This article was originally published on Forbes.
Though 2020 was unprecedented, this coming year can be courageously explored, empowered by the hopes of vaccines and a rapid – though slowed – economic growth. The region’s forecasted 1.5% sales decline in 2020 is set to pick up to 2019 level, with a 6% growth in 2021. Asia’s rapid recovery and increasing export demands contribute to South Asia’s continued GDP growth, furthered by the recently signed free trade agreement RCEP across 15 countries. A positive outlook across Asia is expected to be achieved, with the following five trends and predictions for the Asia retail landscape in 2021:
1. An M&A Shopping Spree
Moves in the past year have been cautious – but also with strategic relevance. Some of the most prominent deals seen were Alibaba BABA -3.7% and Richemont’s $1.15 billion investment in online luxury fashion platform Farfetch, and Thailand’s CP Group merger with Tesco. Other global acquisitions such as VF’s -0.9%VFC interest in Supreme and the long-pursued Tiffany & Co. 0.0%TIFwith LVMH has largely been prompted by the hype built and purchasing power of those in the Asia market.
Meanwhile, the running list of bankruptcies has been expanded by the pandemic lockdowns, all the more becoming an enticing prospect for companies and conglomerates to sweep up and add onto their portfolio for future gains. Where LVMH’s British shirtmaker Pink had folded, contenders such as China’s Trinity Group, whom already owns several distinctive menswear brands, would be a good fit for the fallen. Further acquisitions, therefore, are expected to come through to take up those at a weaker position to run domestically otherwise formulate a strategic merger in hopes of tackling the evolved industry and transformed consumer behavior.
2. The Return of Unmanned Stores
2018 saw China blossom with unmanned stores, only to cut back as quickly as they spread due to the lack of commercial viability. Despite Amazon AMZN -2.2%taking back the reigns with a few pilots in the past months (see Amazon Dash Cart), several retailers in Asia have begun to reinvest in unmanned store technology again. Such is the case with Korea telcos and Japan using robot deliveries on the streets. Where cashless payments and social distancing has been widely promoted during the pandemic, technology has also matured in hand with the proliferated use of 5G internet connectivity to further enhance and power the automation of one’s shopping journey. Silicon Valley startup AiFi had run a few successful unmanned store trials from Europe to China with upcoming plans for another 330 this year.
3. Secondary Cities
Investments allocated to capital cities have gradually shifted to secondary cities and emerging markets. As business returns to normal in Asia, so does the need and demand for physical retail experiences in substitution for banned travel and increased domestic spending. A prime example was seen in Tokyo over the summer with a handful of unique and grand flagships setting foot on the streets of Ginza and Harajuku. Though originally intended for the Olympics, the shift in focus from China to Japan is evidence of international retailers spreading their investments outside of the standard to reach a diversified consumer base with promising markets, and improved growth.
However, second and third-tier cities in China have also been in the limelight in recent times as those in first-tier have moved on from international brands to domestic labels, while the rest are discovering international wonders from global brands entering the new cities for the first time.
When lockdowns and social distancing restrictions were in place, offline retailers moved online, live-streaming rocketed and sales associates became a KOL of their own. With normality setting back into place, lessons learned for retailers are that brands have to come to the consumer’s doorstep, even entering their homes (figuratively speaking). While a selective few retailers had already done so pre-pandemic with exclusive in-home personal styling sessions, the distance now has no limits with virtual consultations.
Retail experiences can also now be brought home, whether it’s a workshop over Zoom or immersive virtual experiences online. And as the world works from home, so are the sales associates acting as new distribution points. Brands became more lenient, putting aside their brand guidelines and policies, and instead opened up new retail channels through their employees through the unlimited possibilities over social media in maintaining a connection with their distant consumers.
5) A DTC and Marketplace Marriage
In times where consumers have begun to favor shopping local, direct-to-consumer brands were met with high volume sales and traffic. For some, rather than solely relying on a single channel, many mom-and-pop brands have turned to marketplaces. Platforms such as Singapore’s Carousell and India’s JioMarthad expanded their commercial offerings as more than just a retail channel, but also are helping enterprises with additional operational capabilities such as marketing or logistics. Creating a vertical marketplace will continue to become a prevalent trend as retailers and marketplaces begin to extend their solutions to other brands looking for a fast turn-key solution to jump onboard.
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