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China will witness the retail wave rise in its next 50 cities even as Hong Kong continues to leverage its proximity to the mainland to fuel its retail boom. Meanwhile, India still awaits the new FDI norms to kick-start investments. However, interest is also rising for the favourable demographics of Philippines, Thailand, Sri Lanka and Indonesia, where evolving consumer preferences influence expansion strategies for retailers. The retail market drivers in these countries are a growing middle class and the growing share of young, generously salaried and highly aspirational population from the IT/ITeS sector. Similar to what is being seen in India and China, the Governments of these countries are in various stages of opening up the retail markets for foreign participation. Like India, the Philippines benefits from a considerable young English-speaking talent pool and service-oriented culture. The resultant high incomes and a enhanced level of overseas worker remittances are driving domestic consumption. With massive strides forward in infrastructure, utilities and tourism (all of which attract investments) we foresee enhanced job creation, which will directly influence consumption. The fact that the Philippines currently has four of the world’s 12 largest malls stand testimony to this. Despite various setbacks, retail consumption in Thailand has expanded by more than 50% over the past decade. In the past five years, Bangkok has received 1.73 million square meters of new modern retail space – an impressive increase of 49% from 2008. Apart from continued economic growth, rising incomes, new residential catchment areas and the evolution to modern retail formats, Bangkok also benefits from its vastly improved mass transit infrastructure. Sri Lanka – particularly Colombo – is another retail hotbed attracting a lot of attention. It has witnessed a steady upward trend in the IT/ITES sector during the past decade, with several off-shore centres now operating in the country. Colombo already has eight operational shopping malls, with an average vacancy rate of only 3-8%. Another 1.05 million square feet of organized retail space will be added in Colombo by 2015. This implies that, from a geographical expansion into the Asian markets, retailers are advised to adopt a two-pronged approach – Vertical penetration into existing markets such as China, India and Hong Kong, and a flanking strategy for countries such as Philippines, Thailand, Sri Lanka and Indonesia. Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India |
