An Executive Voices Blog by Bob Hoyler, Insights Manager for Retail and Digital Consumer at Euromonitor International

In 2023, global retail sales recorded year-on-year growth of 1% in constant terms (i.e. after stripping out the effects of inflation). By recent historical standards, this is not particularly impressive, but it marks a substantial improvement over the essentially flat sales growth recorded by the global retail sector in 2022—a year when sky-high inflation led consumers to cut back significantly on discretionary purchases as they prioritized spending on groceries and household essentials.

The return to growth for the global retail industry in 2023 was powered primarily by two factors. The first is the continued ascendance of eCommerce. While the rate of retail eCommerce sales growth has slowed significantly since the unprecedented boom of the pandemic years, it appears to have normalized at a healthy—if subdued—clip, recording year-on-year growth of 5% in constant terms in 2023.

Taken against the backdrop of store-based retail’s ongoing struggles, this means that eCommerce penetration increased to 22% of global retail sales over the course of year. Although consumers of all age groups (including the digital natives of Generation Z) consistently express a preference for in-store shopping, the fact remains that this stated preference does not seem to match reality, as consumers across generations continue to shift their spending online. With no end in sight to this trend, eCommerce looks set to significantly expand its share of total retail sales going forward.

This rise of eCommerce means that the ranks of the world’s largest retailers are now dominated, more than ever before, by online marketplaces. In fact, five out of the 10 largest retailers in the world in 2023 were digitally-native marketplace operators. As these players have strengthened their hold on global eCommerce, consolidation in the retail sector as a whole has accelerated. Indeed, in 2023 the world’s top 10 retailers accounted for 18% of global retail sales—representing an increase of five percentage points in the span of only five years.

Brands need to be aware of this shift, as their path to the customer—especially through the world’s fastest-growing retail channel—is now dominated, more than ever before, by a small handful of powerful companies. For brands, keeping in the good graces of these entities can be the difference between success and failure.

The second factor driving the return to growth for the global retail sector is the increasing purchasing power of the Asia Pacific consumer base. Thanks to a rising middle class, rapid urbanization, and a striking increase in internet connectivity in recent years, Asia Pacific’s retail sector is roaring. In 2023, the region led the world in retail sales growth for the sixth time out of the last 10 years, recording a year-on-year gain of 3%. Asia Pacific also stands out as being by far the largest regional market in terms of eCommerce sales, accounting for 46% of the world’s online sales in 2023.

Within Asia Pacific, China continues to be an indispensable retail market, accounting for over half of total sales across the region. However, as China’s population starts to decline and its retail sector become more competitive, other markets in the region are becoming hotspots for retail investment. For example, India passed China in 2022 to become the most populous nation on the planet, while fast-growing Southeast Asian markets include Indonesia and Vietnam. As these countries’ relatively young populations and improving income levels are expected to continue to support strong retail sales growth, brands should be taking steps to make sure their plans include these markets.

This is especially true as one of the most impactful retail developments today exists at the intersection of the ascent of eCommerce and Asia Pacific’s increasing importance. This is the transformation of social media platform TikTok and its Chinese analogue, Douyin, into key eCommerce players.

Owned by Beijing-based tech firm ByteDance Ltd, TikTok and Douyin have attracted millions of users thanks to their focus on short-form video content, which resonates with younger consumers. In 2021, Douyin began to double as an eCommerce portal in China, where it has emerged as a livestreaming giant. And TikTok’s TikTok Shop livestreaming feature is also finding success—particularly in Southeast Asia. In just three years, ByteDance has gone from being a marginal player in the retail sector to the fifth largest retailer, by value sales, in the entire world.

However, ByteDance-owned properties are facing increasing regulatory scrutiny in some markets. TikTok has been banned in India since 2020, and the platform risks running afoul of another well-publicized ban in the U.S. But with livestreaming eCommerce proving to be an incredibly popular format across both China and Southeast Asian nations, and with ByteDance-owned platforms dominating the market in those countries, the company looks set to benefit greatly from the overarching factors that are driving global retail sales growth at the moment.

As a result, brands that have not already done so should think critically about investing in livestreaming operations in the Asia Pacific region, where partnering with key influencers can be an effective strategy to drive sales of licensed products.

Euromonitor International helps organizations understand where and how consumers shop through both traditional and emerging retail channels. Comprehensive international coverage and insights as part of syndicated offerings provide retailers, brands, and others in the industry with data and analysis to help guide decisions on investment, expansion and product positioning by category, channel or country. Bridging methodologies based on data science and on-the-ground research, we provide context to strategic and tactical data, helping you answer your biggest challenges and identify opportunities.

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