The top emerging global retail markets are....
India tops an annual list of the 30 top developing countries for retail investment, pushing China, which took the No. 1 spot for the past several years, into second place.
The report, A.T. Kearney's Global Retail Development Index, cites India’s strong GDP growth and growing middle class, coupled with a more favorable regulatory environment over the past few years. It notes that India's retail sector has been growing at an annual rate of 20%. Total sales surpassed the $1 trillion mark last year and the sector is expected to double in size by 2020.
The 2017 GRDI, titled “The Age of Focus,” ranks China in second place. Despite the country's slower overall economic growth, the market’s size and the continued evolution of retail still make China one of the most attractive markets for retail investment. Even as macroeconomic growth slowed to 6.7% in China in 2016, retail was a bright spot and grew at 10.4%. This trend will continue, with retail sales growth expected to contribute more than 70% of the country’s economic growth in 2017. (The top 10 countries from the report are listed at end of article.)
The annual study, now in its 16th edition, finds global retailers facing high uncertainty amid a changing geopolitical environment and increasing nationalist sentiments expressed by Brexit and America First.
Faced with intensifying competition from local and regional retailers that have grown increasingly more sophisticated, and advancements in retail technology and e-commerce, retailers are being forced to pause and rethink their strategies. As a result, the past year has seen fewer retailers entering new markets or expanding within existing markets, as well as many retailers examining their footprints and logistics network to reduce store counts or exit markets altogether.
"The 2017 GRDI is all about the geopolitical scene and how it affects business,” said Hana Ben-Shabat, an A.T. Kearney partner and a co-author of the study. “Retailers are thinking twice about expansion into places where there is uncertainty about future government actions or high political risk.”
Among the report’s key findings:
• In terms of both size and momentum, Asia is the driving force behind global retail and the expansion of branded food and beverage, personal care products, apparel, fashion, and luxury.
• North Africa is making a comeback with the Arab Spring in the rearview mirror, while the Gulf Cooperation Council (GCC) region, specifically the United Arab Emirates and Saudi Arabia, is developing new ideas for growth.
• Sub-Saharan Africa keeps growing and South America’s Andes markets continue to impress.
• Russia and other countries in the Commonwealth of Independent States are still battling with sluggish growth.
GRDI ranks the top 30 developing countries for retail investment worldwide, analyzing 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies to identify emerging market investment opportunities. The study identifies the markets that are most attractive today, and also those that offer future potential.
Here are the top 10 countries from the 2017 GRDI:
1. India
2. China
3. Malaysia
4. Turkey
5. United Arab Emirates
6. Vietnam
7. Morocco
8. Indonesia
9. Peru
10. Colombia
Click here to read the full 2017 GRDI report.