Negotiating a stronger APAC retail landscape - what senior executives should think about today
With the various impacts of the pandemic receding in the rear-view mirror, the mood in the retail sector in many Asia-Pacific (APAC) countries is lifting. Businesses are selectively expanding - and sometimes streamlining - their retail offerings all across the region. Big names are optimising store networks in favoured markets and entering new areas. And the retail sector is more generally is responding to a structural shift towards online shopping, and other technological and regulatory changes that require big changes in operational systems. These new opportunities, exciting as they are, bring with them heightened administration pressure and risk for senior management teams. But what are the noticeable features of this developing environment?
The key trends shaping APAC retail
In many key APAC markets, consumer demand continues to improve, particularly in cosmetics, fashion, technology and the automotive industry. In Japan, South Korea and Vietnam, brands are benefiting from a rebound in international visitor numbers. Meanwhile Singapore, Malaysia, the Philippines, Thailand and Taiwan ROC are also expected to see stronger demand.
In other APAC regions, the outlook is more mixed. In Hong Kong, SAR and Mainland China, many retailers are restructuring business strategies in response to softer sales and economic uncertainty. Some brands are relocating key talent and HR departments from Hong Kong, SAR to areas that are economically stronger (like Singapore), or more cost-effective, (like Mainland China).
Technology is disrupting how business is done
A.I, digital e-commerce platforms, as well as buy now, pay later and subscription buying services, have become increasingly important in the retail landscape.
Competition from companies like Amazon, Shopee and Coupang, which have rapidly expanded their market presence, are disrupting traditional retail giants. Retailers now integrate digital strategies, leveraging data analytics, and personalised marketing to stay competitive.
Back-end systems are becoming more automated too. This includes advanced HRP solutions that offer efficiencies around leave requests and approvals, and enhanced reporting and analytics on vacation trends, absenteeism and workforce productivity. Such HRP improvements enable retail companies to create a more efficient and employee-friendly work environment, ultimately leading to higher job satisfaction and greater productivity.
Sustainability - a growing theme
Sustainability is also playing a growing role, with consumers increasingly considering the sustainability credentials of both products and the businesses that sell them. Brands that can demonstrate a commitment to ESG and sustainability can gain a competitive edge, especially among younger, more socially and environmentally conscious consumers. And retailers are responding by adopting practices such as reducing carbon footprints, sourcing eco-friendly products, and promoting circular economy initiatives.
Complying with local governance obligations is critical
Major market changes - the country-specific rules that govern the business operating environment - also continue to evolve.
Examples include China’s Revised Company Law (2023), which has raised new and complex tax questions for multinational enterprises. Another is the business sustainability legislation that many APAC countries are now working on, in the wake of the IFRS’ release of the global ISSB Standards in June 2023.
Rule changes can be both hyper-specific and extremely important - in South Korea for example, it has been clarified that a general 12-hour weekly overtime limit applies only to work in excess of 40 hours in a week (for full-time workers).
All this means that APAC retail businesses face pressure to understand, and stay compliant with, shifting local laws. Responding to differences in labour laws and regulations across different regions – namely identifying which ones are more flexible or otherwise favourable - is critical in designing business strategies.
And where retailers are restructuring operations, it is important to be on top of the costs that come with change. For example, where employment terminations are involved, what are the country-specific regulations and how do you make sure you are not unwittingly caught short in complying with them?
What APAC retail businesses should think about going forward
For retailers, understanding and complying with diverse local cultural preferences and regulatory obligations across multiple jurisdictions can prove challenging.
Multinational retailers must verify that each country operation complies with local laws, as well as internal global policies. It is easy for centralised management teams to lose visibility and control, particularly when entering new markets. And it is easy for systems to become fragmented.
Not getting administrative and governance matters right brings with it business risk – from operational inefficiencies to potential fines and loss of reputation. And it can also detract from the main goal of any business; an effective strategy and how best to access customers.
It can therefore often be helpful to seek professional support when looking to ease the burden.
TMF Group experts can help
TMF Group provides a broad range of critical compliance and administrative services, grounded in both local and global expertise.
We have deep experience across the APAC region. Our understanding of local business processes can fast track your decision making, reduce your business risk and save you time and money.
Our services can be specific to one area, or can be part of our broader, integrated management solutions. And we ensure ongoing, dependable access to best business practice - as the operational environment evolves, we’ll keep you current.
Rethinking the way you onboard new employees? Looking to solidify your local presence? Get in touch to find out more about how we could assist you. If you want to know more, talk to us.
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