E-commerce will account for 31.4 per cent of total Asia-Pacific retail spending by 2020 according to fresh projections by research house Mintel.
That’s nearly 10 times the proportion of 2010, when it accounted for a mere 3.6 per cent of sales.
Those figures are based on countries with high populations – Australia, China, India, Indonesia, Japan, South Korea and Vietnam – and exclude markets like Singapore and Hong Kong, where e-commerce accounts for less than 5 per cent of total retail sales.
“The future of Asia-Pacific’s retail landscape will force a fundamental change in the way Asian companies are structured, managed and do business,” the report, New Retail: The Futurenomics of Asia-Pacific, concluded.
Its author, Matthew Crabbe, who is regional trends director, Asia-Pacific, with Mintel, said the 2020 projection is only the start.
“E-commerce growth is fast-moving and on a massive scale. From 2015 to 2025, e-commerce will rise in value by over 290 per cent, and reach well over 37 per cent of total retail value across Asia-Pacific. This growth has created a new critical mass with the convergence of online and offline retail and services into New Retail.”
Combining latest Mintel research to paint a picture of how the region’s future economy will be shaped, Crabbe settled on four key conclusions:
Digitisation: Futurenomics nears critical mass
“The online economy is a crucial part of Asia-Pacific’s current and future economic growth. It is also a major part of the continuing integration of the economies and consumer-spending patterns across the region. Meanwhile, Asia is not just innovating within New Retail, it is also a hothouse of innovation in AI, the application of augmented and virtual reality and revolutionary concepts in food production, among many technologies. And New Retail is the focus of how all these developments are agglomerating to shape the ‘futurenomics’ of Asia.”
Integration: The value of experience
“New Retail is a process, rather than a market, where the ‘space’ of e-commerce increasingly integrates with physical shopping spaces. It is also a part of a wider integration process into the broader digital consumer services environment, and across all consumer product sectors. Places and processes for shopping are integrating with entertainment, travel and socialising – which is great as 32 per cent of urban Thai consumers say they are spending more on leisure and entertainment this year,” said Crabbe.
“Brands are finding that they are being drawn into their own integration across sectors. Services brands are merging with retailers; retailers are becoming hoteliers; online platforms are becoming transportation providers – everything is mixing up. This means that brands must now engage with consumers across formats, platforms, technologies, locations, nations and sectors, and find relevance across more aspects of consumer lifestyles.”
Consolidation: More people in less space
“Asia-Pacific’s population is rapidly urbanising into some of the world’s largest cities, creating the potential for New Retail to develop faster in the region. In India, 25 per cent of urban internet users who shop for groceries do so from online supermarkets at least once a month. Meanwhile, in Indonesia, 56 per cent of urban smartphone owners have made a purchase through an online retail site or app,” he said.
“Urbanisation is likely to be significantly influenced in the future. To meet the needs of vast, crammed populations of tomorrow, cities will have to adapt to new technology. New Retail, with the ability to reach anyone, anywhere, via their smartphones, offers a unique solution to connecting with consumers.
Companies in the New Retail industry are encouraged to spread their influence across the region. In fact, New Retail is already expanding rapidly across the region through the influence of China’s leading operators.”
Migration: From brawn to ‘e-brain’
Crabbe said as Asia-Pacific’s populations get older, there will be an increasing need for greater productivity as ‘working age’ populations shrink.
“This will drive the need for ongoing education and long-life learning to keep up with and adapt to new technologies. Mintel research reveals that as many as 72 per cent of urban Thai consumers say they want to learn a new skill, while 59 per cent of urban Chinese mums agree that early education should start as early as possible.
“Technology in production – manufacturing and agriculture, for example – is leading to a shift from a ‘brawn economy’ to ‘brain economy’. Already new technology has democratised the means of production.
In an environment where ideas become currency, we see the emergence of what is now known as the ‘Fifth Estate’ where outlier, disruptor and social groupings become instigators of change in mainstream society. New Retail will be the foundation upon which new economies will be built, and Asia-Pacific is leading the first wave,” Crabbe concluded.