia stems largely from the remarkable growth of the Indian and Chinese markets. In both countries, substantial urban populations in key cities are enjoying increased purchasing power and are generally sending receptive signals towards global brands.
Luxury Brands in China
In China for example, luxury brands such as Louis Vuitton and BMW are demonstrably having a heyday. Meanwhile, some analysts in the industry believe that India is posed to soon overtake its eastern neighbor as the world’s most populous nation. In addition, the country’s high rate of urbanization as well as a steady uptrend in consumer spending compel global retailers to begin infusing capital for the lucrative Indian market.
In the ASEAN region, domestic demand for consumer goods remain steady, with groceries as the most significant format according to the GRDI report. Retail growth forecasts for the Philippines, Indonesia, Malaysia, and Vietnam remain healthy, buoyed by the countries’ expanding economies.
