India reclaims top spot for retail potential in annual survey

Chicago India has regained its top position in A.T. Kearney’s annual study of retail investment attractiveness among 30 emerging markets.

According to the firm’s 2009 Global Retail Development Index, emerging markets continue to represent attractive investment opportunities for global retailers, and the economic downturn has made entry into many of these markets more critical than ever before.

“With economic conditions in developed markets improving so slowly, emerging markets are becoming much more important sources of growth for global retailers," said Hana Ben-Shabat, A.T. Kearney partner and co-leader of the study. "Leading global retailers must develop a portfolio strategy that balances big and developed markets with small and developing markets to manage risks across the globe."

The study found that India’s retail sector remained attractive to both domestic and international retailers, despite government regulations that prevent 100% foreign ownership of retail stores.

Russia ranked as the No. 2 country in the study. Retail sales are projected to grow at 15% annually over the next five years, with food and non-food sales bouncing back in 2010, according to the report. It noted that the country's fragmented retail market — the top five retailers control just 7% of sales — and reduced valuations provide growth opportunities for swift-moving retail leaders.

In China, the No. 3 country in the survey, a $585 billion stimulus package and efforts to boost economic consumption are showing early signs of success as retail sales have grown in early 2009. The country's tier-2 and -3 cities in the central and western regions are attracting foreign retailers' attention, according to the report. These cities are less affected by the economic crisis and are more suitable for new expansion than larger Chinese cities.  

A detailed analysis and country-specific results for the 2009 GRDI is available at www.grdi.atkearney.com.