Retail Destinations

A.T. Kearney’s Global Retail Development Index (GRDI) ranks 30 emerging countries on the urgency for retailers to enter the country. The scores are based on 25 variables across four primary categories: economic and political risk, retail market attractiveness, retail saturation levels and time pressure (difference or addition between gross domestic product and modern retail area growth). Vietnam's leap from fourth in the 2007 GRDI to first place in 2008 was driven by strong GDP growth of 8%, changes to the country's regulatory structure favoring foreign investors, and increasing consumer demand for modern retail concepts. India, Russia and China, the top three countries in last year's GRDI, remain important retail investment destinations, but high real estate costs and growing competition have decreased their attractiveness relative to prior years and forced retailers to look for opportunities in tier II and III cities. According to GRDI 2008 report, the Middle East/North Africa region is clearly the world's hottest region for retail expansion. The strong Euro supporting investment in the region, consumer familiarity with modern retail concepts and petrodollar wealth are the primary factors making the region an attractive retail destination. Among the gulf countries, Saudi Arabia, with a robust 9 percent growth rate and low retail consolidation is among the most attractive global retail destinations.

While Eastern and Central Europe as a whole remain attractive for retail investment, the ‘window of opportunity’ for large-scale supermarket and convenience store build-outs will likely close over the next year or two, according to the GRDI. The opportunity for entry into Eastern Europe is for wave-2 retailers — do-it-yourself, consumer electronics and apparel retailers — as multi-level fashion malls and mixed-use centers are cropping up throughout the region. India continues to be one of the most attractive countries for global retailers today. The retail market opportunity is larger than ever at $510 billion and spending patterns and consumer maturity are growing faster than most global retailers had forecast. But challenges have emerged which could potentially slow the pace of growth for global entrants. Foreign players entering India today face stifling regulations, a clouded political atmosphere, soaring real estate costs and a fiercely competitive domestic retailer group. In China, the countryside has turned into the next retail battleground, despite China's drop to number four in this year's GRDI. China remains one of the fastest-growing economies in the world. Although its per capita GDP remains low given China's large population, consumer spending has more than doubled from the mid-1990s and continues to grow rapidly in the large southern and eastern cities.