The top developing global markets for retail are…
China tops an annual list of the 30 top developing countries for retail investment.
China's retail sector – currently valued at $3.8 trillion — experienced 12% growth from 2017 to 2018, according to A.T. Kearney's 2019 Global Retail Development Index (GRDI), a bi-annual study of the global retailing landscape. That growth is expected to continue at a compound annual growth rate of 10%, reaching $6.6 trillion by 2024.
The 2019 GRDI ranks 30 developing countries – selected from a list of 200 nations – based on three criteria: achieving a "country risk" score above 35; having a population of at least five million; and enjoying a per capita GDP of more than $3,000. China tops the list, followed by India, whose retail sector is valued at $1.2 trillion. Rounding out the top five, but far behind in terms of retail growth: Malaysia, Ghana and Indonesia.
The outlook for global retailers expanding in China is promising, according to the report. Tim Hortons, which entered the country in February 2019, will add 1,500 locations during the next 10 years. In June, value-grocer Aldi opened its store in China, in Shanghai. Costco Wholesale Corp. opened its first Chinese outpost in July, also in Shanghai. It plans to open a second Shanghai store in 2021. Starbucks plans to open nearly 600 locations annually in China, with a goal of 6,000 by the end of 2022.
“National, regional, and local realities—from Internet connectivity to the availability and cost of labor—continue to shape retail development around the world,” the report stated. That said, economic development and trade policy are still the largest factors in shaping global retail growth in consumer markets. “
Additional findings from the report include:
- China’s retail sector is characterized by a blurring of the line separating offline and online retail (a model known in China as “new retail”). Big e-commerce players such as Alibaba are actively partnering with local Chinese “mom-and-pop” stores, helping them to modernize by providing no- or low-cost retail management platforms, allowing partnering stores to optimize product procurement and sourcing.
- The two fastest growing areas of modern retail in China will be supermarkets and neighborhood stores, and mass merchandisers, growing at a CAGR of 17% and 15.3% respectively through 2024.
- India’s online retail market is projected to increase at a healthy CAGR of 25% to 28%, reaching $55–60 billion by 2020, and accounting for 25% of the total organized market.
- The continued growth potential of the Indian economy and retail market has attracted various international retailers, such as Ikea, Under Armour, American Eagle Outfitters, Miniso, Ted Baker, Go Sport, Replay and Hummel.
"This year's GRDI surfaced sometimes subtle, but critical, trends," said Greg Portell, an A.T. Kearney partner and head of the consumer practice. "In emerging economies, we see a growing consumer demand for modern retailing. And, in advanced economies such as India and China, we see the future of retail—markets appealing to local tradition operating alongside modern global retailers."