Magazines Archives - 2009 July

Retailers emerged in sound shape at end-2008 despite global crisis
Story 5 - Overview

The sixth edition of the Retail Asia-Pacific Top 500 is presented at a time when the world is facing its most challenging economic climate since the Great Depression. This ranking of the leading 500 retailers in the region is based on US-dollar sales generated in 2008. That it is being revisited against the backdrop of a bleak economic outlook no doubt colours the perception of how the retailers fared in 2008. It is therefore an apt reminder that the recession truly started making its impact felt in the Asia-Pacific region in the last quarter of 2008.

Although there were definitely cracks in the rosy veneer of the region’s economic performance prior to the onset of the downturn, the general mood remained buoyant as consumers clung on to the lingering trails of their countries’ robust economic performance.

While some consumers started to exercise caution in the last quarter of 2008 as a knee-jerk response to media reports painting a bleak view of the situation in the West, spending generally continued in the East for a variety of reasons. Consumers rationalised that the year-end festive season was not the right time to dampen the buying spirit. At the same time, these same consumers who have grown acclimatised to pampering themselves found it hard to completely deny themselves their retail indulgences.

Towards the end of 2008, at the back of everyone’s minds was, of course, the hope that their country would be buffered from much of the fallout of the global economic meltdown — a hope that we now know has not materialised. Therefore, while retail spending dropped to varying extents across countries in the Asia-Pacific in the final three months as 2008 came to a close, most retailers emerged from the year in reasonably sound shape, albeit not totally unscathed.

HIGHLIGHTS OF THE RETAIL ASIA-PACIFIC TOP 500

The Top 500 retailers in the Asia-Pacific clocked sales totalling US$717 billion in 2008, an increase of 13.5% on the previous year. This was a highly commendable performance, all things considered. Note though that growth is inflated due to the weak greenback. In local currency terms, for example, Top 500 retailers from Japan posted sales growth of under 4% in 2008 — a robust performance given the maturity of the market as well as the slowing economy. However, in US-dollar terms, these same retailers have posted a sales growth of nearly 18%, which contrasts sharply with the performance in local currency terms.

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