Magazines Archives - 2009 April

2008: A bright start but an inglorious end for the retail industry
Story 4 - Focus

The year 2008 has been a year of mixed blessings for the retail industry in the Asia-Pacific region. Despite signs that there was trouble brewing at the start of 2008 with global food and fuel prices and inflation rates spiralling up, consumers were generally satiated and contented — perhaps even a bit complacent — from the prosperous years before.

Consumers in the region remained upbeat despite news of the US being in recession at the end of 2007. The real wake-up call for the region came following the collapse of Lehman Brothers in the US, which triggered the onset of the recession in countries the world over. As we enter 2009, with the world in the grips of one of the worst economic downturns in history, there is a natural inclination to tar retailers’ performance in 2008 with the bleak brush that we are holding right now.

It is key to keep in mind that 2008 was plausibly the last year since the previous economic downturn in which we could see positive growth in the retail industry in the region, given that for most of the countries in the Asia-Pacific region at least, the recession truly only kicked in towards the last quarter of 2008.

Retailers will have to fight hard to keep businesses afloat in 2009 and possibly 2010 as the recession deepens. Even as the economy recovers, retailers cannot expect to reap immediate returns — or even for things to return to the way they were, pre-downturn times. As a region, the Asia-Pacific is perhaps fortunate to have suffered from a comparative lack of consumer spending historically as this means that the potential for growth will remain attractive to global retailers who are faced with scant pickings in their home countries. Therefore, the outlook for retailing in the region remains bright, especially once it emerges fully from the recession.

Within the region, however, challenges will remain. Japan, for one, while an innovative country where many trends and product developments come to life before they are adopted by other countries, is facing a dwindling consumer base with an ageing population and a declining birth rate. China and India are unlikely to fall off the radar for retailers, be they global or domestic players, with their untapped potential on offer.

On a final note, consumers the world over will spend, if they are given a good reason to do so. In 2009 and even 2010 — key years where the full impact of the recession are expected to manifest themselves — what retailers will need to focus on are ways to persuade consumers to part with their money. In countries such as Singapore, retailers have been holding more sales with attractive value-for-money offers to entice shoppers to continue shopping.

Opportunities remain and we still see new shopping malls coming up and global retailers continuing on their expansion plans — with greater caution exercised, of course — in the Asia-Pacific region. Every dark cloud does indeed have its silver lining.

Without delving too much into the uncertain future, however, let us review the year that has come to an end, albeit in an inglorious way, for the retail industry in the Asia-Pacific.

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