The Global Retail Sector’s Centre of Gravity Continues to Shift Towards Asia Pacific

The vast Asia Pacific region is home to the majority of the world’s population. This means that the region is of outsized importance to the global retail sector. In 2023, it accounted for 37% of the world’s total retail sales, by far the highest share of any region globally. By 2028, the share is expected to rise to 40%. The size of the Asia Pacific consumer base, however, only partially explains the region’s importance to global retail.

Three key demographic shifts are powering Asia Pacific’s retail evolution

Three major demographic shifts help explain the remarkable ascent of Asia Pacific’s retail sector. One is the growth of the middle class, ie households with annual disposable incomes of USD45,000-100,000 in developed economies and households with annual disposable incomes of USD15,000-45,000 in developing economies.

From 2013 to 2023, the proportion of middle-class households across Asia Pacific increased from 18% to 28% of the total, with the share rising in all major economies in the region aside from Japan and Singapore

^{Source: Euromonitor International}

The middle class surge has been accompanied by a corresponding increase in disposable incomes and discretionary spending. This has helped to power an unprecedented retail sales boom in the region.

The second shift is the rising tide of urbanisation. Between 2013 and 2023, Asia Pacific flipped from having a majority rural population to a majority urban one. The higher population densities of cities support the proliferation of modern retail formats, such as convenience stores and supermarkets - formats which give consumers an opportunity to spend more than they might at more traditional retail formats. City living also supports the growth of e-commerce, as it is far easier to build and operate the infrastructure needed to support delivery of online orders in urban centres than it is in sparsely populated rural areas.

The third shift is a massive increase in the levels of internet connectivity across Asia Pacific, with the share of the population using the internet more than doubling from 27% in 2013 to 61% in 2023. Now that most Asia Pacific consumers can access the internet from their smartphones, the potential of the region's e-commerce sector is being fully unleashed.

A mobile-first mindset has shaped Asia Pacific’s online sales boom

The meteoric rise of connectivity across Asia Pacific has had a transformative impact on the region’s retail landscape. From 2013 to 2023, Asia Pacific’s retail e-commerce sales increased by a breathtaking 630% to USD1.8 trillion. As a result, Asia Pacific accounted for 46% of the world’s retail e-commerce sales in 2023.

Infrastructure improvements have been critical in boosting Asia Pacific’s e-commerce sales. The COVID-19 pandemic helped accelerate online sales growth, as well. It is the advent of the mobile phone, however, that has done the most to drive the boom in digital sales. Aside from Japan and Singapore, all Asia Pacific countries are “mobile-first” markets. As a result, when the region’s shoppers make online purchases, they are overwhelmingly doing so on their smartphones.

In 2023, 81% of Asia Pacific e-commerce sales by value were transacted via mobile phone, with most of this activity taking place on mobile apps

^{Source: Euromonitor International}

This places Asia Pacific at the vanguard of global mobile e-commerce (m-commerce), and innovative m-commerce models such as livestreaming are finding popularity across the region.

Retailers and brands cannot treat Asia Pacific as if it is a monolithic bloc

Looking to capitalise on the region’s economic growth and vast consumer potential, retailers and brands increasingly view Asia Pacific as a target for geographic expansion. In such an expansive and diverse region, however, there are huge differences in levels of economic development and cultural attitudes towards consumption from country to country. In light of this, it would be a mistake for multinational retailers and brands to take a one-size-fits-all approach to Asia Pacific.

While East Asia — which encompasses China, Japan and South Korea — continues to grow richer, more urban and more connected, its ageing population is creating new challenges for retailers there. Despite this, East Asia’s importance to global retail is incontrovertible, thanks to the massive Chinese market and its status as the source of most mobile e-commerce innovations.

Despite its enormous population, South Asia has historically punched below its weight in global retail. However, in India, the world’s most populous country and the most dynamic retail market in South Asia, a fast-growing middle class, an enormous population of young consumers and a vibrant economy are finally starting to unlock its true potential.

Southeast Asia — which encompasses Indonesia, Vietnam and the Philippines, among other markets — is now the most dynamic region in all global retail. Rapid urbanisation, an expanding middle class and an unprecedented e-commerce boom — supported by Southeast Asia’s love affair with livestreaming — are powering remarkable growth in retail sales across the region.

Powered by favourable demographic shifts, Asia Pacific’s importance to global retail will continue to grow thanks to the digital transformation of the region’s retail sector. Although China is in no danger of losing its title as Asia’s retail champion, India and the large economies of Southeast Asia are poised to remain the fastest-growing retail markets within the region.

Read our strategy briefing, Asia Pacific: Retail’s New Centre of Gravity, for more insights into the transformative impact that the evolving Asia Pacific consumer base is having on the global retail landscape.