International news: strong growth expected for Asian big-box retailers

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Asia’s leading large-format grocery retailers are forecast to grow on average 3.5 per cent a year between 2016 and 2021, according to figures from international grocery research organisation IGD.

Although growth in large grocery formats varies significantly across the region and – as in other markets around the world – they are coming under pressure from the rise of other retailer channels and changing shopper behaviour, IGD says these figures show that large formats have a key role to play in shaping the future of modern trade in Asia over the next five years.

IGD Head of Asia-Pacific Nick Miles analysed 10 of the leading large-format grocery retailers in the region, identifying several challenges and opportunities for this channel to consider over the next few years.

“When the first modern trade retailer broke into the Asian market in the early ’90s with hypermarket and supermarket formats, we expected traditional trade, largely made up of family-owned grocery chains and small independent stores, to be gradually eliminated,” Mr Miles said.

“However, 30 years on, traditional trade is still going strong in most of the region and the shape of retail is changing once again. Online grocery shopping is starting to gain a foothold across all markets, and convenience stores are seeing a surge in growth, too – often at the expense of big-box formats.

“However, despite these challenges, big-box stores still have a critical role to play. In markets where modern retail is starting to take off, large formats are still often the go-to option for retailers to enter the market and create excitement among shoppers; whereas in markets where modern trade is already well established, retailers are on the front foot by repurposing these stores so that they’re fit for future requirements.”

Mr Myles adds that, with plenty of scope for modern trade growth, there remain great opportunities for Asia’s big-box retailers – and their suppliers – that can engage cleverly and in a meaningful way with their shoppers.

Aeon, Walmart and Auchan are the top three hypermarket and supermarket retailers in the region, driven by strong store networks in Japan and China. However, domestic players are also developing a strong presence, with home-grown retailers such as Yonghui and SM Retail growing quickly in China and the Philippines, respectively.

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