Asia's leading big-box (or large-format) grocery retailers are forecast to grow by 3.5% on average per year between 2016 and 2021, according to data from grocery-research organisation IGD.
Although large grocery formats are coming under pressure due to the growth of other retail channels and changing shopper behaviour, IGD says that these stores still have a critical role to play.
"The shape of retail is changing," said Nick Miles, head of Asia-Pacific at IGD. "Online grocery shopping is starting to gain a foothold across all markets, and convenience stores are seeing a surge in growth, too – often at the expense of big-box formats."
“However, in markets where modern retail is starting to take off, large formats are still often the go-to option for retailers to enter the market and create excitement amongst shoppers, whereas in markets where modern trade is already well established, retailers are on the front foot by repurposing these stores so that they are fit for future requirements."
Aeon, Walmart and Auchan are the top three hypermarket and supermarket retailers in the region, driven by strong store networks in Japan and China. However, domestic retailers such as Yonghui and SM Retail are growing quickly in China and the Philippines.
“As in other parts of the world, one of the key challenges facing large-format grocery retailers is rising property prices and increasing levels of competition," added Miles.
"Retailers in markets like Thailand and China have been quick to respond to this test, slowing down new-space growth to focus more investment on existing stores, downsizing their stores, plus converting space into malls, with complementary retail and foodservice offers that are targeted at families."
IGD says that there are many opportunities for retailers to encourage greater engagement with their customers and boost brand appeal, such as running in-store events, trialling new products, and using social media.
“Suppliers to large-format retailers also need to consider how much standards are being raised on freshness, and ensure that they are innovating in this area, with strong communication of their fresh credentials," said Miles.
"And what about private label? These products are no longer considered a cheap alternative, so if you’re a private-label supplier, remember that they can also be part of a high-quality range and should be marketed as such. Bigger retailers can have a key role to play here.”
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.