Discretionary spending fuels Asean market growth

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Local small and medium enterprises (SME) in the houseware and small home appliances industry may consider exporting to some selected markets of Association of Southeast Asian Nations (ASEAN), the world’s sixth-largest economy.

The Hong Kong Trade Development Council (HKTDC) has released the results from its survey exploring the export potential in selected ASEAN markets, namely Thailand, Malaysia, Indonesia and Singapore as a regional hub.

“As growing affluence continues to translate into spending power, ASEAN consumers are moving from buying basic necessities to discretionary items. Along with the ongoing urbanisation, the rising number of residential property developments has boosted the demand for housewares and small home appliances in the major ASEAN cities,” the
HKTDC Research said.

It identified home furnishings, furniture, kitchenware, tableware, and home decorative items, such as ornaments, candle holders, clay pots, vases, cushion cover and rugs as in demand products.

The research paper said rising health consciousness and urban lifestyles are also expected to stimulate spending on modern small home appliances, such as air purifiers, electric fans, electrical toothbrushes, automatic coffee machines and cordless handstick vacuum cleaners.
During 2012-2017, the combined retail sales volume of household appliances in Indonesia, Malaysia and Thailand expanded by a compound annual growth rate of 6.7 percent, and amounted to 94.3 million units in 2017.

It cited figures from Euromonitor International indicating the retail sales volume of household appliances in these markets could reach 121.4 million units in 2022.

The HKTDC Research identified the millennial generation as the largest demographic group in ASEAN and the most powerful consumers.

“Millennials are seeking authentic, honest brands and products that match their values and attitudes and resonate with their aspirations.

They do not just want a functional product, they want a product with a story. Engaging them is about adapting to the evolving media landscape and reaching out through relevant content and storytelling,” it said.

The research paper noted the distribution channels for housewares and small home appliances are “very diverse,” ranging from home lifestyle stores to home improvement stores, as well as department stores, hypermarkets, home shopping, electrical appliances specialist stores, among others.

To penetrate these selected markets, some home furnishings and accessories retailers have opened their own stores in major ASEAN cities, while others expand through franchising.
“Brands that have reasonable brand recognition, a proven business model, good revenue records and sufficient support for franchisees can consider franchising as a means of overseas expansion,” the research paper said.

Apart from operating self-owned and franchised stores, it noted that routes into the ASEAN market are becoming more diverse and competitive for imported housewares and home brands.

“Selecting a distribution channel is an important aspect of building competitive advantage. Suppliers need to consider what a channel can offer, including location and reach, skills and resources, management costs and degree of control,” it added.

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