Chinese and Indian retailers are keenly aware of digitalization benefits but market barriers to entry are high and well-guarded by major retailers, according to a report by Euler Hermes.
The trade credit insurer’s Digital Retail Survey says that astute market players with a heightened awareness of digitalization have the potential to gain significant market shares.
In 2017 and beyond, Chinese real retail sales should stabilize at around +9% growth, slightly below the double-digit long-term average.
Retailers are betting on an online-to-offline (O2O) strategy to leverage opportunities offered by the rise of a new middle class. Electronics and online retailers should sustain the momentum, while the luxury segment is set to restructure – impacted by the anti-ostentatious policy.
India: All bets are off
Indian retail sales will stabilize at a +3/+4% growth in 2016 and beyond, supported by strong demand and accommodating government policies.
The food segment will benefit from a volume effect as consumer spending rises. Fashion profits reached 7.9% in 2016, while general retail enjoyed a more modest 2%.