Shifting Market Frontiers: Identifying Asia Pacific’s Secondary Cities for Retail Investment

Strategy Briefing

About This Report

May 2017

The Asia Pacific region is expected to be at the forefront of global economic growth in the 21th century. Its major cities have historically been the principle drivers and locations for retail investment, however across certain countries, most evidently China, there is a growing shift of activity towards smaller urban regions thanks to rising incomes and improving standards of living. Still, this is not a uniform trend as other markets in the region are still more dependent on their major cities

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Shifting Market Frontiers: Identifying Asia Pacific’s Secondary Cities for Retail Investment

Asia Pacific home to the largest and fastest growing retail market

China is by far the largest retail market, though India is one of the fastest growing globally. Rising consumer affluence, reforms and broadband internet uptake are some of the major reasons underpinning this trend, making this a highly sought after market, given the stagnating performance of Western European countries.

China contains the largest number of secondary cities

In terms of developing countries in the Asia Pacific region, China, dominates the market for secondary cities with 41 cities in 2016 having consumer markets of USD10-50 billion in total disposable income. As well as having sufficiently large consumer markets, Passport Cities data also showed that a number of secondary Chinese cities are displaying robust economic growth and boast household disposable income that can be equated to some primary cities such as Tianjin and Shenzhen.

Indian cities at the heart of economic growth

Secondary city development in India is less pronounced compared to that in China. As of 2016, there were only seven cities with consumer markets of USD10-50 billion. However, with India expected to be one of the frontrunners in economic growth globally, the potential for lucrative retail opportunities in its secondary cities is expected in the medium term.

Concentration of wealth in primate cities in other developing Asian countries

In other developing Asian countries, secondary city development is rather limited. This is largely due to the predominance of primate cities (disproportionately larger than any other city) which continue to house the largest share of wealthy households and absorb the largest share of investment. For example in Thailand, Bangkok’s consumer market is 13 times the size that of the next largest city.

Introduction

Scope
Key findings
Shifting market frontiers and the Asian Century
Retail market potential in Asia Pacific
The importance of secondary cities in the Asia Pacific region
SWOT analysis of secondary cities
Distinguishing primary, secondary and tertiary cities
Factors determining city performance

Key Markets: China

Retailing in China overview
China home to the largest number of secondary cities
Purchasing power in Chinese cities
Purchasing power and growth in China’s cities
Case study: Xiamen

Key Markets: India

Retailing in India overview
Indian cities to be among the fastest growing globally
Purchasing power in Indian cities
Purchasing power and growth in India’s cities
Case study: Pune

Key Markets: Other Asia Pacific Countries

Retailing in other Asia Pacific countries overview
Primate cities dominate in other emerging Asian consumer markets
Purchasing power and growth by city type in other Asia Pacific countries
Household disposable incomes in 2016 across select countries
Case study: Surabaya

conclusion

Concluding remarks

Report Definitions

Report definitions