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Three trends shaping Asian grocery this year

Asia’s grocery markets continue to develop at a rapid pace. Although the evolution of modern trade varies considerably by market, there are common trends that are impacting the sector. International Grocery Distribution (IGD) helps shed some light:
New market expansion

Market consolidation is a global trend that we continue to see around the world, as retailers acquire each other’s assets, merge operations or exit markets. However, retailers in Asia are increasingly expanding into new markets – into countries that already have a healthy and rapidly evolving modern grocery market, as well as those where modern trade is in its infancy.
Last year IGD saw increasing evidence of this trend gaining pace and expects new market entries to continue throughout 2017. Those to watch include Spar International’s confirmed entry into Thailand, 7-Eleven’s hotly awaited entrance into Vietnam and retailers such as Aeon looking to test out the opportunity in Myanmar.

ASEAN online taking off

Across ASEAN, online grocery retailing remains a hot topic, and a majority of retailers have set up operations. Although growing quickly, the channel still represents a small percentage of Asian grocery retail sales. With a rapidly growing middle class, increasing smartphone penetration, new e-payment systems coming online and innovative third-party solutions becoming available to retailers, first mover advantage into this channel is becoming a priority, particularly in major cities. IGD is starting to see retailers launch new – and improve existing – operations
Japanese retailer Aeon and South Korean retailer Lotte are eyeing the growing opportunities in Vietnam – both have recently launched e-commerce operations, setting up their respective online shopping websites for Vietnamese shoppers. Lazada is delving deeper into online grocery retailing in South East Asia via its purchase of RedMart, an online grocery retailer based in Singapore. Drawing on RedMart’s expertise, Lazada plans to expand its online grocery business in Malaysia, Indonesia and Thailand.

Automated Future

Rising labor costs and shortages of people who want to work in grocery stores are two challenges that retailers are increasingly facing in Asia. Additionally, retailers are constantly looking to drive more efficient and customer-focused operations.
Automated solutions, robotics and intelligent technology are increasingly becoming a reality and more retailers are experimenting with this technology, both inside and outside stores.
Consumers in Asia are normally quick to embrace new technologies and some of the solutions of tomorrow are starting to appear:

Lawson and Panasonic have started testing an automated checkout system, named Reji Robo. It calculates a price for all the items in a shopping basket and automatically packs the products. This helps alleviate staff shortages and reduces peak time congestion in-store.

Tokyo‘s Mitsukoshi department store is using a humanoid robot, “Aiko Chihara”, who can speak multiple languages to greet customers. Similar types of robots, such as Softbank’s Pepper, have also been adopted by retailers to provide customer service.

KFC China has created a smart restaurant that employs facial recognition technology to make menu suggestions based on customers’ expressions. It also invites customers to play augmented reality games, with the chance to win discounts from KFC’s menu.

Unique solutions will unlock growth

Asia’s grocery markets will continue to evolve in the year ahead, with retailers finding new and unique solutions to take advantage of opportunities. Shopper habits and expectations are rapidly changing and retailers will have to respond at pace.
Alongside these three trends, IGD also expects to see a rising focus on hypermarket remodeling, as well as the growing influence of online marketplaces on the grocery market.
Marketplaces will continue to increase their networks through acquiring and partnering with businesses, testing physical stores, promoting cross border trade, producing some of the largest retail events on the planet, and pioneering and testing some of the latest technological innovations.

Source: IGD (Institute of Grocery Distribution)

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