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Asia-Pacific Food Retailing: Opportunities and Implications

Asia-Pacific Food Retailing: Opportunities and Implications

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Meta Description The Growth of Asia Food Retailing Opportunities and Implications
BMI View: The spread of organised grocery retail will continue
Publisher Business Monitor International
Date of Report Oct 6, 2011
Quick Overview
The Growth of Asia Food Retailing Opportunities and Implications
BMI View: The spread of organised grocery retail will continue to gather pace among Asian Pacific economies. This trend, however, is particularly pronounced in the region’s emerging markets, as rapid urbanisation and an ongoing liberalisation of retail foreign direct investment (FDI) regulations encourage growth in organised grocery retail sales. Examining the relative attractiveness of organised grocery retail markets, we highlighted three distinct groups in the Asia Pacific region and concluded that the most exciting long-term growth opportunities lie with the underdeveloped retail markets of India, Indonesia and Vietnam.
As the concept of organised retail gets more entrenched in emerging Asian economies, we also aim to examine in this report the impact of an ongoing spread of organised retail on various key stakeholders, which includes traditional retailers, consumers, suppliers as well as farmers.
While we see the proliferation of organised retail as a blessing for emerging market consumers, providing benefits such as cost savings and the assurance of quality, the same certainly cannot be said for traditional retailers and smaller suppliers as they face increasing pressure on their market share and bottom line.
In addition, with the world’s leading organised grocery retail players all vying for a share of the Asian retail pie, we assess the relative growth prospects of global retailers in emerging Asian retail markets and take into account three key considerations, namely the retailers’ existing Asian exposure, their growth strategies in Asia and financing capacities. In our opinion, Wal-Mart and Tesco are the most well-positioned in Asia, given their growth strategies and massive financing capacities, and should continue to enjoy considerable success from their expansionary efforts going forward.
Key Takeaways • Japan, Australia, South Korea, Hong Kong, Singapore and Taiwan: Developed organised grocery retail markets are fast approaching saturation point and will gradually lose their appeal in the near-tomedium term.
• China, Thailand and Malaysia: Rapid urbanisation and continued FDI translate into fantastic long-term opportunities for organised grocery retail sales.
• Indonesia, Philippines, Vietnam, India, Cambodia and Pakistan: Underdeveloped nature of organised grocery retail sectors leave massive scope for growth and a gradual liberalisation of FDI regulations should further stimulate organised grocery retail sales growth.
BMI Industry Forecasts • China Organised Grocery Retail Sales Forecast To 2015 = Growth of 51.6%
• India Organised Grocery Retail Sales Forecast To 2015 = Growth of 91.3%
• Indonesia Organised Grocery Retail Sales Forecast To 2015 = Growth of 53.4%
• Vietnam Organised Grocery Retail Sales Forecast To 2015 = Growth of 54.9%
Table of Contents
Executive Summary ................................................................................................. 7
The Growth of Asia Food Retailing Opportunities and Implications...................................... 7
Key Takeaways ....................................................................................................................................................... 7
BMI Industry Forecasts............................................................................................................................................ 7
Chapter 1 ................................................................................................................ 8
Asia Pacific Organised Retail Sectors...................................................................................... 8
Identifying Relative Value and Opportunities............................................................................................................. 8
CHART: A Three-Tiered Hierarchy ............................................................................................................................................8
Organised Retail as a Proportion of Grocery Retail Sales (%) (2011 versus 2020)
First Tier: Modern Retail Well-Entrenched, But Growth Could Start To Stagnate .................................................... 8
CHART: Developed Markets Leading The Pack......................................................................................................................8
2011 GDP per capita (US$) and Proportional Contribution of Organised Retail to Grocery Retail Sales in 2011 (%)
Second Tier: Exciting Long-Term Rewards on Offer ................................................................................................ 9
CHART: Very Dynamic Growth....................................................................................................................................................9
China, Malaysia & Thailand: GDP per capita % chg y-o-y & MGR Sales Growth, in local currency terms, % chg y-o-y
Third Tier: Underdeveloped MGR Sectors Leave Massive Room For Growth ...................................................... 10
TABLE: Total Mass Grocery Retail Sales, in local currency terms........................................................................ 10
INDICATORS: Australia (AUD bn), China (CNY bn), Hong Kong (HKD bn), Indonesia (IDR bn),
India (INR bn), Japan (JPY bn), South Korea (KRW bn), Malaysia (MYR bn), Philippines (PHP bn),
Thailand (THB bn), Taiwan (TWD bn), Vietnam (VND bn)
Chapter 2 .............................................................................................................. 12
Implications Of An Ongoing Spread Of Modern Retail ....................................................... 12
Traditional Retailers Have The Most At Stake......................................................................................................... 12
Impact On Traditional Retailers .............................................................................................................................. 12
CHART: Growing Dominance of Modern Retailers.........................................................................................................12
LHS: Hong Kong Mass Grocery Retail Sales, HKD bn and RHS: Singapore Mass Grocery Retail Sales, SGD bn
Impact On Suppliers And Farmers ......................................................................................................................... 13
Impact On Consumers .......................................................................................................................................... 13
Chapter 3................................................................................................................ 15
China Mass Grocery Retail Sector Outlook........................................................................... 15
Holding Massive Long-Term Appeal........................................................................................................................ 15
CHART: Rising Affluence Drives Spread Of Modern Retail ........................................................................................ 15
China - LHS: GDP per capita, US$ and RHS: Mass Grocery Retail Sales, % chg y-o-y
SWOT: CHINA MGR INDUSTRY.......................................................................................................................................................15
CHART: Discount Store Sub-format Set To Outperform .............................................................................................. 16
China - MGR Sub-Sectors Growth Forecast, % chg y-o-y
TABLE: CHINA MGR INDICATORS – HISTORICAL DATA & FORECASTS ..................................................................................... 16
INDICATORS: Supermarkets (CNY bn), Hypermarkets (CNY bn), Discount stores (CNY bn),
Convenience stores (CNY bn), Total mass grocery retail sector (CNY bn), Total mass
grocery retail sector growth, % y-o-y
TABLE: Key Players In China’s Mass Grocery Retail Sector........................................................................................ 17
COMPANY: Carrefour, Wal-Mart, Lianhua Supermarket Holdings, RT -Mart, China Resources
Vanguard supermarkets, Dashang Group, Shanghai Bailian Group, Beijing WuMart,
Metro Jinjiang, Beijing Hualian Hypermarkets, Hualian Supermarket Co, Tesco, CP Seven Eleven,
Auchen, KPI Co Ltd
4 Business Monitor International Ltd
Asia-Pacific Food Retailing: Opportunities and Implications
India Mass Grocery Retail Sector Outlook............................................................................ 18
Indian MGR Sales Set To Soar As MGR Sector Gradually Liberalises .................................................................. 18
CHART: Very Low Incomes.........................................................................................................................................................18
2011 GDP Per Capita, US$’
SWOT: India MGR INDUSTRY........................................................................................................................................................18
Looking Ahead ....................................................................................................................................................... 19
TABLE: India MGR Indicators–Historical Data & Forecasts........................................................................................ 19
INDICATORS: Supermarkets (INR bn), Hypermarkets (INR bn), Discount stores (INR bn),
Convenience stores (INR bn), Total mass grocery retail sector (INR bn), Total mass
grocery retail sector growth, % ch g y-o-y
TABLE: Key Players In India’s Mass Grocery Retail Sector......................................................................................... 19
parent COMPANY: Pantaloon Retail, Shopper’s Stop, RPG Enterprises Retail,
Consumer Protection and Guidance Society, Tata Retail, Aditya Birla Retail, Reliance Retail,
Metro Cash & Carry, Nilgiri’s Franch ise Pvt Ltd, Godrej Aadh ar, Ad ani, Home Stores Ind ia Ltd
Indonesia Mass Grocery Retail Sector Outlook .................................................................... 21
Convenience And Supermarket Sectors To Outperform Through 2015.................................................................. 21
CHART: One of the Gang!............................................................................................................................................................ 21
Real GDP Growth, % chg y-o-y
SWOT: Indonesia MGR INDUSTRY..............................................................................................................................................18
CHART: Supermarkets Leading Retail Sales Growth.................................................................................................... 22
Supermarkets, Hypermarkets and Convenience Store Sales Growth, % chg y-o-y
TABLE: Indonesia MGR Indicators–Historical Data & Forecasts.............................................................................. 22
INDICATORS: Supermarkets (IDR bn), Hypermarkets (IDR bn), Convenienc e stores (IDR bn), Total mass
grocery retail sector (IDR bn), Total mass grocery retail sector growth, % ch g y-o-y
TABLE: Key Players In Indonesia’s Mass Grocery Retail Sector............................................................................... 23
parent COMPANY: PT Carrefour Ind onesia, PT Sumber Alfaria Trijaya Tbk, PT Hero
Supermarket Tbk, PT Matahari Putra Prima Tbk, PT Ramayana Lestari Sentosa Tbk,
PT Ind omaret Prismatama, PT Lion Superind o, PT Makro Indonesia **, PT Alfa Retailind o Tbk
Vietnam Mass Grocery Retail Sector..................................................................................... 24
BMI Sees Plenty Of Upside In Vietnam’s MGR Sector........................................................................................... 24
CHART: Economic Boom Lifts Purchasing Power............................................................................................................. 24
Vietnam: GDP per capita, US$ (LHS) and Real GDP Growth, % chg y-o-y (RHS)
SWOT: Vietnam MGR INDUSTRY.................................................................................................................................................. 24
TABLE: Vietnam MGR Indicators–Historical Data & Forecasts.................................................................................. 25
INDICATORS: Supermarkets (VND bn), Hypermarkets (VND bn), Convenienc e (VND bn),
Total mass grocery retail sector (VND bn), Total mass grocery retail sector growth,
% ch g y-o-y
TABLE: Key Players In Vietnam’s Mass Grocery Retail Sector................................................................................... 25
parent COMPANY: Saigon Co-op, Metro Cash & Carry Vietnam, CP Group, Groupe Casino,
Hanoi Trade Corporation, Vietnam National Textile And Garment Group, Saigon Trading
Corporation, Dairy Farm International Holdings, In timex Hanoi, An Ph ong Company
Chapter 4................................................................................................................ 27
Global Retailers’ Prospects In Asia....................................................................................... 27
Wal-Mart and Tesco’s Asian Prospects Looking Particularly Bright........................................................................ 27
Asian Exposure Key To Supporting Future Growth ................................................................................................ 27
CHART: Tesco: An Enviable Asian Profile............................................................................................................................ 27
Asia Sales, US$mn
Wal-Mart and Tesco Well-Poised In China... .......................................................................................................... 27
CHART: Limited Appetite For Carrefour’s Higher-Value Positioning ...................................................................... 28
Selected Countries GDP per capita (US$), 2011
...And In Emerging Asia ......................................................................................................................................... 28
CHART: Wal-Mart & Tesco Have Strong Financing Capacities..................................................................................... 29
Selected Retailers Debt-To-EBITDA Ratio
Wal-Mart and Tesco’s Strong Financial Clout To Support Expansionary Ambitions................................................ 29
Chapter 5................................................................................................................ 27
Global Retailers’ Emerging Market Exposure ...................................................................... 30
Big Western Retailers Need More EM Exposure.................................................................................................... 30
CHART: Still A Lot More That Can Be Done..........................................................................................................................30
Selected Retailers Emerging Market Proportional (%) Contribution To Annual Sales
CHART: The Action Is Clearly In Emerging Markets ....................................................................................................... 30
Selected Retailers Revenue Growth 5 Year Geometric (%) (Average)
Similar EMSI Scores ............................................................................................................................................. 30
Russia Exemplifies What Can Be Done In EMs ..................................................................................................... 31
Global Company Profiles....................................................................................... 32
Wal-Mart Stores.................................................................................................................... 32
Company Overview ............................................................................................................................................... 32
Strategy ................................................................................................................................................................. 32
SWOT: wal-mart analysis.........................................................................................................................................................32
Emerging Markets Increasingly Important .............................................................................................................. 33
TABLE: Wal-Mart Annual Sales & Contribution By Business Unit/Region (%)–Fiscal Year To January...... 33
INDICATORS: US Sales, US$bn, International Sales, US$bn, Sam’s Club, US$bn, US Sales Contribution, %,
International Sales Contribution, %, Sam’s Club Contribution, %
Tesco PLC ............................................................................................................................... 34
Company Overview................................................................................................................................................ 34
Strategy.................................................................................................................................................................. 34
CHART: Mature ..............................................................................................................................................................................34
UK Mass Grocery Retail Sales - 2002-2015
SWOT: Tesco analysis.................................................................................................................................................................34
Emerging Markets Growth Crucial ......................................................................................................................... 34
South East Asia Exposure Key To EM Strategy ..................................................................................................... 34
Precious Scope For Retail Growth Domestically..................................................................................................... 35
TABLE: Tesco Annual Sales–Fiscal Year To February.................................................................................................... 35
INDICATORS: Group Sales (including Value Added Tax), GBP bn, Growth, % ch g y-o-y.................................... 35
sales by geographic breakdown, excluding value added tax: UK Sales, GBP bn, Rest of Europe
Sales, GBP bn, Asia Sales, GBP bn, US Sales, GBP mn
Carrefour.............................................................................................................................. 36
Company Overview................................................................................................................................................ 36
Strategy ................................................................................................................................................................. 36
CHART: Discount Challenge Affecting Already Ailing Hypermarket Segment................................................... 36
France Hypermarket Sales - 2003-2015
SWOT: Carrefour analysis.......................................................................................................................................................36
Revamp Strategy Necessary, Stronger Focus On Price To Follow? ...................................................................... 36
CHART: Carrefour’s Falling Margins.................................................................................................................................. 37
Operating Profit Margin (%)
TABLE: Carrefour Sales By Business Unit/ Region (EUR bn)–Fiscal Years To December................................. 37
INDICATORS: Carrefour Franc e Sales, Carrefour International Sales, Maxidisc ompte
Carrefour top five markets by annual sales proportional contribution to group revenues
(%) - fiscal years to December: Franc e, Spain, Brazil, Italy, Belgium
CHART: France Reliant, Brazil and China Crucial...........................................................................................................38
Carrefour Top Ten Markets By Annual Revenue Contribution (%) - December 2010 Year End
Carrefour Re-Focusing EM Strategy On Core Markets .......................................................................................... 38
Carrefour Arguably Has Most Riding On EMs ........................................................................................................ 38
Casino Guichard-Perrachon.................................................................................................. 39
Company Overview................................................................................................................................................ 39
Strategy.................................................................................................................................................................. 39
CHART: Growth Will Have To Come Mostly From EMs.................................................................................................... 39
France Mass Grocery Retail Sales (EUR bn), 2001 - 2015
SWOT: casino analysis...............................................................................................................................................................39
CHART: Changing Focus.............................................................................................................................................................40
Casino France Sales Breakdown
France Weakness Holding Back Growth ................................................................................................................ 40
CHART: Casino Holds Steady As Revamp Hits Carrefour’s Margins........................................................................ 40
Selected Retailers Historical Operating Profit Margin (%)
EM Focus Pivotal .................................................................................................................................................. 40
TABLE: Casino Sales By Business Unit/Region–Fiscal Years To December............................................................ 40
INDICATORS: Franc e Sales, EUR bn, Latin America Sales, EUR bn, As ia Sales, EUR bn, Other
International Business Sales, EUR mn casino proportional contribution to group sales by
region/business unit (%) - fiscal years to December: Franc e Sales, Latin America Sales,
Asia Sales




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