The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.Learn More
The retail environment in these emerging countries is highly dynamic, offering many opportunities for savvy investors. Double-digit growth in retail value terms has been observed over the last five years, bolstered by strong economies, young populations, rising levels of disposable income and infrastructure improvements.
One common indicator signalling retail growth among developing countries is an increase in modern retailing. Among these five emerging Asian markets, rural areas still account for the majority of the population, with the highest in 2016 being Sri Lanka at 82%, and the lowest at 60% in Laos, according to Euromonitor International’s data.
However, rapid urbanisation within these countries is bringing more potential. Although in its early stages, the market is consolidated under a few large players. In Myanmar, City Mart Holding Co Ltd is a local pioneer, having established several hypermarkets, supermarkets, convenience stores and pharmacies throughout the country. Governments are also playing an important role in promoting the growth of retailing. In Sri Lanka, state-owned retail company Lanka Sathosa Ltd is focusing on small supermarkets, and has the widest network of outlets in the country. In addition to having government regulatory and financial support, the company aims to stabilise market prices to target lower and middle-income households.
Other major regional players are realising the potential and have stepped into the field—a trend particularly seen in Laos, Myanmar and Cambodia. Some notable names include Hong Kong’s Dairy Farm International, Japan’s AEON Group in Cambodia, Thailand’s Big C Supercenter in Laos, and Malaysia’s Lion Group in Myanmar. While these recent additions are giving local urban consumers more places to shop, modern retailing remains under-developed and there is still room for additional entrants.
Of course challenges remain in the development of retailing in these countries. Poor infrastructure in many remote and rural areas makes it difficult to transport a large amount of goods from one place to another. As such, modern retailing has been limited to key cities, such as Phnom Penh and Siem Reap in Cambodia, Vientiane in Laos, Yangon in Myanmar, Dhaka and Chittagong in Bangladesh, and Colombo in Sri Lanka.
While modern retailing is making inroads, habits are difficult to change. Many people in these emerging countries still prefer to shop with traditional retailers. Established relationships between retailer and consumer, accessible locations and the ability to bargain for cheaper prices are some of the factors modern retailers are often unable to match. It is crucial for companies to properly identify their target audience and consider the best approach to addressing their needs in order to achieve success in these markets. For international players establishing strong relationships with leading local players can be particularly effective, enabling them to tap into local traditions and customs. One such example is Hong Kong’s Dairy Farm International’s collaboration with Cambodia’s Lucky Market Group.
While challenges remain, the juxtaposition of modern and traditional retailing makes the environments in these emerging countries highly dynamic and offering considerable opportunities. Euromonitor International expects modern retailers to see robust growth over the next few years with traditional players maintaining a key role in meeting consumers’ daily shopping needs.
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