at the broadest level possible: It’s about making people happy by givingthem things they want and helping them enjoy the process of shopping for them. It’s not technology but human happiness that is the endgame. That happiness will be challenged on a number of fronts in the coming year, as events in politics, the macroeconomy, and a super-abundance of substandard retail property shape consumer spending and retailer operations. What are some of these influential happenings? Here are eight of them. Rising nationalism challenges global brands In China, local brands are making big inroads on turf that was once the major preserve of multinationals. Prominent examples are local brands such as Li-Ning and Anta challenging global athletic footwear brands like Nike, Puma and Adidas. Nike CFO Matt Friend said on a recent investor call that Nike was experiencing “meaningful shifts in consumer traffic in key markets – particularly in Greater China, where bricks-and-mortar traffic declined as much as double-digits versus the prior year”. Traffic softness, he added, was not confined to physical outlets alone. Much of the malaise has to do with Chinese consumers’ preferences shifting to the homegrown brands. The nationalistic trend is also evident in other categories, such as coffee retail, where Luckin has now overtaken Starbucks as market leader in China on the back of a massive store expansion program and a price war. Other domestic coffee brands are making inroads, too, including another lower-end brand, Cotti. Starbucks has seen its same-store sales tank, although it professes to stand firm on its premium pricing strategy. The nationalism trend in China is particularly important because of the US election in November, which could be influential in driving this trend further. While the results were unknown at the time of this writing, a win for Donald Trump would probably mean a shift in America’s China policy to something more adversarial and punitive, with tariffs and other measures. For global retailers with a stake in China, it could get bumpy. Beggar thy neighbor: competition for tourists It hasn’t gone unnoticed by governments across Asia that the post-Covid 19 economic growth and the growth of retail, hospitality and other businesses has largely been driven by the revival of international tourism. There are examples all over the continent of the impacts: the recovery of the Japan department-store sector has been driven, to a large extent, by duty-free sales in Tokyo and a few other major international tourism hubs; and in Thailand the normalization of tourist numbers has been a huge boost to retailers and mall operators in Bangkok, Chiang Mai, Pattaya and Phuket. Ditto for Singapore. Other countries in the region that are not typically dependent on tourism now want a piece of the action, too: Cambodia, Vietnam and Korea all have active government marketing programs afoot to attract international visitors. Thus, a kind of beauty contest has developed, whereby countries attempt to outshine one another with respect to natural beauty, leisure activities, culture, facilities and ease of access. The upstarts are doing well but Thailand seems to be determined not to lose its top spot: it has expanded visa-free entry to 93 countries and is aggressively promoting the country as a hub for sports, cosmetic surgery, eco-tourism and other goodies. To top it all off, the government pulled some financial strings this year for Thailand to host Season 3 of HBO’s satirical drama series, “The White Lotus”, following successful seasons shot in Hawaii and Sicily. Integration of culture with shopping In different ways in different Asian countries, retailers and malls increasingly see themselves as arbiters of national culture. In Japan of course, this has been the case for a long time, with department stores in particular being cultural icons and even occupying buildings that have national heritage status. Likewise, in places like Orchard Road in Singapore, where Japanese and Chinese department stores are genuine cultural icons. More recently, this trend is showing up elsewhere and is likely to intensify, for two main reasons: first, the emergence of a new generation of retail leaders who are pushing the shift away from purely transactional retail and seeking to imbue their stores and malls with a grander meaning. Second, there is a hard economic reason, which is the need for mall operators to rejig their tenant mix to place more emphasis on non-retail attractions to drive foot traffic. In major retail markets like Bangkok, art and crafts have become tightly woven into the high-end mall culture. At Emsphere, opened in December last year, a rotating art exhibit occupies a significant space on the mezzanine level; products that are the work of Thai designers are prominent tenants. Icon Siam, another large shopping mall in Bangkok, has, among other cultural offerings, a sprawling mimicry of a Thai street food scene on the ground floor, and an 8000sqm Heritage Museum. Meanwhile, in Hong Kong, New World Development’s K11 Art Mall in Tsim Sha Tsui is undergoing an expansion. AI drives revival of stagnant categories All the artificial intelligence hype has been around how retailers can use it to decrease costs and provide a better consumer experience. Largely ignored is another AI-driven trend, the benefit it will deliver to sales of the major platforms that run AI applications – the humble computer being the main one. Some number-crunching by analysts at Citi Research shows the recovery in global computer sales that began to take hold as AI-enabled computer models were rolled out this year will take off next year. Citi’s crystal ball gazers say that per cent growth in computer sales will come close to double-digits next year, driven not just by an increase in units sold but in average selling price (ASP) as well. Good times ahead for consumer electronics retailers in Asia. Shift in the mix of retail employment OK, we know some of you are tired of hearing about AI but another trend we can’t ignore is a shift in the mix of retail employment as retailers upskill their existing workforces and also hire more tech-skilled workers at the expense of workers in other parts of the business. The new workforce will have fewer customer service reps and warehouse workers, more social media marketers and data analysts. How this will all net out is impossible to say. Some believe retail industry employment will drop and others say it will just re-allocate workers to other parts of the business. So far this year, retail employment in the US has edged up by just under half a percentage point from last year. It has been very level for the past decade. In Australia, retail employment in the first half of this year is slightly lower than last year. At least according to these data points, AI has not had a visible impact on the top-line retail employment numbers yet. Next year, we will begin to see patterns emerging marking shifts in the kinds of industry occupations. F&B, health and beauty to drive store expansions, but renovations will be prominent In most of Asia, Food & Beverage (F&B) will continue to lead store expansions, with coffee chains among the leading subcategories as the coffee market becomes increasingly nichefied. Health and beauty will also be among the leaders looking for retail space, while apparel chains focus more on single flagships in secondary markets. Store renovations and freshenings-up are taking precedence in many instances over expanding the fleet. Multi-format retailers like Big C need to plough investments into improving the look and feel of their stores and, in many cases, the malls that are anchored by their hypermarkets. Department store renovations are a particularly important ongoing trend. Outstanding examples are to be found in Bangkok, including the ongoing redevelopment of the former Isetan department store at Central World, the addition of the Luxe Galerie at Central Chidlom, and the brilliant redevelopment of the Paragon Department Store. On the landlord’s side, as merchandise retailers focus on the highest quality real estate and the real estate in markets proven by e-commerce pre-testing, malls will come increasingly to rely on F&B, services and entertainment. However, vacancy problems will continue to become chronic in over-malled markets such as Vietnam (outside the CBDs of Ho Chi Minh City and Hanoi) and Phnom Penh. In the former, much of the retail real estate outside the cores of the two big cities is poor and the spending power is limited. In Phnom Penh, the developers have simply gone too far ahead of the market. Legal assaults on greenwashing As regulators give themselves something to do by continually tightening ESG/DEI regs – for example by expanding reporting requirements – companies have turned greenwashing into an international sport. The lack of standardised methodologies that work well across different kinds of businesses, the gross inaccuracies involved in estimating things like carbon footprint, and the rush to look good for investors and consumers pretty much tempt out the greenwasher in every retailer. Lately, watchdogs have decided enough is enough:Lululemon was the target of lawsuits in multiple jurisdictions just prior to the Olympics, where its clothes were Team Canada’s official kit. Singling out Lululemon was somewhat bizarre, given the company’s culture and roots in yoga and healthy living. This is just the beginning folks, expect more of these as time goes on and they won’t necessarily be getting at the worst offenders. The macro picture: central banks take centre-stage Finally, the macro picture: recessionary forces are causing central banks to step in and lower interest rates, which will improve household finances by lowering the variable interest rates on household debt. It has already begun to have a positive impact on retailer profitability, as financing costs have declined materially for many. Some Asian central banks are not yet playing ball (Thailand’s is one) but any prolonged macro weakness over the next year will force their hands. What is the trend to come out of this? A number of outcomes, including a resumption of spending on bigger-ticket items such as home-improvement projects, and a shift in retailers and mall operators from a focus on tourism to reliance on domestic customers.