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Camellia Aebischer

BY CAMELLIA AEBISCHER

Convenience channel in Asia set for growth

As ecommerce expands in Asia, the bricks and mortar retail channel is predicted to follow suit

Convenience channel in Asia set for growth

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Over the next five years the fastest-growing bricks and mortar channel in Asia is predicted to be in convenience.

According to a report by international research organisation, IGD, Asia’s leading convenience retailers are predicted to grow 6.6 per cent each year to 2022, totalling US$1.5trillion.

The reason for this projected success is expected to come from a shift in shopping habits from citizens, and retailers expanding networks.

“Indonesia in particular will continue to stand out as the fastest growing retailer country,” said IGD’s senior retail analyst, Charles Chan.

“The increasing number of single and two-person households is driving the growth of South Korean retailers and increasing growth of smaller formats. This reflects consumer behaviour of purchasing smaller portions and pack sizes along with ready-to-eat solutions.”

The four main formats of convenience retail are identified as:
 
Forecourts, which focus on transient trade and snacking;
Consumer Value Stores (CVS), which service dense urban areas;
Neighbourhood convenience, focusing on fresh food and ‘top up’ options; and
1k supermarkets, which are take many forms but are shaped by local shopper patterns.
 

Chan explained that CVS and Neighbourhood convenience style formats are the most widely adopted models, with both specialist and multi-channel retailers.

“1k supermarkets are a growing trend, particularly in urban locations where hypermarket growth is challenging or space for new stores is limited.”

To succeed in the area, Chan suggests suppliers adopt a flexible approach to operations and supply, assessing potential gaps in a portfolio.

He also notes that innovation and differentiation are priorities for CVS, and that a focus should be made on finding online mobile and digital solutions.

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