New entrants to the Asia Pacific market are increasingly home-grow retailers looking to branch out globally but ill-equipped to do so, new research says.
For the first time in three years, Asia Pacific retailers have made up the greatest number of new entrants to the market comprising nearly 1/3 of new retail entrants in the region, according to new research by CBRE.
Mid-range fashion, health and beauty and luxury retailers comprised the greatest number of new entrants and the overall number of retailers originating from the Asia Pacific rose from 17 per cent to 30 per cent between 2014 and 2017.
The majority of new retailers originated from Japan, Australia and Korea, collectively accounting for over two-thirds of new entrants between 2014-2017.
The rise in home-grown entrants coincided with a slow-down in the emergence of brands from the US and Europe after several years of rapid expansion, the research says.
“While the Asia Pacific retail market continues to be dominated by U.S. and European brands, recent years have seen more homegrown brands come to the fore as local consumers demand products that are more attuned to their cultural tastes and preferences,” according to the paper.
Although Asia-Pacific retailers accounted for an increasing number of new entrants, the majority have minimal experience operating overseas.
“Many Asia Pacific brands are at nascent stage of overseas expansion and failure is not uncommon,” the report says.
While a number of these regional brands have no presence outside of the Asia Pacific, their regional success has given them the confidence to expand overseas – a desire driven by stronger growth in new markets, a desire to enhance brand status and awareness and landlords’ preference for new brands, according to the paper.
But these new entrants must craft their entry strategy through a focus on strengthening brand identity, using the right real estate and utilising market expertise if they want to successfully branch out overseas, the research says.
Retailers must embrace omnichannel
The news comes as a survey by Rakuten Marketing finds that Australia and New Zealand have some catching up to do with the rest of the world, with some of the highest offline shopping trends in APAC.
As the popularity of e-commerce continues to rise, retailers must embrace e-commerce if they’re to keep up with global competition, according to JJ Eastwood, managing director of Rakuten marketing APAC.
Despite both countries having rising rates of e-commerce growth, both Australia and New Zealand consumers have some of the lowest rates of online shopping with just two per cent of consumers shopping exclusively online.
Shipping, returns and payment security are some reasons why Australian consumers are yet to fully embrace online shopping to its full potential, the research says.
JJ Eastwood, Managing Director of Rakuten Marketing APAC said the research indicates that e-commerce is an immense area of opportunity for existing and new retailers.
“There is a clear opportunity here for retailers, to build meaningful relationships with their customers by adopting an omni-channel approach,” he said.
The research indicates that for brands to be successful in the Asia Pacific, they must learn to embrace change by both embracing omnichannel and ensuring a seamless customer experience – from the purchasing experience right through to shipping, Mr Eastwood says.
“There’s certainly opportunities for Australian retailers to learn from the best practices of the big global brands in terms of providing a more personalised customer experience, providing free shipping and overall p[providing a seamless customer experience,” he said.