What can we learn from premium Asian retailers?
By 2030, two-thirds of the world’s middle class are predicted to live in Asia, according to OECD figures.With Asian consumers increasingly affluent, aspirational and eager to try products from all over the world, retailers are looking to harness this trend via their premium formats.
These high-end stores are, in most cases, at the forefront of retail innovation and a testbed for new products, services and concepts. Drawing on our research in the region, IGD’s Asia team has identified three key areas that offer best practice examples for retailers and suppliers from around the globe to learn from:
1. Increasing the appeal of international products
There has been an influx of international products and brands into Asia in recent years, and upmarket grocery stores have experimented with a wide variety of promotional and merchandising tactics to market these overseas offerings.
It’s common to see country flags and bold signage in-store to communicate product provenance. This is pivotal as it delivers reassurance on authenticity and quality, with Western products seen as adhering to higher standards.
Some premium Asian retailers regularly feature country themed events, which offer great opportunities for cross-merchandising. The in Hong Kong, for example, organised a Japanese food festival to tap into the growing appetite for Japanese snacking, while Jasons’ creative Eiffel Tower fixture attracted shoppers’ attention to a range of French agricultural products.
2. Promoting (relatively) new categories
Tea was introduced to the UK in 1657 but only became part of British daily life in the 18th century. In the same way, it takes time and effort (but hopefully not as long!!) to cultivate Asian consumers’ interest in new categories such as wine and cheese. Retailers play an important role in this process by introducing new products to shoppers and educating them.
If we take wine as an example, we’ve seen some stores offer professional advice to help shoppers choose from a vast array of options, while wine tasting events help to engage and inform them.
Another way to convince shoppers to try a new product is to highlight its health benefits. This approach has been applied in many categories including olive oil, organic fruits and vegetables. In the Ole’ Shanghai store, illuminated signs are widely used to communicate the nutritious values and health benefits of various fruits.
3. Upgrading food-to-go and food-for-now solutions
As residents of Asian megacities have busier lifestyles and smaller families than before, local supermarkets are evolving as destinations for takeaways as well as dining-in food.
We’ve seen some new food solutions in-store that add great value to their overall offer and hence drive significant footfall into stores.
Central Food Hall Thailand has optimised its food counters creating an array of buffet bars, offering a superb selection of salad, delicatessen and cooked meals.
Meanwhile, shopping and dining missions are blurring. Foodmart Primo, PT Matahari’s premium banner in Indonesia, has a dedicated dine-in area where professional chefs cook meals that customers order directly from the menu. These innovations have helped transform the supermarket into a social venue and increased shoppers’ dwell time.
Premium Asian retailers are targeting a niche audience. Yet driven by the growing affluent middle class, it’s becoming abundantly clear that they will continue to gain popularity in Asia.
International companies that currently operate in the region are putting more emphasis on supermarket and convenience stores. In our opinion, they should also look to the premium store format as a potential opportunity to grow their business.
- Jenny Li is senior retail analyst – Asia with IGD’s Asia-Pacific team and is responsible for managing research programmes and tracking the latest industry trends in Asia. She regularly travels across the region, gaining market insight from visiting new stores and meeting local retailers and suppliers. Prior to working at IGD, Jenny had six years’ experience working at market research and consulting firms, proving consumer insights to global businesses such as Nestle and HSBC, as well as advising government trade bodies their emerging market strategies in Asia.