Asia-Pacific is leading the world as the main driver of global retail growth. According to recent PwC estimates of the retail and consumer products sector in Asia, retail sales volumes in the region will reach an estimated market worth of US$11.8 trillion by 2016, significantly eclipsing sales volumes in North America (US$4.4 trillion) and Western Europe (US$3.1 trillion). Burgeoning online retail is now skyrocketing: eMarketer estimates some 1.03 billion digital buyers globally this year, a whopping 44.4% from Asia Pacific.
There is still huge room for improvement. Traditional retailers are only slowly recognizing new business opportunities rich and diverse digital technologies can offer, while online retailers are challenged with transforming a fragmented base of Internet users into regular e-consumers. Much remains to be done if both traditional and online retailers want to reach the 27 million Asian households and their annual incomes of over US$150,000 that the Economist Intelligence Unit (EIU) projects for 2030.
So how can retailers, consumers, and governments work together to solve these challenges and benefit from the innumerable opportunities the region has to offer?
1. Overcoming sector fragmentation
Traditional retailing still dominates in the Asia-Pacific region. The global economic slowdown may have dampened growth targets by affecting incomes, inflation, and interest rates, but the region remains a top destination for global retail chains.
Luxury brands, for instance, are expanding aggressively to cash in on Asia's increasingly affluent young demographic. The Economist Intelligence Unit (EIU) estimates that by 2020, the region will represent 50 to 60% of the global luxury revenue.
However, the luxury retail sector is not alone in driving this retail growth. According to CBRE's latest report on the Asian retail market, mid-range fashion retail exhibited the most potential, accounting for around 20% of new store opening since the first quarter of 2013 - compared with 18% from luxury groups. Both homegrown and global brands lead the Asia-Pacific market in terms of consumer goods demand because they are most accessible to young, urban, fashion-conscious, and middle-income consumers.
Harnessing the tastes, habits, and incomes of this new "hyper-connected" Asian middle class represents a great opportunity for retailers looking to expand their operations in the region. While consumers in mature economies such as Singapore, South Korea, Japan, and Taiwan embrace what this digital age has to offer, their emerging counterparts - the likes of Vietnam, Indonesia, China, and India - are still struggling to develop a comprehensive and unified online presence that caters to different infrastructure hurdles and distinctive points of market entry.
The logical next step is to make ICT products, services, and technologies scalable and customizable to ensure businesses and individuals are able to launch and manage profitable online operations. Whether it's a traditional retailer looking to diversify its product offering on the web or an online retailer looking to expand its reach to other markets, the availability of an all-in-one ICT service allows businesses to quickly and efficiently overcome the challenge of regional fragmentation.
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