Etude PwC sur le secteur de la distribution en Asie (2013)


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Réalisée en partenariat avec l’Economist Intelligence Unit, le rapport propose un panorama unique des évolutions du secteur de la distribution et de la consommation en Asie, avec un focus par pays et par segment.

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Etude PwC sur le secteur de la distribution en Asie (2013)

  1. 1. Outlook for theRetail and ConsumerProducts Sector in Asia
  2. 2. Carrie Yu China & Asia Pacific Retail and Consumer Leader PwCForewordImpacted by the global economic As the largest market in Asia, China making a comeback, and still moreconditions, growth in many Asian remains crucial for many retail and that have turned around successfullymarkets has slowed down. However, consumer companies. The Chinese through transforming the operatingthe region as a whole remains ahead of government has reiterated its emphasis models and product offerings. In anNorth America and Europe. Retail in boosting domestic consumption, evolving and dynamic marketsales volume in Asia Pacific is relative to fixed investments and environment, the strong survivors areforecasted to grow 6% in 2013 and will export, as the key economic driver of often those who stand firm on theirmaintain this upward momentum growth. While the pace of growth may corporate mission, backed by solidthrough to 2016 with an estimated have slowed, the retail industry is infrastructure fundamentals andmarket worth of US$11.8 trillion, forecasted to grow at 10.5% in 2013 equipped with razor sharp focus towhile that of North America and and 10.4% through to 2016. At the constantly reinvent themselves toWestern Europe is US$4.4 trillion and same time, India, with its huge young create value to stakeholders.US$3.1 trillion respectively. Home to population and growing income of theChina and India, Asia continues to be middle class, will continue to attract Indeed, we have witnessed numerousthe main driver of retail growth the attention of international and innovations and success stories ofglobally and holds out the best regional players. This is particular so many local and internationalopportunity for growth and profits for with the recent relaxation of the limits companies in the industry. In thismany international retail and on foreign investments in Delhi to connection, I am personally inspiredconsumer companies. allow 51% foreign equity in multi- by the interviews featured in this branded retail operation. India’s retail report and hope our readers will findThe growing critical mass of growth is forecasted to bounce back the same inspiration. We are honouredconsumers in Asia warrants long-term strongly from 1.9% last year to 6% in to have some of the region’s mostinvestments and tailored market 2013. successful companies in generouslystrategies. Indeed, by 2020, the sharing their core values and ethics,percentage of the population However, Asia’s consumer markets are business visions and consumerconsidered as middle class is envisaged not completely liberalised and remain insights. I am deeply grateful to Mrto shift from North America and highly fragmented. Traditional Motoya Okada of Aeon, Mr John Lo ofEurope to the Asia Pacific region. This retailing still dominates and local Tencent, Mr A. Mahendran of Godrejshift may happen even earlier, as players are abound. Apart from the and Mr Nigel Luk of Cartier for sharingChina’s leadership has committed in challenges in navigating through their wisdom. I would also like to takethe recent 18th National Congress of regulatory hurdles as well as adapting this opportunity to thank ourthe Communist Party of China, to to cultural differences and consumer colleagues in the region and thedouble the country’s 2010 GDP and per preferences, retail and consumer Economist Intelligence Unit for theircapita income of both urban and rural companies also have to cope with the invaluable input and assistance.households by 2020. The expanding influx of new competitors to themiddle class consumers will be a market, whether online or offline. Over Sincerely,substantial force in driving demands the years, some international retailfor a wide spectrum of products, and consumer companies might haveranging from functional food, personal exited from certain markets in thecare products to the latest smartphone region, but there are also othersmodels. The same phenomenon is alsohappening across many Asiancountries including India, Indonesia January 2013and Vietnam. 2013 Outlook for the Retail and Consumer Products Sector in Asia 1
  3. 3. This report was written in cooperation with the Economist Intelligence Unit’s industry and management research division.The economic and industry forecasts included are those of the Economist Intelligence Unit. Due to a change in methodologysome historical figures may be significantly different to those published in last year’s report.
  4. 4. Table of contents 4 Executive summary 6 Introduction Section 1: Retail 10 Food and general retail 11 Hypermarkets, supermarkets and convenience stores 12 — Q&A with Motoya Okada of Aeon 13 Food, beverages and tobacco 14 Private label 15 Fashion and apparel 18 Online retailing 20 — Q&A with John Lo of Tencent Section 2: Consumer goods 23 Fast-moving consumer goods 25 — Q&A with A. Mahendran of Godrej 28 Luxury brands 31 — Q&A with Nigel Luk of Cartier 33 Durable consumer goods and electronics 37 At a glance: Indonesia, Malaysia, Singapore, South Korea, Thailand and Vietnam 50 Conclusion 2013 Outlook for the Retail and Consumer Products Sector in Asia 3
  5. 5. Executive Summary The outlook for the global economy remains uncertain, as consumers and businesses alike wait for clear directions on a range of economic risks, from the US deficit to the euro zone crisis. The European Union (EU) is forecast to contract in 2012 and to muster only marginal growth in 2013. Growth in the US and China is also slowing. Although governments in both countries have introduced stimulus measures, any upturn is expected to be modest. Asia’s other economies will slow as well, but will look healthy by comparison with the US and EU, with regional growth (excluding Japan) averaging 5.7% in 2012 and 6.4% in 2013. This report discusses the outlook for September 2012 that it would permit six retail and consumer products foreign direct investment of up to 51% Asia will remain the main driver of sub-sectors in Asia — food and general in multi-brand retailing. Retailers, global retail sales growth, but retail, fashion and apparel, online particularly in China, are beginning to companies will be challenged by retailing, fast-moving consumer goods target customers more carefully. For slowing economies and high inflation (FMCG), luxury brands, and durable example, CR Vanguard is launching a and interest rates. Retail sales are still consumer goods and electronics. It new high-end chain of boutique expected to expand by a respectable focuses, in particular, on China, Hong supermarkets, while Carrefour is 5.8% in 2012# and 6% in 2013, Kong, India, Japan and Taiwan, and stepping up its strategy to cater for although this is down substantially looks at how the industry is faring in consumers concerned about China’s from 9.6% volume growth in 2010. 2012 and is expected to grow through frequent food safety problems by Companies are responding by 2016, and the opportunities and focusing on organic food. reworking their product, production challenges in the years ahead. and regional strategies. As Asia’s current environment of The main findings of the report are as high inflation and rising prices All eyes will continue to focus on follows: drives customers to seek value, Mainland China (China), by far Asia’s private food labels have new largest retail market. For many, the opportunities to increase their Major international retailers will fastest growth will come in the less share. While the private label business continue to expand in Asia, with developed third- and fourth-tier cities, took decades to develop in Western more tailored strategies being as disposable incomes there rise countries and came about only after introduced in China. By 2016 China rapidly. The proportion of Chinese the retail sector matured, the concept will overtake the US as the world’s households earning over US$15,000 is rapidly catching on in Asia, where largest retail sales market, worth some per year will increase from roughly large populations and growing US$4.2 trillion. India, too, is now 11% of the total in 2011 to 41% in incomes mean that the region will attracting considerable interest, after 2016, by conservative estimates. remain the world’s largest food market, its government announced in # This figure is expected to be revised downward based on new forecasts for India, which became4 PwC available just prior to publication of this report.
  6. 6. Executive Summaryworth US$4.2 trillion in 2012. India’s including both Asian retail companies Chinese and other Asian travellersbig retailers have been very active in and foreign offline retailers such as abroad. But local, home-grown luxuryintroducing private label products, America’s Macy’s department stores, brands will also emerge, catering towhich now account for 20-25% of are now expanding their own online Asian consumers’ rediscovery of theirprofits for most. In addition to catering presence in Asia in partnership with own long-standing traditions of localfor the needs of value-conscious e-tailers. The online market’s growth craftsmanship. For example, Chow Taiconsumers, private label goods can in 2012-16 will be aided by increased Fook Jewellery Group of Hong Kong isalso fill a void in markets such as India broadband and mobile-phone already twice the size of iconicwhere many categories of goods are penetration, the spread of smartphones American jeweller Tiffany & Co inunderdeveloped. To overcome and tablet computers, and terms of revenue. As local brands seekconsumers’ concerns about the quality improvements in payments and international capital and expertise,and safety of private labels, retailers logistics infrastructure. and global luxury brands remain keenare upgrading packaging and to appeal to local tastes, partnershipspromoting their international backing Rising incomes will continue to between global and local brands, suchwhere possible. drive growth in the FMCG sector but as Richemont’s controlling stake in companies will have to contend with Hong Kong-based fashion labelAsian demand for fashion and several challenges, including Shanghai Tang, will become moreapparel will continue to lead the increasingly demanding, value-, and international fast conscious consumers and cut-throatfashion brands are expanding competition. Consumer spending is Growth in demand for consumeraggressively to cash in on Asia’s being hit by high inflation, rising durables and electronics is slowingyoung demographic and rising interest rates and price hikes by FMCG but will remain strong. However,affluence. Asian demand for fashion companies in response to costlier Japanese manufacturers are losingand apparel will continue to surpass inputs and commodities. Tough their decades-long dominance inthat in Western Europe and North economic times are intensifying Asia in these sectors. Market demandAmerica and the gap will widen in the existing challenges for foreign for electrical appliances andcoming years. This has attracted the companies. For example, in December housewares will increase 5.9% in Asiainterest of many foreign brands, 2011, Switzerland’s Nestlé and France’s in 2012, lower than an earlier forecastparticularly in the area of fast fashion, Danone revisited their China business of 6.6%. However, growth will recoverwhich targets young, upwardly mobile models in the face of fierce local to 6.8% in 2013 and expandcustomers. Newcomers to the Asia competition. In response to all these consistently through the forecastmarket in 2012 included Topshop of challenges, FMCG companies are period to 2016. Strong growth isthe UK and US retailer Forever 21, who planning their expansions more encouraging competition and Japanesejoin Spain’s Inditex, owner of the Zara judiciously, partnering with local manufacturers, hurt by the globalbrand, Uniqlo of Japan and H&M of companies, and better targeting economic crisis, a strong yen andSweden, all of which have been rapidly customer groups. Many are putting natural disasters in Japan andexpanding in recent years, notably in renewed emphasis on expansion in Thailand, are rapidly losing theirChina. rural areas and smaller cities. They are dominance. As they struggle, also looking to acquisitions to buy companies such as South Korea’sOnline retailing continues to grow market share. Samsung, China’s Haier and Taiwan’srapidly in Asia, prompting Hon Hai, have swooped in to capturetraditional and foreign offline Asian consumers now account for market share by expanding quickly andretailers and even luxury brands to over half of global luxury sales, and offering lower prices, a wider rangeembrace online sales in the region. the boom is spurring the growth of and adequate technology in anAccording to industry intelligence local luxury brands. According to the increasingly commoditised market.provider eMarketer, from 2013 World Luxury Association, China is setonwards Asia will lead the world in to replace Japan as the most importantglobal business-to-consumer (B2C) market for luxury in Asia. Globale-commerce sales, with a 41.4% share brands will continue to increase theirby 2016. Traditional retailers, presence and efforts to cater for 2013 Outlook for the Retail and Consumer Products Sector in Asia 5
  7. 7. 9.8%, on the back of companies Introduction widening their reach, the modernisation of the retail industry and the influx of new consumers. China will overtake the US as the world’s largest retail sales market in 2016, when its retail sales are forecast to be worth US$4.2 trillion. Growth will remain high through the rest of the forecast period. The fastest growth The outlook for the global economy 9.6% volume growth in 2010 they are will come in the less developed remains uncertain at best. The EU still expected to expand by a third- and fourth-tier cities, as economy is forecast to contract in 2012 respectable 5.8% in 2012. Next year disposable incomes there rise rapidly. and to manage only marginally that should accelerate to 6%, with the The proportion of Chinese households positive growth in 2013. Growth in the upturn lasting through the forecast earning over US$15,000 per year will US and China is also slowing. While period to 2016, when the market will increase from roughly 11% of the total policymakers continue to work on be worth US$11.8 trillion. in 2011 to 41% in 2016, by conservative action plans, the circumstances are estimates1. such that they are likely to accomplish All eyes are on prospects for China, by little more than to prevent a deeper far Asia’s largest retail market. While In Japan, Asia’s second-biggest market economic downturn. Asia’s economies the economy has been slowing, the after China in dollar terms, retail sales will slow as well, but will still look Chinese government has made clear will expand by a modest 1.6% in 2012 healthy by comparison, with regional that it will intervene to stimulate and contract slightly for two years growth (excluding Japan) averaging growth if necessary. China’s GDP is thereafter as Japan’s trade-dependent 5.7% in 2012 and picking up to 6.4% in predicted to grow 7.8% in 2012 and at economy continues to suffer against a 2013. around 8% through the rest of the backdrop of weak external demand forecast period. Despite high inflation and a strong currency. Domestic Asia will remain the main growth and prices, China’s retail sales will demand is expected to remain weak, driver of retail sales globally. Although grow at a still impressive 10.9% in given poor economic growth and an retail sales have slowed from their 2012, higher than an earlier forecast of uncertain employment market. Retail6 PwC
  8. 8. Introductionsales growth will remain negligible Figure 1: Real GDP growth (% change)through the forecast period, partly Region 2009 2010 2011 2012 2013 2014 2015 2016because unemployment will remain Asia and Australasia (incl Japan) 1.2 7.1 4.0 4.2 4.2 4.5 4.3 4.3relatively high and wage growth Economies in transition* -5.6 3.4 3.8 2.5 3.0 3.7 3.7 3.9subdued at best. Nevertheless, Latin America -1.9 6.0 4.3 3.1 3.9 4.2 4.0 4.1relatively high incomes and strong Middle East and North Africa 1.7 5.2 3.4 3.4 3.9 4.7 4.9 5.3demand for high-end goods will keep North America -3.4 3.0 1.8 2.1 1.8 2.1 2.2 2.3Japan’s retail spending among Asia’s Western Europe -4.2 2.2 1.7 -0.2 0.5 1.3 1.4 1.4highest2. World -2.3 4.2 2.7 2.2 2.4 2.9 2.9 3.0 Source: Economist Intelligence UnitIndia’s economy has started to look *Bulgaria, Czech Republic, Hungary, Poland, Romania, Russia, Slovakia and Ukrainesluggish, and GDP growth will slow to5.8% in 2012, while consumer priceinflation remains a high 9.3%. Given Figure 2: Global retail sales growth by volume (% pa)the uncertain economic outlook andrising prices, retail sales growth will Region 2009 2010 2011 2012 2013 2014 2015 2016slow substantially to 1.9% in 2012, Asia and Australasia 5.3 9.6 5.2 5.8 6.0 6.9 6.7 6.8 Economies in transition -4.4 3.9 6.6 3.4 3.6 4.0 4.4 4.5much lower than an earlier forecast of Latin America 0.1 3.1 5.2 4.9 4.6 5.4 4.7 5.35.3%, although demand growth for Middle East and North Africa 1.6 3.6 2.7 1.0 3.4 3.7 4.0 4.1more basic items like food and soaps North America -5.8 0.8 3.8 1.6 1.5 2.0 1.9 1.8and cleansers will remain strong. India Western Europe -2.5 0.2 -1.0 -1.3 0.0 0.3 0.7 0.8is Asia’s third-largest retail market World -0.6 4.2 3.6 2.9 3.4 4.1 4.1 4.2after China and Japan, although it hasone of Asia’s lowest sales per head Source: Economist Intelligence Unitratios. Retail sales growth will bounceback to 6% in 2013 as GDP growth Figure 3: Global retail sales (in US$ trillion)picks up and inflation abates Region 2009 2010 2011 2012 2013 2014 2015 2016somewhat, with growth hovering Asia and Australasia 4.93 5.88 6.81 7.43 8.23 9.24 10.43 11.81between 5% and 6% for the remainder Western Europe 2.89 2.85 3.05 2.91 2.94 2.97 3.00 3.14of the forecast period, driven by North America 3.25 3.36 3.61 3.74 3.89 4.06 4.23 4.41income growth, increasing Latin America 1.02 1.17 1.29 1.37 1.49 1.63 1.75 1.89urbanisation, and a rising number of Source: Economist Intelligence Unitattractive stores and foreign brands.The increase in the number of wealthyhouseholds from an estimated 494,000with annual earnings over US$50,000 Figures for 2012 onwards are forecasts. Prior years are actuals or 2012 to 2.4 million in 2016 willdrive demand for non-essential andluxury goods3. Delhi has once againannounced a relaxation of the limits onforeign investment in its retail sector,saying it will allow 51% foreign equityin multi-brand retail operations.Foreign retailers have expressed keeninterest, but there is still strongopposition to the move from somequarters. 2013 Outlook for the Retail and Consumer Products Sector in Asia 7
  9. 9. Introduction Figure 4: Asia retail sales growth by volume (% pa) Territory 2009 2010 2011 2012 2013 2014 2015 2016 In Hong Kong, retail sales volumes will Australia 3.29 2.15 0.10 0.70 1.10 1.30 1.70 2.00 grow 2.7% in 2012 as economic China 16.82 19.07 10.90 10.90 10.50 11.10 10.20 10.00 growth in the territory dips to 1.5% on Hong Kong 0.01 15.61 18.50 2.70 1.50 3.40 4.50 4.50 the back of a slowing global economy India -0.37 8.95 3.10 1.90 6.00 5.60 5.90 6.10 and China’s reduced growth rate. Indonesia 3.47 4.78 5.20 4.60 5.50 6.70 6.60 6.50 Retail sales volume growth will slow to Japan -0.93 3.30 -0.60 1.60 -0.10 -0.50 0.30 0.40 1.5% in 2013 as unemployment rises. Malaysia 0.62 5.83 6.70 4.90 5.70 5.00 4.90 4.80 Nevertheless, relatively strong New Zealand 0.50 2.50 -0.40 -1.20 2.30 2.30 3.20 3.30 economic growth (which is expected to Philippines 3.98 5.56 1.80 2.90 4.90 5.00 5.20 5.20 return to 4.2% in 2014 based on a Singapore -0.58 6.70 1.30 1.70 2.70 3.80 4.60 5.30 South Korea -0.31 4.55 1.90 1.00 2.10 2.20 2.80 2.90 recovery in global trade) and rising Taiwan -1.42 9.10 5.00 0.20 1.80 2.60 3.00 2.70 local incomes will provide impetus to Thailand -0.54 6.70 1.50 7.80 6.90 5.30 4.80 4.70 retail sales in Hong Kong over the Vietnam 3.05 4.73 6.30 8.30 11.10 10.30 8.70 6.40 medium term. Though visitor numbers from mainland China have increased, Source: Economist Intelligence Unit growth in sales of luxury products such as jewellery, watches and clocks and Figure 5: Retail sales in Asia (in US$ billion) valuables has slowed, indicating that while the uncertain global economic 4,500 outlook has not dissuaded tourists from visiting Hong Kong, it has made 4,000 them more cautious about spending. Given the relatively high cost of 3,500 inflation, retailers’ profitability will depend partly on their ability to pass 3,000 on rising costs to customers, hence China ensuring that they are able to develop 2,500 Hong Kong premium brands for which higher 2,000 prices can be charged4. India 1,500 Japan Taiwan’s retail sales will increase by Taiwan only 0.2% in 2012, as its export- 1,000 oriented economy slows on weakening global demand. However, as growth in 500 the wider economy picks up, retail volume growth is likely to recover to 0 2009 2010 2011 2012 2013 2014 2015 2016 1.8% in 2013 and to rise to between 2% and 3% for the remainder of the Source: Economist Intelligence Unit forecast period. With a population of just over 23 million, Taiwan is a smaller market than most in East Asia. Figures for 2012 onwards are forecasts. Prior years are actuals or estimates. However, at over US$10,000, annual disposable income per head is relatively high, and over 50% of households have an annual income over US$25,000 (this will rise to a forecast 65% by 2016). Retail sales will also be supported by more visitors from China, as visa and travel restrictions continue to be eased5.8 PwC
  10. 10. Section 1: RetailThe future of global retail lies firmly in Asia, but economic growth in the region isslowing and inflation and interest rates are high. Companies are responding byreworking their product, production and regional strategies and looking foracquisitions, while continuing with their organic expansion. China remains the mainfocus for foreign companies across all categories. As international companies try tomake inroads into Asian markets, they will face stiff competition from well-established local brands. Countries across Asia are quickly expanding access tobroadband and mobile phones. This is helping online retailing in Asia to expandquickly and traditional retailers are exploring the online channel. 2013 Outlook for the Retail and Consumer Products Sector in Asia 9
  11. 11. Section 1: Retail Food and general retail Key findings • Major international retailers continue to expand in Asia, although sluggish home markets mean that some are finding Figure 6: Retail sales of food in Asia and Australasia (in US$ billion) investment resources constrained. 8,000 • Recognising customer preferences for online shopping, traditional 7,000 retailers are making the move online. According to market 6,000 researcher Kantar Worldpanel, by July 2012 the proportion of 5,000 Chinese households making FMCG purchases online increased 4,000 from 16% a year earlier to 22% in China’s top tier cities. 3,000 • Asia’s current environment of high inflation and rising prices 2,000 could trigger greater growth in private label goods as consumers 1,000 seek value for money. 0 2009 2010 2011 2012 2013 2014 2015 2016 Source: Economist Intelligence Unit Figure 7: Food, beverages and tobacco: Market demand growth (% real change pa) Territory 2009 2010 2011 2012 2013 2014 2015 2016 China 3.9 1.9 2.6 2.2 2.9 2.8 2.5 2.2 Hong Kong -0.5 5.5 6.7 0.9 -0.2 1.2 1.5 1.3 India 6.5 3.3 1.0 4.7 2.7 3.4 4.7 3.9 Japan -0.6 2.8 0.2 1.4 1.0 1.1 0.9 0.7 Taiwan 0.0 3.0 2.2 0.3 0.9 1.6 2.0 1.7 Source: Economist Intelligence Unit Figures for 2012 onwards are forecasts. Prior years are actuals or estimates.10 PwC
  12. 12. Section 1: Retail store model, which will allow it toHypermarkets, supermarkets and expand rapidly while limiting investments11.convenience stores Retailers are also targeting customers more carefully. For example, China’s CR Vanguard, which has over 4,000 stores across China, is launching a new high-end chain of boutiqueAs conditions remain grim in their plans to open 30 new stores in China in supermarkets called V+. It will focushome countries, major international 2012, up from 20-25 per year recently8 on residential communities, targetingretailers will continue to expand in and has other plans in addition to middle class consumers in 1st and 2ndhigh-performing emerging markets. China. India is now attracting tier cities, while CR Vanguard’s otherIndia and China place 3rd and 5th considerable interest after its brands will target busy commercialrespectively in AT Kearney’s 2012 government announced in September areas12. Meanwhile, to cater forGlobal Retail Development Index, 2012 it would permit foreign direct consumers concerned about China’swhich ranks the attractiveness of investment of up to 51% in multi-brand frequent food safety scandals,emerging countries to retailers. In a retailing. Despite several restrictive Carrefour is stepping up its organicNovember 2011 Economist Intelligence conditions attached, Wal-Mart (US) business. In May 2012, it added 100Unit global survey of retail managers, has already announced entry plans, new organic products to its list oftwo-thirds of the respondents said they while others like Tesco (UK), Carrefour “lowest price” goods13.were redirecting their focus to and Metro (Germany) could soonemerging markets, and three-quarters follow9. Retailers are also moving online,expected these markets to take up the recognising customer preferences forslack from the slowdown in developed However, retailers are struggling to online shopping. According to marketmarkets. China remains the emerging manage their large-scale expansions researcher Kantar Worldpanel, themarket of choice, although its economy into Asia, as dipping sales in their proportion of households in China’sand retail sales growth are slowing6. home markets tighten available top-tier cities making FMCG purchasesAccording to PwC’s 15th Annual Global investment resources. Some companies online increased to 22% as of JulyCEO Survey released in January 2012, are now reshaping their strategies as 2012 from 16% a year earlier. Shopperswhich surveyed 1,258 CEOs in 60 they enter Asian economies amidst were drawn by lower prices, thecountries, 60% of CEOs of consumer slowing growth and fierce competition. convenience of delivery and access togoods companies believe that more brands14. In August 2012,emerging markets will be the main Wal-Mart, for example, says it will slow Wal-Mart received governmentdriver of growth compared with down the launch of new stores in China approval to increase its ownership ofdeveloped economies. in 2012 to focus on operational online supermarket Yihaodian from efficiency. It was opening more than 40 around 17% to 51.3%. Yihaodian sellsInternational retailers are still stores annually between 2009 and about 180,000 products, and has aexpanding quickly across Asia. 2011 and is among China’s top nationwide B2C online groceryJapanese retailer Aeon, which has retailers, but it has been service15. In addition to physicalsome 14,000 outlets across 12 Asian underperforming rivals like Carrefour expansion, 7-Eleven also plans to rollmarkets, is now expanding into in terms of average revenue per store10. out an online sales platform in ChinaVietnam, Malaysia and China’s smaller Meanwhile, Japanese-owned 7-Eleven, in 2013.cities as part of its ‘Asia Shift’ which has over 100 stores in China, isexpansion strategy7. France’s Carrefour now experimenting with a franchise 2013 Outlook for the Retail and Consumer Products Sector in Asia 11
  13. 13. Section 1: Retail Q&A with Motoya Okada, President, Aeon You have taken some initiatives to cater and to take leadership at such times. But at for the needs of elderly consumers. times of emergency, what is more crucial is What has been your experience with to have “survival and fighting spirit”—not these initiatives? for yourself but for the benefit of others. For instance, we had shopping centre managers The shopping centre that we opened early who made quick decisions to turn their this year in Chiba, Japan is designed stores into temporary shelters. Only with a particularly to meet the needs of our senior strong sense of responsibility to serve the customers. Customers enjoy unique public were they able to exercise such shopping experiences including access to a leadership and avoid the worst-case comprehensive range of medical clinics and scenarios. cultural programmes, as well as financial services that cater for their lifestyle needs. Was it the case of Aeon’s “customer- first” principle contributing to risk The market response has been very good. management? Established in 1758, Aeon has The Japanese market is a test ground for our effort to shift to a senior-oriented Yes, and our steadfast corporate mission to grown to become the largest retailer market, one of our strategic growth areas. benefit our customers is not bound by in Japan in terms of operating From next spring, we’ll be opening more Japan’s borders. After the recent riots in revenue. Aeon Group, which stores of this kind in Japan with new China, all our Chinese employees worked formats and services to further meet the hard to restore the stores as they believed comprises 200 companies, recently interests of our senior customers. opening the stores as early as possible established a new management would benefit their customers. Not a single system based on separate How are you benefitting from group employee thought about leaving. I was synergies? extremely moved to see the scene in China, headquarters for Japan, China and which was exactly what I saw in Tohoku ASEAN and is looking to repeat the Our financial services, for instance, allow after the disaster. I think the outcome success in other Asian markets. us to identify individual (retail) customers. would be very different depending on the By combining our credit card and retail organisation. You can physically repair businesses, we have recently completed a buildings but you cannot restore the stores test in Japan to operate a high-level if your employees do not return. customer relationship management system that would allow us to personalise Last but not least, what do you identify promotion efforts. The card business also as the ultimate value that Aeon is helps in the running of loyalty bringing to Asia outside Japan? programmes. We seek to become the What are your expectations for growth number one player in the credit card Making products and services available in Asian markets? business for the new middle class in Asia. that can help to improve people’s quality of So we believe these synergies will be highly life is important. The paramount issue, At the moment, we earn around 80% of our relevant to the success of our retail business however, is trust—customers need to total retail revenue from the Japanese in Asian markets. believe you will never lie to them. In the market. We have a plan to secure Japanese term, it’s about “establishing exponential growth in the Chinese and You have been very successful in Japan Noren” (curtain-like cloths that are ASEAN markets, with the aim to bring with Topvalu, your private label. How do traditionally hung over the entrance of earnings from these markets to the same you plan to take this success abroad? Japanese stores). This can be translated as level as those in Japan by around 2020. building a brand but “Noren” in fact carries We’ll need around 13-15% annual growth Until recently, we have been bringing the more meaning—it’s the trust itself, built in Asian markets to meet this goal. At the Topvalu products that we sell in Japan to between customers and the retailer. moment, we are still largely focused on the Chinese market. But of course it makes making the necessary up-front more sense to develop and sell products I’m talking about the old Japanese ethics of investments. according to local preferences. We are thus commerce, the origins of Japan’s customer- advancing our localisation effort in China oriented services—which include practices What do you identify as Aeon’s and other Asian markets, and making which emerged during the Edo Period, such competitive edge that would allow it to progress towards designing, producing and as making small units available according experience such high growth in Asia? selling locally. Localisation efforts by to customers’ needs, and fixing and listing region within respective countries also will set prices (versus selling with variable One of the biggest changes in Asia is the be important for products such as food as prices). I would say these are expressions of rapid growth of the middle class. And the people’s tastes tend to vary by region. democracy and justice. And there isn’t a middle class is the consumer group that we customer anywhere in the world who does have always served—for 250 years, since Can you share your lessons learnt from not enjoy being treated fairly and with we started as a trader of Kimono fabrics in last year’s crisis in Japan? goodwill—these are universally the Edo Period. We have deep experience in appreciated values. servicing this consumer group, as well as It’s important to be able to gather growing alongside them, as they grow. information and make decisions quickly,12 PwC
  14. 14. Section 1: Retail In Hong Kong, demand for food,Food, beverages and tobacco beverages and tobacco is forecast to grow by a nominal 0.9% in 2012, lower than an earlier forecast of 2.8%, partly due to the high base effect created by 2011’s strong growth of 6.7%, andAsia’s large populations and growing In India, the market demand for food, partly because of the high prices ofincomes mean that the region will beverages and tobacco will rise 4.7% in food imports, which dominate theremain the world’s largest food market, 2012. Although inflation and prices sector. Demand will contract by 0.2%worth US$4.24 trillion in 2012 and set remain high they are easing from the in 2013 and grow moderately duringto grow to US$6.92 trillion by 2016. In alarming heights seen in 2011. the rest of the forecast period.China, market demand for food, Demand growth will remain positive Imported food products with strongbeverages and tobacco will grow at through the forecast period, ranging quality credentials will see rapid2.2% during 2012, given high inflation between 2.7% and 4.7%. Rising growth in sales in 2012-16, asand rising food prices. Demand growth household incomes, increasing consumer fears regarding the qualitywill recover to 2.9% in 2013, and then urbanisation and changing lifestyles of food imports from mainland Chinarange between 2.2% and 2.8% for the will aid demand for packaged food, will increase the pressure on retailersrest of the forecast period. Quality which has been growing strongly. As and restaurants to source morecontrol is a major problem for the India has South Asia’s lowest spending products from other countries20.sector. Despite government efforts, per head on packaged food, the sectorthere is likely to be little progress in holds strong growth potential in In Taiwan, market demand for food,addressing this complex problem 2012-16 as incomes increase18. India’s beverages and tobacco will grow atduring the forecast period. More wellness products market also offers only 0.3% in 2012, as the island’ssophisticated first-tier markets will see considerable potential. According to an trade-dependent economy slows ona rapid rise in consumption of August 2012 report19, it grew 20% in weakening global demand. Growthimported foreign food products in 2011, to Rs590 billion (US$12.6 will remain sluggish at 0.9% in 20132012-16, as consumers try new billion), but still represents under 4% and will pick up only moderately tocuisines and seek safer food16. of overall consumer expenditure. The between 1.6% and 2.0% for the rest of report forecasts this market to grow at the forecast period.Japan is the world’s third-largest food a compound annual growth ratemarket after the US and China, with (CAGR) of 18-20% over the next threeretail food sales estimated at US$523 years, reaching Rs950 billion (US$18.7billion in 2011. However, the market’s billion) by 2014, driven by a number ofmaturity, deflationary pressures in the factors, including increasing healthsector and strong competition will awareness, interest in preventive care,keep sales growth weak. Demand in increased interest from male customersthe food, beverages and tobacco and the growing aspirations ofcategory will grow at only 1.4% in consumers in smaller towns.2012, given Japan’s troubled economy,cautious buying sentiment andconcerns about food safety followinglast year’s major earthquake andnuclear crisis. Demand growth willslow further in 2013, to 1.0%, and willremain weak through the forecastperiod. Japan’s ageing population willboost the health food (or functionalfood) segment in the medium term.Japan is the world’s second-largestmarket for functional food after theUS, and its range of functional foods isprobably the world’s largest and mostinnovative17. 2013 Outlook for the Retail and Consumer Products Sector in Asia 13
  15. 15. Section 1: Retail Private label Private-label sales continue to chart Indian retailers have been quick to between 16% and 42%28. After an slow growth across Asia. According to latch on to the private-label strategy, initial blitz of own-label products, London-based L.E.K. Consulting, even though the sector was opened to India’s retailers are now consolidating private labels have a much lower share modern retailers only a few years ago. their portfolios and aiming to increase of supermarket sales in Asia than in In developed countries, private labels market share. Aditya Birla Retail’s developed countries, ranging from less took decades to take off and were More chain launched only 15 products than 1% in Indonesia to between 1.5% introduced only after the retail sector last year, down from 25 in 2009. It and 30% in Thailand, Malaysia, South was well-developed. Big domestic discontinued several brands, and Korea, Singapore and Taiwan, and retailers including the Future Group, instead used just one brand across all approximately 6% in Hong Kong21. Bharti Wal-Mart Retail (a joint venture products. It also removed high- Separate data from Euromonitor show with Wal-Mart), Aditya Birla Retail, investment personal care products the share of private-label goods in Reliance Retail, Spencer’s Retail and from its portfolio29. India at 11% and at 4% in China22. As Dubai-based Landmark Group’s Spar Asia’s current environment of high Hypermarket, all developed their own Asia’s players may even be able to inflation and rising prices drives private-label brands about five years up-end some conventional wisdom customers to seek value, private labels ago, as they began building their retail about the private-label business. For have new opportunities to increase networks. The Future Group, India’s example, while private labels usually their share (they are cheaper than largest retailer, says that since India is succeed better in products with low other brands because less is spent on under-branded and under-penetrated differentiation, India’s Croma chain of marketing, distribution and in many categories, it makes sense to multi-brand electronics stores sells its advertising; retailers push their own build own-brands while categories are own brand of durables from brands with excellent in-store themselves developing25. refrigerators to hair dryers. The placements and promotions). To retailer expects to almost double its overcome Asian consumers’ suspicions In-house brands now account for revenues from its own brands to Rs2.5 about the quality and safety of private 12-15% of sales and over 20-25% of billion (US$48.4 million) in FY13. The labels, retailers are upgrading their profits for most Indian retailers26. brand also benefits from the excellent packaging and promoting their Retailers have focused on good reputation of its parent, the Tata international backing where possible. packaging, attractive pricing and Group30. strategic in-store placement to attract For example, the UK’s Tesco sells its consumers. According to market Tesco private-label products at its 660 researcher Nielsen, Indian shoppers Tesco Lotus stores across Thailand and spend over US$100 million on private- in other Asian countries23, while label items per year and this is set to France’s Carrefour and the US’s rise to US$500 million by 201527. Wal-Mart do the same at their stores across Asia. Many of Asia’s local At the networks of big retailers, these players have also developed successful products now outsell several national own-brands in recent years, including brands in some categories. According some of China’s largest retailers. to data from Nielsen for July- Retailer Lianhua Supermarket September 2011, at the Future Group’s Holdings, which by end -2011 had Big Bazaar and Bharti Retail’s Easy Day 5,233 hypermarkets, supermarkets outlets, these retailers’ own private- and convenience stores in 19 provinces label floor cleaners account for over in China, has also developed its own 50% of all floor cleaner sales, while private-label business24. their packaged wheat flour, rice, tea, spices and salty snacks take shares of14 PwC
  16. 16. Section 1: RetailFashion and apparelAsia’s fashion and apparel market clothing spend will rise throughoutgrowth will continue to lead global 2012-16, driven by growing personal Key findingsgrowth through 2012-16. In 2012, disposable income and higher interest • The gap in demand for fashionnominal clothing market demand in in fashion apparel. Online apparel and apparel between Asia andAsia and Australasia, at US$199.49 retailing will become an important the West will widenbillion, will continue to surpass market segment during the forecast substantially, with demand indemand in both Western Europe and period31. Asia growing 3.8% in 2013.North America and that gap will widensubstantially during the forecast • India will be the star performer, In Hong Kong, demand in 2012 willperiod (see Fig 9). In 2012, demand in growing by 9.4% in 2012, with grow at 2.8%, on the higher base ofAsia will rise 4.4%. That is lower than sales driven by the expanding 8.5% in 2011. Robust demand willan earlier forecast of 5.1%, partly population of young people, continue during the forecast period,because of a higher base created by rising awareness of with sales rising steadily through to2011’s demand growth of 5.3% (higher international fashion and an 2016. Despite very high rents, foreignthan earlier projections of 4.8%) and influx of foreign brands. China players will continue to enter the localpartly a result of slower economic will follow behind with 7.9% apparel retailing market, both to tapgrowth in the region. growth. increasing local demand and to capitalise on the rising number • Fast fashion brands areDemand in China is forecast to grow at mainland-Chinese tourists shopping in expanding rapidly in Asia but7.9% in 2012, lower than a previously Hong Kong32. face stiff local competition.expected 8.4%, given the slowingeconomy, high inflation and highprices. Still, consumer demand andFigure 8: Clothing: Market demand growth (% real change pa)Territory 2009 2010 2011 2012 2013 2014 2015 2016Asia and Australasia 1.9 5.3 5.3 4.4 3.8 4.5 4.8 5.1China 10.5 8.5 7.8 7.9 7.5 8.8 8.4 8.1Hong Kong -1.4 6.3 8.5 2.8 1.7 2.6 3.0 2.9India 7.8 6.2 5.1 9.4 7.2 7.7 9.0 1.3Japan -1.3 2.3 -0.2 1.0 0.6 0.9 0.7 0.7Taiwan 0.4 3.6 3.0 1.1 1.8 2.6 3.1 3.0Source: Economist Intelligence UnitFigures for 2012 onwards are forecasts. Prior years are actuals or estimates. 2013 Outlook for the Retail and Consumer Products Sector in Asia 15
  17. 17. Section 1: Retail In India, demand for apparel in 2012 is In Japan, clothing demand will grow forecast to grow at 9.4%, against an only 1.0% in 2012, lower than an earlier estimate of 8.7%. Although high earlier forecast of 1.5%. Although inflation, rising prices and a slowing reconstruction spending will support economy may persist in the short term, limited economic growth in 2012, clothing sales will nevertheless rise sluggish wage growth will depress rapidly during the forecast period, consumer sentiment in 2012 and from US$7.38 billion in 2011, to through the forecast period. During US$13.52 billion in 2016, driven by a 2012-16, private consumption is growing population of young people, expected to rise by less than 1% a year rising awareness of international on average. However, clothing sales fashion, and an influx of foreign will continue to be the most important brands. Disposable income will treble category of retail sales (excluding food from US$1 billion in 2012 to US$3 and beverages) in 2012-16, despite billion in 2016. However, the market negligible growth in yen terms35. will remain extremely competitive, on proliferation of ready-to-wear apparel shops and as more foreign companies enter the Indian market33. Figure 9: Clothing: Market demand (nominal US$ million) Taiwan’s clothing market is performing 300,000 moderately. Demand growth is forecast at 1.1% in 2012, lower than an earlier projection of 3.9%. The global 250,000 economic slowdown in 2012 is expected to drag down the export- dependent island’s real GDP growth to 200,000 1.3% this year. However, demand will improve during the rest of the forecast Asia and period as GDP growth rebounds, 150,000 Australasia private consumption expands steadily and the inflow of Chinese tourists North 100,000 America grows34. Western 50,000 Europe 0 2009 2010 2011 2012 2013 2014 2015 2016 Source: Economist Intelligence Unit Figure 10: Clothing: Market demand (nominal US$ million) Territory 2009 2010 2011 2012 2013 2014 2015 2016 China 35,370 41,173 48,893 56,444 64,333 74,563 85,480 98,038 Hong Kong 37,913 40,596 45,726 48,732 51,710 55,129 58,852 62,782 India 5,397 6,603 7,376 7,755 9,210 10,879 12,602 13,529 Japan 24,118 25,861 28,079 28,005 26,788 25,468 25,001 24,395 Taiwan 3,274 3,568 3,977 4,035 4,186 4,400 4,669 4,917 Source: Economist Intelligence Unit Figures for 2012 onwards are forecasts. Prior years are actuals or estimates.16 PwC
  18. 18. Section 1: RetailFast fashion expandsaggressivelyUnder pressure from poor performancein Western markets and rising inputcosts, numerous international fastfashion brands are hoping to cash in onAsia’s young demographic and risingaffluence. The fast fashion industryrelies on bulk production to bringaffordably-priced fashion to market inquick cycles. Fast fashion’s ‘cheap chic’approach plays well with Asia’s young,upwardly mobile customers who havefast-changing tastes and a hunger forbrands but an eye on affordability.The world’s largest fast fashion retailer,Spain’s Inditex, owner of the Zarabrand, and many of its competitors,such as Uniqlo of Japan and H&M ofSweden, have established themselvesin Asia and are expanding aggressively. clothing retailer, has one store in Japan China, too, has strong home-grownInditex has 5,527 stores around the and opened its first China store in May apparel brands. For example,world including 300 in China, where 2012. US retailer Forever 21 also Metersbonwe has over 3,000it’s one of the most successful foreign opened its first stores in Hong Kong branches42 and a presence in theretailers. It expects to have 425 stores and Beijing in 201240. smallest of Chinese cities. According toacross 50 Chinese cities by end-201236. Euromonitor, it is China’s third-largest However, these companies will face apparel brand behind Nike and localJapan’s Fast Retailing, which owns formidable competition from local sportswear brand Anta. MetersbonweUniqlo, already has 136 stores in players, who have the advantage of now plans to expand into London,Greater China and 181 in the rest of Asia’s long-standing strength in Paris, New York and Milan43. Anta hadAsia. It now plans to add 1,000 new textiles, an understanding of local 7,807 Anta stores in China as of Junestores in each of those markets over the tastes, years of local experience, 2012 and says it will continue tonext 10 years, seeing great potential in established distribution networks and expand, though at a ‘slower’ pace ofmiddle class consumers in China, an existing real estate bank. Hong 100 new stores in 201244. China’sTaiwan, Hong Kong, the ASEAN Kong, for example, has a strong set of Trendy International Group has 300nations and India37. US fashion brand local apparel brands such as Giordano, directly owned stores and hundreds ofTommy Hilfiger plans to open 500 Baleno, Bossini, I.T and Esprit. These franchises for its four brands, includingstores in India over the next five years companies will expand strongly on the its largest, Ochirly. JNBY, establishedthrough a local joint venture; it already Chinese mainland and in Southeast in 1994, runs more than 600has 58 franchise stores and over 60 Asia in 2012-16, and in some cases also franchised stores across China45.shops-in-shops38. American retailer in EU markets. Hong Kong’s Li & Fung,Gap is targeting 20 new stores in Hong among the world’s biggest supply-chainKong and mainland China by February management companies, is moving2013, raising its store count there to into apparel retailing and has bought4539. New companies are also joining several Western clothing retailers,the rush. Topshop, owned by the marketers and brands to market toArcadia group, the UK’s largest Chinese customers41. 2013 Outlook for the Retail and Consumer Products Sector in Asia 17
  19. 19. Section 1: Retail Online retailing Key findings • Asia will lead the world in business-to-consumer e-commerce sales from 2013 onwards, accounting for a 41.4% share of the business by 2016. • Recognising the strategic importance of online retailing as a new distribution channel, traditional retailers are expanding their own online presence in Asia. • Luxury companies are overcoming their fears that online sales will compromise their high-end image. Luxury accessory maker Coach (US) launched its first official online store in China on Taobao Mall in December 2011. Online retailing will grow rapidly in Infrastructure growth will aid a swift Asia during 2012-16, aided by rise in Asian online retailing. increased broadband and mobile- According to industry intelligence phone penetration, the spread of provider eMarketer, in 2012 the smartphones and tablet computers, Asia-Pacific region will account for and improvements in payments and 31.1% of B2C e-commerce sales logistics infrastructure. Asian globally, second only to North countries are frantically increasing America’s 33.4% and higher than access to the internet and mobile Western Europe’s 26.2%. From 2013 phones. In 2011, China added 30 onwards, Asia will lead the world in million fixed-broadband subscriptions, such sales, with a 41.4% share by half the total subscriptions added 2016, when China’s slice of the pie will worldwide, while Singapore and the rise to 23.4%, from 9.9% in 201248. Republic of Korea had more mobile- broadband subscriptions than In 2012, the internet penetration rate inhabitants46. As of December 2011, in China is forecast to be 42.8 per 100 26.2% of Asia’s population had people49. According to Chinese internet access, accounting for 44.8% research firm Analysys International, of the world’s internet users47.18 PwC
  20. 20. Section 1: RetailChina’s B2C e-commerce transactions India’s internet penetration is forecast Taiwan’s high internet penetration ofgrew 73% to RMB81.87 billion to be a low 10.6 subscribers per 100 80.4 subscribers per 100 people60 and(US$13 billion) in the first quarter of people in 2012, but its 129 million high smartphone usage will aid growth2012, and are expected to reach users will represent the second-highest of its e-commerce market, which theRMB450 billion (US$72 billion) for all online population in Asia57. Swift Institute for Information Industryof 201250. US-based Boston Consulting growth in internet access, broadband expects to grow by 20% in 2012, afterGroup estimates that e-commerce sales services and mobile internet access growing by an estimated 25% inin China will account for 7.4% of total could rapidly change India’s online 201161. However, given Taiwan’s smallretail sales by 201551. retail landscape. Meanwhile, online population, online sales growth will retailers in India are adopting concepts likely slow down as the marketHong Kong’s current high internet such as cash-on-delivery to overcome approaches saturation in the latter partpenetration of 78 subscribers per 100 obstacles such as low usage of credit of the forecast period62. An obviouspeople in 201252, its densely packed cards. Overall, online retail revenues growth market for Taiwan’spopulation (which makes delivery of in India are projected to increase by e-commerce businesses is mainlandgoods more efficient) and the quick more than five times in the next four China, but many regulatoryspread of smartphones make it a years, from an estimated US$1.6 restrictions on the integration of thepromising prospect for online retail. billion in 2012 to US$8.8 billion in two markets remain in place.According to a survey from online 2016, according to Forresterpayments firm Paypal, Hong Kong’s Research58. M-commerce may growonline shopping value reached US$1.9 strongly since mobile-phone usage isbillion in 2011 and is expected to touch rising quicker than fixed internetUS$2.5 billion by 201553. Offline access, while innovative offerings likeretailers will still thrive since Hong mobile wallet payment services areKong’s shoppers continue to enjoy also increasing. India had 893.84physical shopping and searching for million mobile subscribers at end-good deals. December 2011, including 292 million in rural India, and a wirelessJapan offers huge potential for online penetration of 74.15%. According toand mobile shopping. In 2012 it is the Internet and Mobile Association offorecast to have 82.8 internet India, India’s overall e-commerceconnections per 100 people54 and a market grew 47% to around Rs460dynamic mobile-telecommunications billion (US$9.2 billion) in 201159. Thesector. In 2011 roughly 20% of online government’s recent announcementretailers’ sales were made on that it would further open the retailsmartphones and m-commerce will sector to foreign investment did notcontinue to grow. While the largest include retailers in Japan are generalshopping sites like Rakuten, a localfirm, and, the localsubsidiary of US-based Amazon,specialised online retailers areincreasing in number and growingquickly. For example sellsshoes and handbags55. According toForrester Research, e-commerce salesin Japan will grow from US$63.9billion in 2012 to US$97.6 billion in201656. 2013 Outlook for the Retail and Consumer Products Sector in Asia 19
  21. 21. Section 1: Retail Q&A with John Lo, CFO & Senior Vice President, Tencent Platform, Online Games, etc.), Wireless users shopping information while mobile Value-added Services, Online Advertising payment facilitates the completion of the and e-Commerce transactions. The payment procedure on site. We have user-paid revenue model and high partnered with various offline merchants cash-generative nature of our internet and retailers to experiment with O2O business enabled us to weather the marketing opportunities. Recently, we have economic downturn in 2008/09 and also launched “QQ Buy” apps for iPhone maintain steady growth in both operating and Android phones to offer e-commerce and financial performance. We aim to services on mobile devices. As 3G further diversify our revenue base and infrastructure becomes more well- achieve long-term sustainable growth established and smartphone penetration through investment in our platforms, R&D increases further, we believe there is a huge and new initiatives. We are now in the early growth potential in mobile commerce. stage of developing our e-Commerce business, which accounted for 8% of our Tencent’s internet platforms have total revenue in Q2 of 2012. brought together the largest internet Established in 1998, Tencent community in China. What has been the provides a comprehensive range Our primary goal for e-commerce is to biggest factor in your success? build a consumer-oriented platform which of Internet and wireless value- delivers quality services and a Tencent has built a strong social added services. Through its various differentiated user experience to meet the infrastructure in China which offers a online platforms, including Instant changing needs and growing demands of diversified range of products from QQ IM our customers for rapid delivery, (instant messaging) to QQ Mail (email), Messaging QQ,, the QQ competitive prices, better product choices social networks Qzone and Pengyou, social Game Platform, social networking and better after-sales services. These are media Tencent Microblog and smartphone- service Qzone and wireless portal, also the challenges that e-commerce based social communication platform companies have to address. We will Weixin. We believe our success stems from Tencent services the largest online continue to leverage our multiple platform our focus on user experience. Leveraging community in China and fulfills the advantages and deep understanding of our on our huge QQ IM user base (784 million user’s needs for communication, users’ needs to customise a differentiated monthly active user accounts as of Q3 of online shopping experience for customers. 2012), we are able to create a strong information, entertainment and community effect for our users. All these e-Commerce on the Internet. Tencent’s e-commerce site PaiPai has social communications services are closely numerous categories ranging from integrated with each other with one single There is a lot of concern about the sports to moms and babies to red login ID. Users can share their own social economic slowdown in China. What are packets. Which areas are seeing the graph and synchronise comments and your expectations for growth in the fastest growth? photo uploads across these platforms. Users coming year? can also enjoy unified experience across PC We are building a new e-commerce platform, and mobile terminals. The macroeconomic environment in China, to host our B2C and small- and is challenging but we remain optimistic on medium-sized enterprise-to-consumer What impact is online communication the growth of the e-commerce market. (SME2C) marketplaces, lifestyle services (e.g. (interactive communities such as Currently, online shopping sales account hotel booking and ticketing) and offline-to-, and social networking for around 5% of total retail spending in online (O2O) services. Paipai will focus on the services) having on consumer buying China, representing much room for growth consumer-to-consumer marketplace under decisions in China? Are consumer goods compared to other developed markets like the umbrella of We see strong companies prepared for this? the United States. In fact, the US has been growth in our overall e-commerce business across all product categories like 3C products From a merchant perspective, social experiencing a faster rate of growth for its (ComputerCommunicationsConsumer networks are a good platform to access online retail sales than offline sales during Electronic), and believe B2C business models potential customers and to enable precise the past decade. According to iResearch, can better address the increasing demands of user targeting and CRM (customer the average growth rate of China’s online online shoppers. Hence, in addition to the relationship management). At the same shopping market is expected to be around development of, we will focus on time, users are highly engaged in social 30% in the next 3-5 years. expanding our principal business and B2C networks and can share virally their The China e-commerce market is open platforms in order to capture the reviews on products and shopping growing exponentially. What is the growing demands in this area. experiences with their friends. Nowadays, biggest challenge for Tencent in keeping both online and offline retailers are up with this growth? How are you What are Tencent’s expectations for increasingly using social networking dealing with this challenge? growth in the mobile commerce market services (SNS) to build brand awareness in China? and user loyalty. Leveraging the success of Tencent has a diversified business model our SNS platforms, Tencent is also which is built upon our huge instant Mobile commerce is not only a natural partnering with brand advertisers and messaging user base and traffic. We extension from the desktop, it actually merchant partners to broaden access to generate revenue from four major presents more potential in terms of target customers for brand building and businesses, namely internet value-added business models and monetisation. For user loyalty campaigns. service (including Community and Open example, location-based services offer20 PwC
  22. 22. Section 1: RetailTraditional retailers move Foreign offline retailers are also recently launched, anonline reconsidering their past disregard for e-commerce website for Japanese andRecognising the strategic importance online Asian sales. In China, Wal-Mart South Korean goods includingof online retailing as a new upped its stake in online grocery store cosmetics and apparel brands, as welldistribution channel, traditional Yihaodian to a majority holding in as toys and dry goods67.retailers are expanding their own February 201265. In May 2012, Americanonline presence in Asia. China’s largest retail giant Macy’s announced an Even luxury companies are overcomingdomestic appliance retailer and alliance with local e-tailer VIP Stores, their fears that online sales willleading multi-channel retailer, Suning, owner of and, compromise their high-end image.derived around 4% of its 2011 both multi-brand luxury e-tailers. It is They have been alerted by the Asianrevenues from Suning Yigou, its planning a dedicated section on Omei. success of online luxury stores,e-commerce business63. Many com in 2013. Macy’s has been selling including the US Gilt Groupe andtraditional retailers across Asia are online to mainland Chinese consumers in Japan, Hongnow partnering with e-tailers in since June 2011, using fulfilment Kong’s Glamour Sales (operating insymbiotic relationships, increasing services from FiftyOne, a US company China and Japan), and excluzen.comsales without investing in a separate that helps retailers serve clients in and in India, which offeronline business. For example, India’s foreign markets without investing in heavily-discounted luxury was set up in 2008 as a infrastructure66. Others, such as Luxury accessory-maker Coach (US)comparison website, but after 18 Banana Republic and Marks & Spencer, launched its first official online store inmonths without revenues, it tied up will now begin to deliver to Hong Kong China on Taobao Mall in a one-monthwith suppliers to advertise their (and some other Asian countries) from trial in December 201169, whichproducts. It now generates business their home markets. recorded 3.5 million visitors but onlyworth Rs20 million (US$376,000) a limited sales. Coach is now reportedlyday, earning commissions of 2-20% of Scores of Japanese and South Korean planning to launch its own Chinesesales from sellers. Amazon has also retailers, whose brands are extremely e-commerce platform by end-2012. Inopened in India in its traditional popular in China, already use Chinese- March 2012, US-based luxury retailerformat — as a portal through which to owned portals to sell directly to Neiman Marcus Group invested US$28buy goods from numerous retailers mainland consumers. 360Buy, among million for a stake in Glamour Sales, its— called junglee.com64. China’s three largest online retailers, first international foray, and hopes to launch an online shopping website by end-2012 to enter the Chinese luxury market70. 2013 Outlook for the Retail and Consumer Products Sector in Asia 21