"Reversing a two-decade long policy of expansion, European fashion brands are turning away from the Asian market. Decreasing consumer expenditure amid the US-China trade war is luring brands away from the Asian markets with challenges like Brexit and protests and strikes further adding to woes. Brands like Germany-based Metro and France-based Carrefour have exited their European operations in the recent past with UK-based Tesco planning to join the bandwagon. The retailer, which exited its China business in 2013 and the South Korean market in 2015, now plans to offload its Malaysia and Thailand operations."

Reversing a two-decade long policy of expansion, European fashion brands are turning away from the Asian market. Decreasing consumer expenditure amid the US-China trade war is luring brands away from the Asian markets with challenges like Brexit and protests and strikes further adding to woes. Brands like Germany-based Metro and France-based Carrefour have exited their European operations in the recent past with UK-based Tesco planning to join the bandwagon. The retailer, which exited its China business in 2013 and the South Korean market in 2015, now plans to offload its Malaysia and Thailand operations. The sale of these operations will fetch the company over $9 billion which it plans to use to restructure its UK business which recently cut thousands of jobs and shifted to new formats including checkout-free stores amid tough competition from discounters and Brexit-related pricing pressure.

European retailers redirecting investments

Besides selling their Asian operations, many European retailers are also protecting their core operations by redirecting their investments. France-based Carrefour sold 80 per cent of its Chinese operations to local rival Suning.com in June 2019. The company had pulled out of the Indian market five years ago. Similarly, in November 2019, Metro announced its intention to offload China business to Wumei Technology. It now plans to sell off its Japan, India and Pakistan units. These brands are challenged by the rapid advance of online shopping which has led to the rise of numerous regional brands. Two years ago, Chinese hypermarket chain, Sun Art Retail Group, sold a 36 per cent stake to internet giant Alibaba Group Holding for $2.9 billion, boosting its digital capabilities.

Retailers bucking the trend

However, like exceptions to every rule, few Western retailers are expanding their Asia operations with the help of local players. French retailer Auchan Retail recently boosted its stake in Sun Art. In November, Walmart unveiled plans to open about 500 stores and depots over five to seven years in China. The company’s retail outlet Sam Club managed to thrive in the Chinese market by upscaling its operations and offering foreign goods to affluent shoppers. Its competitor, Costco Wholesale also opened its first outlet in Shanghai in August 2019.

UK’s online supermarket Ocado Group took the partnership route to boost its international presence. The group collaborated with the Japanese retailer Aeon to set up robotic warehouses for online grocery sales. It believes this alliance would prove to be an invaluable experience for the company as Aeon has a deep understanding of customers’ needs and has successfully configured its technology to meet the specific challenges and opportunities of the Japanese market.