Consumers' financial uncertainties hit APAC’s retail sales growth
Philippines, Vietnam, and Malaysia are the hardest hit nations in the region.
Retailers in the Asia-Pacific region will need to brace for a slowdown in sales growth as two in three consumers expressed deep concerns over the uncertainties in their financial situation, restricting them from spending freely, according to a report from GlobalData.
Among the countries in the region, the Philippines, Vietnam, and Malaysia accounted for the highest proportion of extremely concerned respondents, as insecurities about their financial situation induces the shoppers to cut down on discretionary retail spending which was expected to ease in 2021.
However, India, Singapore, and Thailand recorded a dip in the concern levels compared to the previous quarter which can be attributed to the roll out of COVID-19 vaccines, as the protection from infections will give them more confidence for their health.
With widespread vaccine rollouts and regaining consumer confidence in some countries, the long-term retail outlook in the region remains positive with an expected compound annual growth rate of 6.7% during 2020-25 to reach $11.2t, according to GlobalData’s retail analyst Ankita Roy.
“Sizable number of respondents are concerned about the restrictions on socializing and eating out in restaurants owing to the risk of COVID-19 infection. However, consumers are looking to return to activities of pre-pandemic life mostly in countries where restrictions are no longer in place,” Roy said.
The ‘convenience store’ channel is generally more popular with the Asian and Australasian consumers who have continued to be heavily affected by the global pandemic in Q3.
Consumers prefer convenience stores because they are smaller in size and closer to local communities, making them less prone to superspreader events, Roy said. Thus, its high popularity indicates that they are still integrated into consumers’ shopping habits despite lowering of COVID-19 cases and increased use of online channels, Roy said.
In addition, convenience stores are more heavily visited by younger consumers, who tend to live alone or buy just for themselves and shop on the go due to time constraints, so are suited to the convenience format.
“Whilst online shopping of retail products has been a go-to option for consumers during the pandemic, physical store formats will certainly continue to be a favourable destination for shoppers if they adjust to changing consumer attitudes and concerns around health,” Roy added.