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FEATURE
Retail Trends for South East Asia 2023
Terence Ng is currently a Senior Analyst in Coresight Research , focusing on research related to B2B and B2C surveys , US retail technology startups , the Metaverse and Chinese consumers . Prior to joining Coresight , Terence worked in international research agencies such as Nielsen and Ipsos , HK retail conglomerate AS Watson Group and the HKSAR Government assisting in the Ocean Park Rethink initiative .
China is no longer the sole growth engine in retail and e-commerce of the world – the up-and-coming are stories of brands and retailers either setting their first presence in the Southeast Asia , or to expand operations in Southeast Asia because they no longer see much growth potential in countries they first tap into . The Southeast Asian consumers are finding it easier to shop online as mobile broadband rapidly rolls out across , which also comes with a more affordable range of internet-enabled mobile devices . Below , we present five retail trends that pertain to Southeast Asia , which brands and retailers in the region cannot miss .
Continuously Growing E-Commerce Spending
According to an International Data Corporation ( IDC ) study , e-commerce spending in Southeast Asia is expected to rise by 162 % to reach USD 179.8 billion by 2025 across the region , with digital payments accounting for 91 % of total ecommerce payments . Mobile banking and mobile wallet users are expected to grow 97 % and 162 % respectively between 2020 and 2025 . A report released by Lazada also found that 57 % of shoppers in the region search for products directly on eCommerce marketplaces , establishing eCommerce platforms as a new search engine . Gunjan Soni , Zalora ’ s CEO , said in a release that the new era of retail is already here in Southeast Asia . From a business perspective , there is also increasing demand among retail staff in the region as indicated by their salaries - salaries in Southeast Asia are also expected to increase " slightly " in 2023 as compared to 2022 , according to Aon ' s 2022 Salary Increase and Turnover study released in early December 2022 . Retail is also expected to see the highest year-over-year increase in salaries ( 6.5 %).
Inflation Leads to Heighted Price Concerns
Despite the growth potential for e-commerce in Southeast Asia , the issue of inflation is hitting the globe without sparing the Southeast Asia intact . Southeast Asian countries will suffer from rising food prices and interest rates , which then lead to reduced consumption of goods among Southeast Asian consumers . At least 3 in 10 Southeast Asian consumers are also worried about general price rises across all household purchases , rising interest rates , rising fuel prices / transport costs , rising food prices and rising utility prices , according to a survey conducted by Blackbox Research . This also resonates with why Southeast Asian consumers shop online – a study found that 33 % of shoppers enjoy shopping online due to discounts and sales as well as reward programmes ( 17 %).
Growing Sustainability in the Region
Southeast Asia consumers are paying more attention to sustainable goods and brands recently , which goes hand-in-hand with the rise in the amount of eco-friendly solutions available in the market . As Marian Dang indicates , the sustainability manager of H & M Southeast Asia , she expressed that consumers are not only attaching value to a product or service , but they also want to identify themselves within a brand and expect that brand to act more responsibly towards the environment .
Diversification of Supply chain and Growth Concerns Push Southeast Asia Growth Previous lockdowns in multiple Chinese cities , coupled with U . S . -China tensions , have forced multiple brands and retailers to rethink their supply chain strategy and to go beyond China through tapping into Southeast Asia . Thailand , which is known to have supply chain connectivity among the region , has benefited as supply chain disruption causes brands and retailers to get goods to market faster . We also see some Chinese beauty brands tapping into Southeast Asia as they see weakening domestic consumption in China . Lotte , for instance , is also pulling out of China and focusing on Southeast Asia .
Digital Payments Continue to Surge as Consumers Embrace Convenience and Flexibility
The Southeast Asian consumers are also embracing more flexible payment options . Take AS Watsons Group for instance , Watsons is partnering with BNPL provider Atome in Southeast Asian markets including the Philippines , Malaysia , Thailand , and Indonesia . On the other hand , QR codes are also skyrocketing in popularity in Southeast Asia , thanks to its convenience . Central banks in the region are looking to link their payment systems that will allow customers to buy goods and services by scanning QR codes within the year .
What Next for Brands and Retailers in SEA
2023 will continue to be a challenging year for brands and retailers in the region , with both upsides and downsides present within the retail and e-commerce environment . Through providing flexible payment options , sustainability offerings and a strategy to control costs effectively , the future remains positive for brands and retailers in the region .