The predicted growth for the region is far ahead of that expected for Western economies, with North America and Western Europe both forecast to average growth of only 1% during the same period.
“Over the past decade we have witnessed a fundamental shift in spending patterns in Asia Pacific, and this shift is shaping the development of the industry worldwide,” said Carrie Yu, PwC’s retail and consumer leader for China and Asia Pacific.
“Industry players are well aware that their growth targets can only be reached in Asia Pacific, and are therefore adjusting their investment strategies accordingly to reflect the growth of the market in this part of the world.”
In value terms, retail sales in the Asia Pacific region are expected to reach $6.6trn (£4.23trn, €4.99trn) this year and $10.5trn in 2015, according to the report. PwC and the EBU also noted that, while Asia’s rate of expansion in the near term will be relatively subdued due to the uncertain global economic outlook, fundamental trends in Asia’s market will “ensure the industry expands at a healthy pace over the medium to longer term in Asia”.
Specifically, the report said it expects the highest level of growth to come from online retailing which it said had “taken off at lightning speed, thanks to the rise in social media and improvements in telecommunications infrastructure and payment and security systems”. This is expected to translate into an increase in average growth of 20% annually in Asia in the near term and by as much as 40% a year in some “well-wired” countries like Japan, while China is expected to drive the overall rapid rate of growth.
“Currently, over 36% or 485 million of China’s population have internet access. That number is larger than the entire population of the United States. Suffice to say there is a huge online potential yet to be tapped in China,” said Yu.
“What’s more, Chinese online shoppers have a few unique characteristics compared to their counterparts in other countries. Most notably, they are shown to be the most committed shoppers. This is supported by a recent PwC global survey on multi-channel retailing where 70% of Chinese respondents said they shop on-line in all product categories, compared to 40% of US and European respondents. ”
The report suggests that because of these compelling forecasts, retailers, both local and foreign, are increasingly looking towards multi-channel retailing as a new revenue source.
As expected, China remains the retail powerhouse in Asia. The rate of growth, however, is expected to slow to about 9.5% and 9.8% in 2011 and 2012 respectively. The steadier pace comes in the absence of stimulus measures which helped drive sales to 19% in 2010. Chinese consumers, on the other hand, are fuelling the retail sales growth in other Asian markets like Hong Kong (projected growth of 4.5% in 2011), particularly in the health and beauty and luxury goods sector.
While China still presents an attractive market, foreign retailers are beginning to set their sights on other markets in the region including Vietnam, Thailand, Indonesia and the Philippines, where growth is expected to register more than 5% annually between 2011 and 2015.
