IGD predicts that China, India, Japan, Indonesia and South Korea will be the top five markets in Asia and will contribute 83 per cent of the grocery sales in 2023, and 78.8 per cent of total growth in the next five years.
“Asia will continue to extend its position as the world’s largest grocery market over the next five years, contributing additional sales to the global grocery market than the next three fastest-growing regions in value change terms – Europe, Africa and Latin America,” Nick Miles, head of Asia-Pacific at IGD, said.
China takes the lead in the sector and despite slow growth, it is still expected to have a CAGR of 6 per cent until 2023.
“Online retailers will have an increasing influence on China’s grocery landscape, with partnerships fuelling the digitisation of retail. Retailers’ geographic focus is shifting as first-tier cities become saturated and as such, they are looking to establish a presence in lower tier cities. Also, new manned and unmanned store concepts are likely to emerge and change the face of physical retail,” said Miles.
India, placed in second, has the fastest growth leading to 2023, with a CAGR of 11 per cent. Traditional retail makes up 95 per cent of the market with 12 million Kirana stores at the centre of the retail landscape.
“Modern retail chains will expand with a focus on establishing themselves in major cities and urban centres. Online will be one of the most significant modern trade channels, with new retailer partnerships improving supply chain and customer reach,” he explained.
Meanwhile Japan’s declining population and low spending growth may result in a slower CAGR of 1 per cent to 2023. Miles said that collaboration and consolidation between retailers are vital to drive growth in the supermarket sector in the country. The country faces stiff competition from drugstores, discount and speciality stores. But technology and automation are the strong points of Japan.
Indonesia, the fourth-largest market, with traditional trade making up 80 per cent of the grocery market in 2023.
“Mini-market operators Indomaret and Alfamart will continue to dominate modern trade, growing their networks and investing in digital capabilities. The growing influence of online from both existing retailers and investment by Alibaba and JD.ID in the market will also play a role. The modernisation of traditional trade remains a huge growth opportunity, particularly beyond major cities and across the outer islands,” added Miles.
South Korea will have a CAGR of 5 per cent. Currently the country’s two largest food and consumer goods channels are in hypermarkets and supermarkets. It is rapidly increasing in plenty new stores. Like Japan, South Korea is technologically advance and its consumers a digitally engaged society.
“Asia’s food and consumer goods market possesses huge growth opportunities: The combination of the largest regional grocery market and strongest real growth prospects of any region means Asia should be on any suppliers’ radar for growth,” explained Hall.
IDG reports that convenience and online will have the fastest growth in the grocery sector. It sees Asia’s market landscape as “very diverse”, but expects convenience and online channels to see the greatest investment and fastest growth over the next five years.