Five trends for Asian retailers in the Year of the Dragon

Asian cities are in full swing celebrating the Lunar New Year, with decorations in store aplenty for one of the year's biggest shopping periods. The Year of the Dragon symbolises power, strength and luck and the shopping mood in Asia is buoyant, with the majority of Southeast Asians planning to increase or maintain shopping budgets this season. Mastercard Economics Institute (MEI) also predicts APAC consumers will be spending more on travel and dining out this season.

Recent Microsoft Advertising research reveals product searches growing during the Lunar New Year season, with a spike in searches in the two weeks before. For example, according to Microsoft's internal data searches for clothing in Vietnam rose by an incredible 81% during Lunar New Year. Whilst the rise in Singapore (15%) and Malaysia (19%) were less dramatic, the increased volume shows how important it is for brands to capture the interest of last-minute shoppers.

Coming right after the festive Christmas shopping spree, analysts predict that everyday essentials and high-quality goods will be the focus for Chinese New Year shoppers. But even as spending rises, it’s not simply a return to pre-pandemic commerce. Consumers are evolving with shifts in product preferences and buying behaviours. There are also distinct differences between different Asian markets—one strategy may not fit all.

To breathe some dragon fire into your sales and ensure efficient marketing campaigns, these are the five key trends for Asian retailers to be aware of in 2024:

1. Mobile is everything

Against a background of global economic headwinds, marketers are looking to platforms where they can achieve maximum impact and bang for their buck. From marketing to omnichannel shopping, the route to Asian shoppers is via their mobiles. In fact, recent research revealed online shopping budgets are seeing the biggest rise: 60% of respondents said they planned to increase online budgets vs 41% for offline. Even hong bao—traditional red packets stuffed with cash—are now going digital.

According to research, hybrid shopping is the favourite way to shop for the majority (73%) but mobile is their preferred medium at every phase of the shopping journey with shoppers using their devices to learn, explore and buy.

It’s also pretty much a full-time shopping job as Southeast Asians love to shop via their mobile all day. However, there’s a surge (57%) after 4pm with another peak (22%) between 8pm and 10pm; something worth bearing in mind when it comes to scheduling communications around offers and discounts.

2. Physical stores still matter

Bricks and mortar stores remain important, particularly for certain categories, and the broad return to working from the office has also increased footfall in city centres.

Southeast Asian consumers still want to buy items such as jewellery, gift packs and home appliances in-store and they’re still physically buying holiday groceries. Unsurprisingly, it’s the opportunity for tangible product experiences which is driving people in-store for those types of items.

But it’s worth noting that consumers’ increasing use of digital is influencing what they expect from physical stores. Merging the physical and digital is growing in importance with shoppers wanting "experience centres" that offer showrooming and webrooming. 39% of APAC consumers want the in-store shopping experience to be more interesting or exciting—this is even higher in Malaysia, at 56%. Meanwhile, 61% of shoppers spend more in a store, and 90% are more likely to return, if they have a positive experience.

3. Shoppers are much more selective

While established brands remain popular, with Nike, Uniqlo and Adidas in the top ten apparel searches, there’s also a rise in "category explorers" during Lunar New Year, according to Microsoft Advertising. This suggests Asian shoppers are keeping their eyes open and looking for the best deals. 58% of shoppers fall into this category, having decided on what products to shop for, but not which brands. Just 13% are "brand lovers" who know both the products and the brands they want.

This is an opportunity for brands to capture new customers. With 29% of shoppers being "bargain hunters", seeking incentives before they buy, special offers and discounts should be a priority. There are a few key differences across the region though: In Singapore both men and women are equally driven by bargain hunting (42% of women vs. 43% of men) but in Indonesia, it’s the women who are predominantly looking for a deal (24% of women vs just 12% of men).

Certain categories are also seeing a definite spike during the festive period, such as apparel, beauty and personal care and gadgets. conversely, home and garden and sports and fitness categories have gone on the back burner.

4. Luxury remains in demand

Southeast Asia and Japan have seen high growth in consumers who view traditional luxury branded items as status symbols, but there’s also rising support for local premium brands. China is predicted to become the luxury industry’s biggest market by 2025. Microsoft Advertising’s data found high end brands such as Estee Lauder, Lancôme, Tom Ford, Dior and Chanel among the top beauty category searches during Lunar New Year in Southeast Asia.

Luxury is also a sector where the customer experience is a paramount. Consumers expect premium products to come with premium service. This means nurturing customer relationships much more intimately and ensuring a highly tailored, personalised service. Sustainability is also considered increasingly important when it comes to luxury goods.

5. New technology is making waves

From using generative AI to create marketing assets to "in-stream" shopping, smart retailers will be investing in ad tech and retail tech solutions. E-commerce giants like Amazon are creating immersive experiences, connecting commerce to content. Amazon Anywhere enables people to buy physical products in games and apps. Third party solutions are also available: Moët & Chandon recently trialled Vudoo’s shoppable video ads. Microsoft Advertising is also enabling advertisers to elevate customer shopping experiences with Bing Copilot New AI-powered Microsoft Shopping tools, through features such as buying guides, summarised reviews and insights, and price match.

Targeting has also become increasingly important. While budgets haven’t dropped, brands have moved away from a spray-and-pray approach to more a targeted and focused approach in terms of their platform investment.

Offering a range of payment options is also vital. APAC shoppers are more prepared than global averages (57% vs 55%) to leave a store or abandon an online shopping cart if they can’t check out using their preferred payment method.  Asian consumers also show interest for paying in cryptocurrencies and using BNPL (Buy Now, Pay Later) options.

In the face of evolving consumer behaviours, technological advancements, and economic uncertainties the retail landscape in Asia is undergoing significant transformation. But while challenges persist, Asian consumers are ready to engage and spend, embracing both online and offline shopping.

Retailers who prioritise customer experience and harness new technologies stand to reap the benefits of this shift. The New Year festive season is a high-pressure time for retailers as well as a huge opportunity to win new customers. But it will take personalisation and innovation to capture hearts and wallets.

Rohit Dosi is vice president and general manager for Strategic Revenue Partnerships at InMobi.