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Five trends shaping Asian grocery retail

Five trends will shape Asia’s grocery retail market over the next 12 months, according to international grocery research organisation IGD.

Asia’s grocery landscape continued to move at a fast pace last year, says IGD head of Asia Pacific Nick Miles, with entries and exits, the repurposing of store networks, the growing emergence of online, and rapid experimentation with technology.

“Although consumer habits and landscape evolution vary across the region, there are common trends and opportunities. We expect Asian-based retailers to expand their store networks next year with further focus on format differentiation and smaller-format stores, greater fluidity and collaboration online, plus a shift to technologies that will help businesses be more efficient.”

IGD has identified five key themes predicted to shape the market and influence retailer strategy:

1. Asian retailers leading expansion
Five years ago, retailers headquartered outside Asia were driving international expansion. Now, however, Asian retailers are predominant in extending store networks. “Suppliers should look to strengthen their relationships with Asian retailers who are driving expansion,” says Miles. “Being the first to make a move is a key priority for long-term growth.”

2. Stores smaller but enhanced
Although hypermarkets still have an important role in Asia, across almost all countries retailers are also focusing on developing formats with smaller sales areas. The trend is being driven by changing shopper preferences toward online and convenience channels. Miles says there is also ongoing “explosive growth” of convenience formats in many markets. “As store footprints shrink, suppliers will have to ensure their brands stay relevant by tailoring their approach by channel.”

3. Differentiation by format innovation 
There was an increasing focus last year on shopper-focused format innovation, with improved retail concepts being tested, rolled out and enhanced through the growing use of customer data and analysis. Retailers are looking to deliver better in-store environments that differentiate their stores and target specific demographics. They are also seeking new locations for expansion.

4. Online to offline collaboration
With the online environment in Asia becoming increasingly fluid, online retailers are partnering with physical retailers while physical retailers are experimenting with new technology. As e-commerce companies grow, IGD expects collaboration with brick-and-mortar retailers to also happen more across borders.

5. Technology driving in-store efficiencies
Retailers in Asia are increasingly experimenting with digital and technology adoption, and this trend will continue, predominantly in markets where modern trade is more developed. In less-developed grocery markets, retailers will look to use technology to grow more rapidly. “Testing and playing with new innovations will remain important,” says Miles, “but to get buy-in from retailers technology will need to improve the shopping experience or drive profitability.”

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