Chicago A study released Monday by management consulting firm A.T. Kearney found that retailers should be increasingly focused on international expansion. According to the firm’s 9th annual Global Retail Development Index, a slowdown in the United States means that it is time to look elsewhere for growth.
“Retail executives have learned again that core markets like the United States and Europe are not the powerful engines of growth they would like,” said Hana Ben-Shabat, A.T. Kearney partner and co-leader of the study. “Reliance on developing countries for future growth is no longer a ‘nice-to-have,’ but a necessity. Establishing operations in a portfolio of countries both small and large offers the best path to global success for retailers.”
China returned to the top of the study as a priority expansion market for the first time since 2002. And while many retailers are focused on expansion to larger emerging markets like Brazil, India and China, the GRDI found smaller countries including Kuwait, Uruguay, Albania and Macedonia represent increasingly attractive expansion opportunities for international retail expansion.
The Top 10 countries in the 2010 GRDI, which ranked the retail expansion attractiveness of emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness, retail saturation levels and the difference between gross domestic product growth and retail growth, include China; Kuwait; India; Saudi Arabia; Brazil; Chile; United Arab Emirates; Uruguay; Peru; and Russia.
India, last year’s top GRDI destination, fell to third. Retail growth will continue in India, according to the study, but an influx of foreign players, limited and expensive desirable real estate and foreign investment restrictions have pushed the country’s retail market closer to maturity.
The study found that the Middle East and North Africa region exhibited the most exciting retail growth opportunities today for international retailers, with eight of its countries placing among the GRDI’s Top 21: Kuwait (2); Saudi Arabia (4); United Arab Emirates (7); Tunisia (11); Egypt (13); Morocco (15); Turkey (18); and Algeria (21).
“Local retailers have begun expanding within the region and international names are rushing in as well, many thro