Emerging Market Priorities for Global Retailers

As the pace of globalization continues to pick up, retailers are moving into emerging markets faster than ever. True competitive advantage, however, does not always go to the swiftest — it goes to companies that make the right moves at the right time. A.T. Kearney's Global Retail Development IndexTM helps executives plan —and time —their market strategies by identifying which markets are in their prime, which are losing their luster, and which are the up-and-comers. Rankings are based on country risk (economic and political) and market potential (see figure).

A quick overview shows how fast the retail map can change. India retained its top position on the Index, and some key changes made it more attractive than ever. Earlier this year, the government announced that it would allow foreign companies to own up to 51 percent of a single brand retail company.

Russia came in second and remains attractive, with a $180 million retail market that grew 19 percent in 2005. But with many retailers entering the market and regional players expanding beyond Moscow and St. Petersburg, the Russian window of opportunity is beginning to close.

Vietnam ranks third on the Index and enjoys one of Asia's fastest growing economies, with GDP growth of 7.5 percent and a population of 84 million people. Modern retail sales grew by 20 percent last year.

Figure: A.T. Kearney's Global Retail Development Index, 2006

From a regional perspective, Asia has overtaken Eastern Europe as the dominant area for global retail expansion, with 40 percent of the top 20 markets.

Emerging Patterns
Beyond the yearly findings, we also examined more than 11 years of data to gain insights into the patterns and effects of retail in emerging markets. Here's what we found:

• Emerging markets pass through windows of opportunity that remain open for an average of 5 to 10 years before saturation levels increase.

• Certain retail formats work better than others, depending on the time of entry and region. For example, supermarkets work best in emerging markets.

• Modern retail expansion contributes to economic growth

This last point, in particular, should resonate with governments and policymakers in emerging markets. Countries around the world must create the right competitive environment to attract foreign companies and reap the economic benefits that increased activity can provide.

About the Study
For the past five years, A.T. Kearney has helped retailers prioritize their global development strategies with the Global Retail Development Index (GRDI). The Index ranks 30 emerging countries based on more than 25 macro-economic and retail-specific variables. ©

For more information about the study findings and the complete rankings, see www.atkearney.com or contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it .