Asia’s grocery market is the largest in the world, with a predicted 6.3 percent compound annual growth rate until the year 2021. The region’s market is expected to reach US$4.8 trillion by 2021—equivalent to Europe’s and North America’s combined.
In the convenience channel, high double-digit compound annual growth is expected over the next four years in Vietnam at 37.4 percent, the Philippines at 24.2 percent, and Indonesia at 15.8 percent. The statistics are derived from the performance of leading convenience store operators in each country.
“The retail markets in these three countries are gradually shifting from traditional to modern trade, and there are several factors driving this—a positive economic outlook, a significant increase in GDP per capita, deregulated markets encouraging more foreign investment, and rapidly changing shopper habits,” said Nick Miles, head of Asia-Pacific at IGD.
Convenience stores are showing the strongest growth prospects in Asia, compared to traditional bricks and mortar grocery channels. This resulted from rapid urbanisation, a growing young population and greater levels of disposable income.
Vietnam, the Philippines and Indonesia share similar characteristics that make their convenience markets ripe for growth:
- Store expansion: These three convenience markets are driven by an increase in store numbers. For example, the number of convenience stores operated by the top five retailers in the Philippines has more than doubled in the last five years. Moreover, retailers are gradually shifting their focus from the capital to more provincial areas for better opportunities
- Local players are gaining a stronger foothold: Asia’s convenience market has traditionally been dominated by Japanese retailers. However, there have been more market consolidations and partnerships and most noticeably, domestic players have been scaling up their operations and establishing leadership in their local markets
- Neighbourhood mini-supermarkets are becoming more popular: Apart from the modern convenience store format, local operators have developed a successful neighbourhood mini-supermarkets model, which better caters to local needs.
Across the region’s key growth markets, increasing investment in convenience stores by retailers and manufacturers is predicted, concluded Mr Miles.