The global economic downturn has depressed worldwide consumer spending, sentiments and investor confidence and the retail industry, as with other industries, has been adversely impacted. That said, the PricewaterhouseCoopers thought leadership study entitled Glimmers amid the gloom: The outlook for the retail and consumer products sector in emerging markets suggests that there some sub-sectors within the Retail&Consumer industry that are performing robustly, globally, despite market conditions.
There is little evidence that the expansion plans of multinational supermarket chains will falter. Multinational retailers, such as Wal- Mart, Carrefour, Tesco and Metro, will continue to expand their operations in emerging markets. Asia remains particularly buoyant despite the global economic downturn.
Asia is the most exciting growth region for apparel retailers, with China and India expecting double-digit growth rates for sales. India is the third-largest apparel market after China and Japan, and is expected to grow faster than both these countries in the next two years.
Fast food restaurants
Fast food is proving to be recession-proof in emerging markets. In Asia, while affluent consumers are trading down from fine-dining options, they and lower income consumers can still afford to eat out. Restaurant chains are rapidly increasing their outlets and are keeping costs down to fund this expansion.
The FMCG sector faces competitive threats from retailers’ private- label goods. The trend across Asia and Latin America is for firms to penetrate markets more deeply and reach lower-income consumers. At the same time, firms are concentrating on reducing their supply chain costs and investing in marketing.
Sales of luxury goods in Asia are defying the current financial crisis and this region has the brightest outlook for the future, with 15,300 households estimated to have a net wealth of over USD 1 million in 2008. The Indian luxury market presents tremendous growth potential; however, the current regulatory environment may prevent rapid expansion.
Consumer durables and electronics
Asia, already the largest manufacturer of consumer electronics, is also emerging as one of the biggest buyers of computers, colour TVs, DVD players and mobile phones. Consumer electronics majors are cautiously optimistic. Despite the current economic crisis, a steady growth in demand is forecast for this region, as Asians continue to spend on electronics.