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Market Insights by Bluebell delivers up to date intelligence on the Asian retail market.
REDEFINING ONLINE MARKETPLACES IN ASIA
How is digital evolution impacting the luxury retail business, and how do the two co-exist?
This study takes a close look at the evolution of online marketplaces and examines the current retail reality through a market by market analysis. The paper presents the Asian online landscape through the Group’s own experience, its local market partners, and the major online players in the region.
With a predicted e-commerce penetration in 2023 of 35% (Source: Euromonitor International), China is leading the pack in digital innovation. However the consumer journey is not merely confined online in the country. Quite the opposite: brick-and-mortar retail still accounts for more than 80% of total retail sales. The uniqueness of the Chinese retail market and its true omni-channel structure is complex, and the many players offer distinct solutions to retailers.
HONG KONG SAR
Hong Kong’s unique positioning within the Greater Bay Area (GBA) places it a large advantage in terms of its geography and diverse talent pool. However with its high population density, people can easily access consumer goods from physical stores, and brands have not digitised at the same rate as in Mainland China. How will established brick-and-mortar brand footprints within the city compete with its unique position to become a center for the GBA digital centralization?
Despite the island’s fairly small size, Taiwan has one of the highest online retail penetration rates in the world. Driving the growth is the national youth, most of whom do their shopping online, but also homegrown e-commerce platforms. 80% of users have downloaded retail apps on their phones, with an average of three shopping apps installed per mobile. How have digital marketplaces evolved in Taiwan?
As the world’s third largest e-commerce market, Japan has a highly unique retail ecosystem, both in terms of demographic and cross-border opportunities. Unlike Taiwan, where younger generations are the main driver for e-commerce, Japan has a large older population of spenders. In addition, Japan has one of the lowest cross-border shopping rates due to language barrier, as the majority of the population only speaks Japanese. This plays a large role in the development of local marketplaces, and whilst bricks and mortar shops remain the preferred norm in terms of consumption habits, there are signs that even the older population is adhering to online for certain product categories.
South Korea, with tech-savvy consumers, strong technological and mobile adoption, and an advanced internet infrastructure, has proved fertile ground for a number of big players and startups focusing on different offerings, from marketplaces to search engines and messaging/ social commerce platforms. Even traditional retailers have increasingly turned their attention to their online businesses, and have a plethora of marketplace options to choose from. Each venture is competing for a share of the revenue in what is an increasingly overcrowded market. Who are the winners in such a competitive market?
Despite the differences in the growth of retail infrastructure and e-commerce across the region, online retail is beginning to occupy a bright spot in Southeast Asia. According to the Google-Temasek e-Conomy SEA 2018 report, e-commerce is estimated to exceed US$100 billion in GMV by 2025, from US$23 billion in 2018. Nevertheless, online commerce still only makes up 2-3% of total retail sales in the region, due to challenges in building a solid distribution network offline.
ASIA LUXURY & LIFESTYLE RETAIL BAROMETER
Monitoring the resilience of lifestyle retail in Asia
A series of ongoing reports to monitor the impact of COVID-19 on lifestyle and luxury retail in Asia throughout 2020.
Market Insights works with 50 global brands across Asia, including select brands external and internal to the Bluebell Group, with the aim to promote greater sharing amongst retailers in the region. The study covers seven markets, and five product categories including fashion, accessories, footwear, beauty and fragrance and Gourmet F&B; with deep dives into Mainland China and South Korea Travel Retail.
Part 1, Jan-May 15, 2020
From January to 15 May 2020, the impact of COVID-19 on luxury & lifestyle retail has been staggered across Asia.
Mainland China was the first market to experience significant sales decrease YoY, and the first to rebound with positive YoY growth from April.
In large part due to severe travel restrictions, overall sales in Hong Kong SAR dipped in February and March, though to a different extent across product categories.
Taiwan, which saw fewer cases and no hard lockdown, experienced a smaller YoY dip that can be attributed to cautious consumption behaviour.
As of mid-May, Singapore, Malaysia and Japan were suffering the strongest YoY sales drops from the impact of ongoing lockdowns.
Part 2, May-June, 2020
After experiencing the highest YoY performance drop between March and April, all markets began recovering in May – with the exception of Mainland China, which began its recovery much earlier than the rest, and was already seeing positive signs of rebound in March.
By June, Taiwan was the only market with all product categories experiencing positive YoY.
In Hong Kong SAR, recovery was muted across categories, with footwear regaining the most ground on 2019 sales, although it was the most affected category in the months prior, so the numbers only represent a very slight rebound.
Following the easing of lockdowns, Japan saw a rapid YoY performance bounce back from May to June, though not yet reaching positive growth. Japanese consumers rushed back to brick-and-mortar stores once social distancing measures were eased.
Malaysia saw a more muted recovery, while Singapore still suffered from the largest YoY sales drop across categories in June, as its severe lockdown was only slowly being lifted.