Consumer spending is booming in Southeast Asia

A consumer spending boom in Southeast Asia is causing a kind of gold rush among retailers and startups. One of the major e-commerce players in the region is Singapore-based Lazada, now owned by China’s Alibaba. Here’s a look at consumer spending in the six markets in which Lazada operates.

Consumer spending in Indonesia reached an all-time high of nearly $98 billion (all values in USD) in the first quarter. Retail sales growth has fluctuated widely from month to month, but it has remained above 2 percent most months and sometimes double that.

Consumer spending in Malaysia reached $41.6 billion in the third quarter of 2017, an all-time high for the country. Year-over-year growth for each quarter has continued to rise, as well. Retail sales growth has been lower than in 2017, but at just under 10 percent for the first couple months of the year, growth has been good.

The Philippines has seen sustained growth of consumer spending from quarter to quarter over the last several years. In the first quarter of 2018, it hit nearly $30 billion. Retail sales growth surpassed 4 percent in March.

Consumer spending in Singapore was more than $28 billion in the fourth quarter of 2017. This was 5 percent higher than a year earlier. Retail sales growth took a hit in January, falling nearly 8 percent, but it grew more than 8 percent in February.

Consumer spending in Thailand reached about $41 billion in the fourth quarter of 2017. Spending has been growing YoY and even from quarter to quarter over the last year. Retail sales growth has been more than 9 percent this year.

Consumer spending figures for Vietnam are a bit delayed, but it has seen sustained growth for several years. Spending reached about $135 billion in 2016. Over the last year, retail sales growth has been well above 10 percent most months.

The growth potential in Southeast Asia easily illustrates why Lazada is there. It could also be why Walmart is looking to Asia. India holds a lot of potential on its own and the most potential in South Asia. Should Walmart choose to expand using its Flipkart acquisition, Southeast Asia markets are the obvious choice.

Southeast Asia is also important for startups seeking distribution. VentureFace CEO Peter Xie recommends to his clients that they start out finding distribution and retail partners in this region because it’s easier to expand to new markets. Local retailers in these markets also offer better terms for startups typically than large markets like the U.S., where consignment is a general rule.

Retail wars can have unforeseen consequences, but more competition can create new opportunities, as well. For now, though, the markets are full of untapped potential.

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