Asia — Retail's final frontier

Asia is home to countries with the largest populations in the world yet the continent cannot boast of a single global level big retail player. There are many reasons for this, mainly two: the majority of the Asian population is still poor and whatever little they consume, it is local and decentralised.

Even though the retail environment is in different stages in various parts of Asia, the bottom-line is that retailing is growing rapidly in the region. Examples are China's Bailian (Brilliance) Group (Top Global Retail Ranking #90), Hong Kong's AS Watson & Company Ltd. (Ranking #53), Japan's Seven & I Holdings (Ranking #17) and South Korea's Lotte Shopping (Ranking #78).'

As Asia catches up with the West, retail is going to get even bigger in this part of the world. This realisation is dawning on both Asian businesses and governments. For example, even from a small but rich country like Singapore, its supermarket chain NTUC FairPrice is trying to spread its wings by venturing outside the city state. According to media reports, the popular local supermarket chain is setting up a hypermarket chain in Vietnam. It is partnering the Saigon Union of Trade Co-operatives on the initiative. The first hypermarket under the joint venture is expected to be operational by 2012.

"Over the last decade, we have witnessed a major transformation in Singapore's retail industry," said S. Iswaran, senior minister of state for trade and industry and education, government of Singapore, at the 2010 Singapore Retail Industry Conference CEO Forum on 31 August 2010. "Today, Singapore is widely regarded as one of the most vibrant and exciting shopping destinations in Asia."

In Singapore's case, the signs are telltale. The retail industry is a significant contributor to Singapore's economy. In 2008, the industry registered some S$26.2 billion (US$20.1 billion) in sales revenue and generated $3.8 billion in Value-Add. This accounts for about 1.4 per cent of Singapore's gross domestic product (GDP). The industry also employs more than 100,000 workers in some 19,000 establishments, which is about four per cent of Singapore's total workforce.

Though there are expectations that Asia will lead worldwide GDP growth for 2011 and this bodes well for the further sustained growth of Singapore's retail industry, a drag could be slowing or stagnant productivity levels. According to the minister, Singapore already lags behind other international cities like Hong Kong and New York in this regard. Singapore's retail productivity is only 66 per cent that of Hong Kong's and 44 per cent that of New York's.