3 pillars reshaping the future of retail in Southeast Asia

Retailers are urged to prioritise digitalisation, experiential initiatives, and sustainability to remain competitive.

NEW digital interfaces, experiential retail, and responsible retail are now the main drivers reshaping the future of retail in Southeast Asia. That’s according to Quan Yao Peh, senior analyst of the Channels Practice at Euromonitor International.

At the Retail Asia forum in Shangri-La, Bangkok, Quan provided an overview of the current state of retail in Southeast Asia, emphasising the enduring impact of cost-of-living challenges on consumer sentiment.

“What is the current state of retail in Southeast Asia? Here at Euromonitor, we believe that retail is now firmly in the post-pandemic era,” he said. “The cost of living challenges continue to remain top of mind for many consumers in this region.”

“This is really due to the impact of rising prices and the muted macroeconomic climate impacting consumers' spending decisions and their spending sentiment,” he continued.

Indonesia and Vietnam emerged as pivotal retail markets, collectively commanding over 50% of retail value sales in the region.

Digitalisation drive

Based on Euromonitor’s latest research, Quan outlined key findings across various retail categories. The surge in modern grocery formats, propelled by convenience and product variety, was underscored, alongside the imperative for retailers to bolster digital capabilities to meet evolving consumer preferences.

Quan also noted the burgeoning landscape of e-commerce, accentuating the role of innovative technologies like artificial intelligence and social commerce in enhancing the shopping experience and driving consumer engagement.

The senior analyst also pointed out how retailers are leveraging AI, immersive technologies, and collaborative initiatives to create personalised and engaging shopping experiences.

“Consumers now expect the store[s] to move beyond just a transactional destination but to become a place where they can engage in experiences, where they can engage with the brand and its community,” said Quan.

Integrating sustainability

Quan also underscored the importance for responsible retail practices in driving positive environmental and social impact. This includes various elements such as the environment, ethical sourcing, transparency, amongst others.

“Based on our industry survey on sustainability, we believe that at this point, the environment still continues to be the top area that's influencing the sustainability priorities of businesses in this region,” he noted.

Quan said retailers in Southeast Asia are embedding sustainability into their core business strategies, ranging from ethical sourcing to community empowerment initiatives. Examples included Central Retail’s SeaVerse platform, showcasing retail innovation, alongside Watson’s initiatives in the Philippines and Toko Padai in Indonesia, underscoring the rising significance of sustainability.

Looking ahead, Quan predicted continued growth in Southeast Asia's retail sector, fueled by economic expansion and e-commerce.

“Digitalisation, experiences, and sustainability will continue to remain the key priorities that are driving the future of retail in this region,” Quan said. “We believe that it's important that you act on these priorities to ensure that your business remains relevant… it remains the preferred shopping experience of consumers in an increasingly competitive online landscape.”