Global Retail Development Index ranks India at No. 5

29 Jun '12

6 min read

Michael Moriarty, A.T. Kearney partner and study co-leader commented, “Given the accelerated growth rates of developing countries compared to the anemic growth in European and North American markets, global retailers must have a strategy for expansion into developing markets. In the past five years, U.S.-based Wal-Mart, France-based Carrefour, U.K.-based Tesco and Germany-based Metro Group saw their revenues in developing countries grow 2.5 times faster than their home markets.”

Latin America’s expanding, dynamic retail sector and strong economic growth has driven strong results with seven countries included in the GRDI this year. Many retailers have entered Latin America in the last few years.

Retail sales per capita in Brazil (#1 in the Index) have grown 12 percent per year for the past four years to reach US$ 5,514, the third largest of the countries ranked in the GRDI. The retail market size increased 15 percent last year, and consumer spending has increased by nine percent per year since 2007. In 2011, retail sales accounted for 70 percent of Brazil’s consumer spending.

Chile (2nd) has one of the most sophisticated and competitive retail markets in the region. The country is one of Latin America’s fastest-growing economies, with expected GDP growth of 6.2 percent in 2012. Inflation is low and country risk is low.

China moved up in the 2012 GRDI, ranking #3. The country’s future retail growth remains positive, with double-digit annual sales growth expected. However, inflationary pressures are driving up rents 30 percent per year, and labor costs are growing 15 percent a year. China is one of the world’s largest luxury goods markets, with more than 100 brands active in the country.

Uruguay (4th) is becoming a retail destination. Despite its relatively small local population,

Uruguay’s high urbanization and strong consumption levels are attractive to retailers. The economy is progressing - annual GDP growth of 6 percent GDP since 2007 and unemployment is at an all-time low.

India (5th) remains a high-potential market with accelerated retail market growth of 15 to 20 percent expected over the next five years, supported by GDP growth of 6 to 7 percent, rising disposable income, and rapid urbanization. Changes in FDI regulations were a major story in India last year. The changing FDI climate has provided an interesting dynamic to several international retailers’ entry and expansion plans for India. Organized retail penetration remains low, at 5 to 6 percent indicating room for growth.

The Retail Talent Index

One of the key lessons learned over the 11 years of analyzing international retail expansion is the importance of finding and developing local talent to make global expansion a success. New markets are only as effective as their workforces, and harnessing the local talent pool is critical for reaching customers.

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