actice at Kearney, Apac nations had mixed performance in 2023 compared with the previous year.  “India has been a great growth story and is becoming more attractive for investors with a large consumer base with fast-rising incomes supported by a strong emphasis on infrastructure building and digitalization,” he told Inside Retail. Forecasts predict that in the next four years (FY 27–28), India will overtake Germany and Japan and become the world’s third-largest economy. China is still the focus On the other hand, he said that China remains attractive but has dropped three spots driven by the overall softer economic outlook of the country.  China is the world’s largest retail market, accounting for almost 50 per cent of global retail transactions.  It was valued at $3.8 trillion in 2022 and grew at a CAGR of 8 per cent from 2017 to 2022. Despite sales remaining below the pre-pandemic level and weak consumer sentiment, retail growth is expected to reach 5 per cent from 2022 to 2027. Estimates suggest China’s social commerce market enjoyed a 40.25 per cent increase from 2021 to 2022 and is expected to grow at 17 per cent per year between 2021 and 2025, topping $1 trillion in annual sales in 2023.  Live streaming has become immensely popular. By 2025, Douyin, a short-form video platform, like TikTok, is expected to become the largest Chinese social media platform and brands are actively seeking to tap into it for social commerce. China’s e-commerce market, worth $1.9 trillion in 2022, grew at 28 per cent CAGR from 2017 to 2022 and is expected to reach $38 trillion by 2027. Other highlights Many Southeast Asian economies have also dropped in terms of ranking in the report as many retailers struggle to achieve profitable growth and scale in their markets. India took the top spot in the GRDI ranking, followed by the Dominican Republic, Saudi Arabia, China, Azerbaijan, Egypt, Kazakhstan, Malaysia, Turkey and Indonesia. The report highlighted the Middle East, as the next global retail hot spot, as an expanding, younger, urban and progressively more affluent population is sustaining fast-paced retail growth in these marketplaces. Projections indicate that total disposable income in MEA (Middle East and Africa) nations will double by 2040. On the digital side of the retail equation, these countries are fueled by quick commerce, hyperlocal delivery services and digitalisation of small traditional retailers. The rise of omnichannel Major retailers in many emerging economies are also making shopping more convenient by investing in omnichannel capabilities, including options such as click-and-collect and partnering with digital platforms to increase logistical efficiency. According to Pathak, an omni-channel play is a must-have for any retailer in Southeast Asia.  “Consumers expect their retailers to provide them with a physical store experience complemented by the convenience of online shopping. The key challenge, however, is that the online path to profitability has remained elusive for many retailers,” he added. He reiterated that it will be important for retailers to be deliberate on the assortment and delivery promise as well as clear on the monetisation benefits from data and analytics to enhance profitability.  “In the past, we have seen many global players enter, struggle and exit these markets. Close analysis of these factors will be key for survival,” he noted. Ongoing growth in e-commerce Globally, according to the report, e-commerce is projected to be the fastest growing retail channel, in position to account for approximately 24 per cent of retail sales by 2027.  It is projected to grow at twice the rate of bricks-and-mortar retail, with a CAGR of about 11 to 12 per cent per year.  Retail e-commerce is also projected to show a strong increase in sales, adding an absolute value of $1.4 trillion from 2022 to 2027.  More than 64 per cent of this opportunity is expected to come from emerging markets. Apac nations are expected to lead the digital charge with rapid growth anticipated in China, Indonesia, Malaysia, Vietnam, Thailand, and India. Innovation is key When it comes to e-commerce, retailers are also using innovation to provide consumers with immersive in-store experiences, personalisation, and the enhanced convenience of shopping online. “AI has significant potential to drive retail transformation. Many use cases are being deployed by retailers across the Asia-Pacific region. It is too early to declare success and measure ROI. The deployment will also vary by the retail format,” Pathak opined. He foresees a much greater influence of AI on larger purchases in supermarkets, hypermarkets and e-commerce where the shoppers’ browsing times are higher and the ability to influence purchases is greater.  “We are seeing use cases along assortment recommendations, predictive pricing recommendations and customised promotions The challenge, however, remains in having robust interconnected data and systems that allows for seamlessly leveraging data across multiple systems for decision-making at scale,” he pointed out. What’s next? In 2024, Pathak believes retailers have a prime opportunity to become ruthlessly consumer-centric and be unequivocal internally and externally on what their core proposition is to drive organisational success.  In the last few years, he has seen many retailers diversify efforts without aligning with their fundamental consumer proposition, due to a “fear of missing out”.  “Identifying an approach that best suits their business demands a meticulous understanding of their consumer base, aligning business strategies with consumer needs, and fostering innovation that resonates with their core proposition,” he stressed. He recommends that retailers need to be distinctive in terms of their value proposition. “During inflationary times, it is the players on the extreme ends of the pricing spectrum that do well. There are premium retailers whose affluent shoppers are less price sensitive and hence they can pass the inflation along,” Pathak said. Alternatively, he pointed out that retailers who can bring assortment at the most affordable pricing would do well as they will be able to keep their customers loyal and retain (and even increase) volume sales.  “It will be about keeping costs low and driving tactics like larger private label penetration to keep margins higher. It also becomes important at these times to really prioritise investments into the future versus winning today,” he concluded.