Retail Recap: Q1 2021 in the Asia-Pacific Region
APAC retail sales have a direct tie to lockdowns and economic events. Plus, investment news from major retail players demonstrates a commitment to online grocery.
Did you miss our first two Q1 recaps? Be sure to check out our summaries of retail trends in North America and EMEA.
The Q1 2021 retail recaps continue, as we switch our focus today to the APAC market.
China was the first country in the world to grapple with COVID-19. The world watched with increasing uneasiness as the virus spread, and before long, the World Health Organization declared COVID a global pandemic. That being said, it only makes sense that we start this Q1 recap by looking at how the retail industry in China has fared.
Q1 celebrations and staycations boosted retail sales
April 8, 2021 marked one year since the lifting of Wuhan’s 76-day lockdown, and in the months preceding that milestone, consumer spending was up in China. This is in comparison not only to 2020 when the total shutdown was in effect, but to 2019 as well.
China’s National Bureau of Statistics reported that in January and February 2021, retail sales of consumer goods rose 33.8% year over year. The “dramatic rise,” as Business of Fashion explained it, makes sense when you consider that in the same months of 2020, most parts of the country were completely closed. However, it’s interesting to note that “the total sales for the two-month period…also represents growth of 6.4% over the same period in 2019.”
A Reuters story on China’s retail growth points out that “China’s economic activity is normally distorted in the first two months because of the week-long Lunar New Year Holiday, which fell in February in 2021.” From Feb. 11-17, retail sales were up 28.7% from 2020’s Lunar New Year, and up 4.9% from 2019.
Like the way authorities in the U.S. pleaded with Americans to reconsider their November and December holiday plans, people in China were also asked to stay put, during a time when many migrant workers normally make an annual trip home. Celebrating locally led to more consumer spending, “energizing” China’s retail sector, as the Wall Street Journal described.
A final observation of retail trends in China comes from eMarketer’s forecast released in February, which suggests that 52.1% of 2021 retail sales will come from ecommerce. “For the first time anywhere, a majority of retail sales for an entire country will transact online,” said the market research company. Talk about digital transformation.
Australia’s COVID precautions and economic stimulus decisions influenced Q1 outcomes
Australia was home to one of the strictest COVID lockdowns in the world, lasting 112 days in the city of Melbourne last summer. Even so, 2020 was “the best year for retail sales on record,” according to the Australian Bureau of Statistics, which is important to keep in mind when assessing dynamics so far this year.
After “wildly volatile” retail activity in late 2020 – surging 7.1% in November and declining by 4.1% in December – retail sales in Australia were up only 0.6% in January 2021.
In early 2021, lockdown decisions continued to make headlines, though certainly for shorter durations of time – in both January and February, Brisbane had “snap three-day lockdowns” in response to variant outbreaks. Sales in February “fell unexpectedly” because of lockdowns, declining by 1.1%.
Then, in a “positive sign for the economy,” retail sales surpassed expectations in March because of growing employment and increased consumer spending, rising 1.4%, as reported by Reuters.
One would be remiss to discuss fluctuating retail sales without highlighting other factors at play, namely Australia’s decisions in March to stop or scale back its JobSeeker and JobKeeper supplemental payment programs. Paul Zahra, CEO of the Australian Retailers Association, said, “There’s still a big question mark over what impact the removal of JobKeeper has had on the economy.”
At one point in the last year, almost one-third of Australian workers were on JobKeeper. While The Guardian reports that “the unemployment rate of 5.8% in February is very healthy given what has occurred over the past 12 months,” consumer spending is likely to be affected by these programs coming to an end, not to mention the presumption that “JobKeeper may have been propping up businesses that won't survive.”
Across Asia-Pacific markets, online grocery is booming
Before discussing Q1 developments in India, we must acknowledge the unthinkable situation the country is facing at present with COVID-19. As well, we acknowledge that the current crisis will have a ripple effect beyond the next quarter of this year.
Flipkart, owned by Walmart, announced in Q1 that it will expand online grocery sales in India, with sights set on 70 more locations in the next six months, many of which will be in smaller cities.
The news comes in the same month that Tata Sons announced its intentions to take a majority stake in BigBasket, an Alibaba-backed online grocery seller. Plus, these developments from Flipkart and Tata Sons are both on the heels of JioMart’s entrance into India’s digital grocery space last year.
South Korea’s largest ecommerce company, Coupang, had its Wall Street debut in March as the largest early-2021 initial public offering in the U.S. Soon after, Reuters reported that online grocery service Market Kurly is planning an IPO for this year, though it’s not clear if it will take place in the U.S. or South Korea.
COVID has also been a catalyst for online grocery growth in Indonesia, where L.E.K. Consulting has found that consumers are “more willing than ever” to make an online purchase. And in Christchurch, New Zealand, supermarket Countdown announced in late March that it was introducing brand new micro-fulfillment technology to one of its store locations.
Countdown was the first supermarket in New Zealand to launch online shopping 25 years ago, and the latest tech “will increase the availability of online shopping in the city by an additional 4,000 orders per week.” The retailer noted in its press release that the investment was made because “online shopping demand across Canterbury has increased by more than 30%.”
We’re wrapping up our Q1 recaps, just in time to start studying Q2
We’re inching closer to the end of our Q1 Retail Recap series, with just one more region left to cover: Latin America. As a reference, here are the other Q1 2021 recaps if you’re interested in additional learnings:
As well, Scott Gillies, Revionics’ regional director of APAC, previously shared his perspective on why supermarkets are the most trusted brands in Australia, and how all retailers can leverage pricing to win consumer trust. Check that out here.
Maisie is a content marketer and copywriter specializing in B2B SaaS, ecommerce and retail. She's constantly in pursuit of the perfect combination of words, and a good donut.