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What it takes for grocers to grow with emerging Asia

What it takes for grocers to grow with emerging Asia

Despite dazzling macro trends, grocers in Asia need to make critical adjustments to achieve retail success in emerging markets.

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What it takes for grocers to grow with emerging Asia
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This article originally appeared in the Bangkok Post.

These would seem like the best of times for the grocery business in emerging Asia.

Home to about 44% of the world’s population, Asia’s emerging markets boast macro trends that would delight any retailer: healthy GDP growth, a rapidly rising middle class and populations that are steadily moving into cities, where the economics of distribution favor modern trade. By Bain & Company analysis, 30% of the world’s retail growth through 2017 will come from Asia’s emerging markets.

But if the growth is strong and prospects are bright, why do some companies pull ahead while others follow distantly or fail? India’s Big Bazaar grew to $2.1 billion and earned 6% margins in 2012. China’s RT-Mart nearly tripled its revenues from 2007 to 2011, and Indonesia’s Hero Supermarket watched its revenue growth significantly outpace the total market during those years. However, in the same retailing environment, some of their multinational competitors lost share.

Despite the dazzling macro trends, there are a host of obstacles that make this region a tricky one. In addition to dealing with intensified competition and a fragmented environment, retailers find they need to adapt their strategies to vastly different countries in varying stages of development. They also must grapple with each country’s specific challenges: India’s poorly developed infrastructure, China’s massive urban traffic problems, Indonesia’s regulatory and protectionist measures. Grocers find it’s not always possible to grab share by repeating a standard or imported formula. Companies need to make critical adjustments.

Read the full article in the Bangkok Post

Serge Hoffmann is a Bain & Company partner based in Hong Kong, Sharad Apte is a partner based in Bangkok and Mike Booker, a partner in Singapore, leads Bain’s Consumer Products and Retail practices in Asia-Pacific.

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