Global retail expansion continues unabated

02 Jun '15
3 min read

Despite significant regional challenges, international retailers are taking the long-term view on investments in developing markets and are persisting in finding solutions, according to global management consulting firm A.T. Kearney.

The firm’s Global Retail Development Index (GRDI) 2015 ranks the top 30 developing countries for retail investment. Using more than 20 macroeconomic and retail-specific variables, GRDI identified not only the markets that are most successful today, but also those that offer future potential .

China emerged as the GRDI's top country for the first time since 2010, and its retail market is expected to grow to $8 trillion by 2022. Sub-Saharan Africa continued to make inroads into the rankings, with three countries (Botswana, Nigeria, and Angola) in the top 30 and several more on the verge of entering soon. And across the world, "small gems" such as Uruguay, Qatar (ranked for the first time), and Mongolia provide pockets of untapped potential in less populated markets.

One of the GRDI's recurring themes is the "window of opportunity" for investing in physical retail in developing markets. The concept is based on the reality that markets pass through four stages of retail development (opening, peaking, maturing, and closing) as they evolve from informal trading to more mature, organised markets, in a process that typically spans 10 to 15 years.

This year's survey shows how markets such as Peru and Indonesia are beginning to peak, while others such as Chile and Mexico are near maturation. It also shows that the typical path and time frame can vary. For example, Russia's development has taken a nonlinear path as the country took a step back in 2014 due to increased risk.

In this year's special feature, GRDI has examined the prospects for luxury goods in developing markets. Luxury remains a bright spot in emerging markets, as the wealthy have proven less vulnerable to economic woes than the general population, and mall developers have taken advantage of increased consumer spending and mobility. In that section, the GRDI explored which markets present the most long-term opportunity and how luxury brands are adapting their strategies to succeed.

The relative instability in the developing world is reflected in the 2015 rankings. In the Middle East, markets were rocked by a record drop in oil prices and ongoing regional conflicts. Latin America fell from last year's heights as growth decelerated amid concerns over structural economic issues. Meanwhile, Russia took a big step back in the rankings under the weight of international sanctions and a financial crisis. Regional winners this year include Asia, which outpaced other regions despite a slowdown in growth. (SH)

Fibre2fashion News Desk – India

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