Countries across the region show similar trends. Higher levels of education, increasing wealth, smaller families, urbanization and Westernization all contribute to the rise of modern retailers in the region. At the same time, huge disparities in wealth, education and standard of living remain. The result is that the traditional format grocery channels still maintain a big share of the market, especially in rural or suburban areas.
In this situation, retailers have difficulty in meeting the needs of a diverse and widespread population. In some cases foreign retailers struggle to attune to local cultures and tastes. Domestic retailers are not about to give up market share and they have the advantage of local knowledge and customer loyalty. Governments have also acted to protect domestic players.
The Australian grocery market is mature and characterized by relative low growth and fierce competition. There are two main players in the supermarket sector. Companies are focusing not on price but on streamlining their service and expanding their ranges to include electrical good and toys as well as financial services, cafes and petrol. An upcoming issue is political interference relating to country-of-origin labeling.
The enormous grocery retail market in China is estimated at U.S. $285 billion and is growing at a rate of seven percent annually due to steadily rising disposable incomes and increasing urbanization. Traditional-style markets account for 68 percent of the grocery market. Due to wide regional variations, retailers need to customize according to local needs and to appreciate that the Chinese are price sensitive.
The grocery market in Hong Kong is mature with two main players, both local. Land is too scarce for hypermarkets and car ownership is low. Traditional style markets are declining. Current trends are towards longer opening hours and the sale of convenience foods which cater to the longer hours people are working.
Despite a large population, increasing wealth and economic growth, the Indian retail market is underdeveloped. Traditional grocery markets account for 98 percent of the sector, although this is reducing. The Indian middle class is growing. Problems within the sector include its slim profit margins and highly competitive nature. It is fragmented and there is little brand awareness. Foreign players are few due to tax implications but the government may address this soon.
Consumer confidence in Indonesia has been dented by such issues as the Bali bombings, the Asian tsunami, bird flu and fuel prices. The grocery market is fragmented and 99 percent traditional. Modern retailers are concentrated on Java and are characterized by hyper, super and mini markets all competing on price. Average prices have reduced as a result. There are few foreign players due to onerous regulations.
This is a mature grocery retail market second only in size to the U.S. It is not growing. Japan has not fully recovered from economic downturn and there have recently been some food safety scares. Foreign players have not adapted well to the Japanese market. Hypermarkets tend not to be successful as the Japanese prefer fresh food and shop frequently rather than in bulk. There has been some growth in the convenience store sector.
Increasing urbanization and Westernization have led to growth in the grocery retail market at the expense of the older traditional, independent retailers. Both local and multinational players have been successful in Malaysia. Because consumer tastes are dictated along ethnic lines ― Malays, Chinese and Indians all have different wants ― the market is fragmented. Hypermarkets are popular and convenience stores even more so.
Grocery retailing in Singapore is like that of Western countries. Modern retailers dominate (70 percent) and there is little growth opportunity due to low population growth. With rising affluence, however, Singaporeans are demanding more convenience and higher quality goods. Supermarkets predominate but there has been a rise in convenience stores due to busy lifestyles. Online grocery shopping is beginning to make inroads.
With a stable population, growth in the grocery retail sector in South Korea is expected to be only about two percent. Areas where there is expansion include health, well-being and organic product lines. Western-style products are beginning to become more popular. Hypermarkets are taking a bigger share as car ownership increases and people buy less frequently and in bulk. Traditional grocery markets still dominate at 61 percent of the total.
There is significant growth in the retail market in Thailand at around 10 percent annually. Demand is increasing for packaged and processed food. Hypermarkets and supermarkets are mostly clustered around Bangkok. Supermarkets are beginning to be squeezed out by the hypermarkets and convenience stores. Traditional grocery markets still dominate at 66 percent of the total and these retailers have gained government protection.