Emerging Market Retail Growth Outlined in New Report
New York, NY – Chile ranks first place in terms of global retail market potential in A.T. Kearney’s latest Global Retail Development Index (GRDI).
With Uruguay, Brazil, Peru, Panama, Colombia, Costa Rica and Mexico also in the index of top emerging economies ready for retail expansion, Latin America “continues to show strength as a regional retail growth market,” according to the business consultancy.
The region maintains its dominating position in the GRDI, with three countries in the Index’s top five positions, as an expanding middle class offers lucrative opportunities.
The “diverse retail ecosystem” includes Brazil’s huge market, Chile’s sophisticated mid-sized market, and “small gems” such as Uruguay, where high consumption levels are attractive to luxury brands, the GRDI said.
“While some Latin American countries face economic and political challenges, continued economic and political stability in leading countries has led to increased consumer and investor confidence and created a favorable environment for retail.”
International retailers there “are entering and gaining ground in a highly competitive environment with local and regional leaders. This battle is most intense outside of the region’s capital cities, where new markets are emerging as consumers opt for modern retail formats.”
Asia has a number of fast-growing economies that offer fertile ground for retailers, as growing populations, rising incomes, and increasing affinity for modern formats helps retail sales increase rapidly. Modern retail is spreading beyond the largest urban centers to smaller, untapped cities and regions.
The region saw several improvements in the rankings, led by China, which rebounded into second place, Malaysia, which re-entered the top 10 for the first time since 2009, and Indonesia, which moved up four places from last year’s ranking. Other Asian countries in this year’s Index include Sri Lanka, India, the Philippines, and Vietnam.
Even with less-bullish economic growth, “China remains impossible for retailers to ignore. Retail sales in the world’s most populous country increased 13 percent in 2013 to $3.7 trillion, and consumer confidence rose.”
The Middle East and North Africa
A dynamic retail region – the Middle East has a growing and young population, strong GDP growth, and increasing consumer confidence and spending.
With Qatar scheduled to host the FIFA World Cup in 2022 and Dubai recently winning the Expo 2020 bid, the region’s construction and infrastructure boom should continue, thereby benefiting retail.
Middle East and North Africa (MENA) consumers” are becoming increasingly more demanding, seeking formats to better meet their needs along with more interesting creative concepts. Some markets are saturating, particularly Dubai, and local developers are now expanding across the region.”
Fewer international companies entered in 2013, but those in the region “focused on expanding their footprint and growing local brands. E-Commerce in MENA is predicted to grow from $9 billion in 2012 to $15 billion by 2015,” according to a PayPal study.
Central Asia and Eastern Europe
The region’s highest-ranked countries are some of the GRDI’s most shining “small gems” – countries such as Armenia, Georgia, Kazakhstan, and Azerbaijan, whose location and unsaturated retail environment makes them attractive options for international retailers.
On the other end of the spectrum is Russia, which leaped back up the rankings this year “as its retail potential outweighed the country’s lingering risks.”
Africa is marked by distinct regional differences. In the West, Africa’s most populous region, international retailers including Walmart and Carrefour, have succeeded in navigating the challenging business landscape, targeting middle- and high-income consumers who are brand conscious and want convenience, quality and variety.
The East” is untapped and increasingly attractive, as the largely informal markets feature few international retailers. Regional retailers dominate the region targeting all income segments.”
In the South, the most developed region with stronger infrastructures, high incomes, and macroeconomic stability, South African retailers lead the growth with their close proximity and cultural alignment. Regional and local retailers are leading the e-commerce push, particularly among affluent consumers.
Mike Moriarty, A.T. Kearney partner and co-author of the GRDI said, “With GDP growth of 5 percent, rising household incomes, fast urbanization, and a growing middle class, Sub-Saharan Africa is a region of massive potential for retailers.”
Published since 2001, the GRDI ranks the top 30 developing countries for retail investment worldwide and analyzes 25 macroeconomic and retail-specific variables that help retailers devise successful global strategies to identify emerging market investment opportunities.
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