In May, I visited Shanghai and Seoul, South Korea, as part of the asia a go go tour for retail executives, designers and architects. While VMSD regularly covers Asian retail projects and trends, experiencing them in person resulted in new-found professional and personal perspectives; I encourage all our readers who do business in the region to take advantage of similar opportunities.
If your eyes aren’t looking eastward, they ought to, if only to stay abreast of market and design trends that might affect your business. In a report by A.T. Kearney (Chicago), China is now ranked as the top country in the Global Retail Development Index (GRDI) for the first time since 2010. China’s retail market is forecast to grow to $8 trillion – double the size of the U.S. market – by 2022.
While China’s GDP growth has slowed, relative to other developing markets, and anxious observers track its recent stock market turmoil, the country’s retail performance is unmatched, reports A.T. Kearney.
In addition, e-commerce continues to grow rapidly, with Asia’s market size ($525 billion) now exceeding that of North America ($483 billion). As Internet ubiquity increases and online offerings improve, Asia’s e-commerce retail sales are expected to grow as much as 25 percent annually.
Chinese disposable income is also on the rise, while the emerging younger generation – pampered, privileged “princes and princesses,” as a Shanghai-based designer described the offspring of the country’s one-child policy – hungrily consume brands from the West and share their aspirational lifestyles via WeChat, China’s hugely popular mobile messaging platform. One young Chinese woman told me how she’ll often join her father for traditional tea, followed by a meet-up with friends for a more trendy Starbucks coffee drink.
The challenge for Western retailers and designers looking to tap the market is that Chinese developers tend to jump from concept to final design with little discussion in between, an industry observer told me, often resulting in head-scratching store designs. And, while the corruption scandals of recent years are being proactively dealt with, quality is still an issue. “The Chinese are very good at producing building hardware,” the Shanghai designer said. “Execution is another story.”
Chinese developers want to be famous, and strive to outdo each other with bigger, flashier designs. “It’s all about face,” another local source said. In contrast, the established South Korean retail aesthetic is considered more sophisticated and refined.
In Asia, I learned that business success requires understanding and working within the culture. Personal relationships are paramount; having a physical presence helps; and it’s hard work, but the payoff potential is there. Perhaps it’s time to consider planning your own retail tour?
For more insights on retail in Asia, go to page 15 VMSD's August issue for our “Special Report: The Retail Road to Asia.”