Retail Asia 2018 JunJuly2018 | Page 46

2018 RETAIL ASIA-PACIFIC TOP 500 AUSTRALIA Retailing experiences modest growth Over the review period, retailing in Australia experienced a positive performance. Despite weak growth in wages and rising household debt, the strong housing market, supported by low interest rates and growth in household credit, encouraged consumers to spend, as the perceived value of their assets increased. However, retailing will face challenging times, as a slowdown in consumption growth is expected in the foreseeable future. Online sales continue to experience stronger growth than overall retailing Internet retailing in Australia experienced strong growth over the review period. The rising importance of having a retail presence across multiple channels encouraged retailers to invest heavily in omni-channel offerings, with a particular focus on their digital presence, as consumers continued to favour the convenience and price-competitiveness offered by Internet retailing. Grocery retailers see faster growth than non-grocery retailers Grocery retailers experienced stronger growth than non-grocery retailers in the review period. This growth can largely be ex- plained by the success of discounters, which continued to gain relevance through the aggressive expansion of Aldi. Supermar- kets, particularly Coles, performed well over the review period, while Woolworths is in the midst of a transformation strategy to revitalise its sales in the supermarkets channel. Wesfarmers continues to lead retailing in 2017 Wesfarmers was the largest retailer in Australia in 2017, leading across multiple retail channels. The company’s value sales growth is largely driven by its strong performance in channels such as home and garden specialist retailers, stationers/office supply stores and mass merchandisers. Wesfarmers is committed to investing in value, customer service, its stores and its website, along with offering an improving range of merchandise across its retail businesses. Modest growth ahead Although retailing in Australia is expected to see a positive value CAGR at constant 2017 prices over the forecast period, the overall economic outlook in Australia is expected to slow down. Low growth in wages and high mortgage stress are expected to impact the growth of consumer products, and thus the growth of retailing. — Hianyang Chan, Senior Analyst CHINA Retailing sees an increase in value growth in 2017 Overall retailing saw a pick-up in current value growth in 2017, driven by the rebound in value growth in supermarkets, hypermarkets, traditional grocery retailers and homeshopping compared with 2016, in addition to the continued robust double-digit value growth 44 Retail Asia June/July 2018 OV E R V I E W in Internet retailing in China. Chained players in supermar- kets made efforts to boost shoppers’ experience in small-and medium-sized outlets located in neighbourhoods, with free home delivery to promote sales, while homeshopping recov- ered from decline by catering to consumers’ on-the-go pur- chases via smartphone apps launched by players in this channel. An omni-channel strategy is emphasised by more retailers To stay relevant amid the highly intensifying competition, more retailers adopted an omni-channel strategy. Leading mixed retail- ers such as Hefei Department Store Group and Parkson Retail Group set up online shopping platforms to offer a wide range of products, providing value-added services for consumers. Mean- while, many department stores started click-and-collect services to facilitate the collection of goods at physical stores after placing an online order. On the other hand, online retailers were busy opening bricks-and-mortar stores, represented by JD.com, which launched its first convenience store in June 2017, and plans to open one million outlets in five years in rural areas of China. Non-grocery retailers continue to thrive Despite a larger value sales base, non-grocery retailers continued to outperform grocery retailers in 2017, mainly fuelled by the vigorous double-digit growth of variety stores and warehouse clubs. A wide range of quality products at wallet-friendly prices in variety stores appealed to consumers in pursuit of lifestyle shop- ping, while warehouse clubs continued to attract local consumers by offering enriched product portfolios, including groceries, at competitive prices. On the other hand, grocery retailers faced mounting pressure, especially from leading Internet retailers, which ventured into bricks-and-mortar stores, represented by Hema supermarket, which has been under Alibaba since 2016. Alibaba consolidates its lead amid intensifying competition Alibaba Group Holding further consolidated its GBO leadership in retailing in a highly competitive market in 2017. This was underpinned by its pioneering position in the booming Internet retailing channel, and the new retail strategy put forward by its founder, Jack Ma, to unfailingly cater to consumers’ changing needs. Domestic players continued to lead amid the intensifying competition, represented by Alibaba, JD.com, GOME Electri- cal Appliances Holding and Suning Commerce Group, while multinational players such as Wal-Mart and Amazon are making efforts to