Economic uncertainty throughout Europe and the United States and political instability in the Middle East are putting an increased spotlight on developing markets, which are forging full-speed ahead and show no signs of slowing down, according to the 11th annual Global Retail Development Index by consulting firm A.T. Kearney.
Possibilities for retailers abound not only in the biggest developing markets, particularly the BRIC nations (Brazil, Russia, India and China), but also in many smaller, more far-flung countries around the world, including Georgia, Oman and Mongolia.
The report makes a strong case for global expansion.
“Given the accelerated growth rates of developing countries compared with the anemic growth in European and North American markets, global retailers must have a strategy for expansion into developing markets. In the past five years, U.S.-based Wal-Mart, France-based Carrefour, U.K.-based Tesco and Germany-based Metro Group saw their revenues in developing countries grow 2.5 times faster than in their home markets,” said Michael Moriarty, partner, A.T. Kearney, and co-leader of the study.
The report ranks the top 30 developing countries for retail investment worldwide. For the second consecutive year, Brazil took the top spot, driven by its growing middle-class economy. High consumption rates, a large urban population, and reduced political and financial risk also make Brazil a top destination for international retailers. In 2011, retail sales accounted for 70% of Brazil’s consumer spending.
Chile, which ranked second on the Index, has one of the most sophisticated and fastest-growing economies in the region, according to A.T. Kearney, with an expected gross domestic product (GDP) growth of 6.2% in 2012. Plus, the country has low financial risk — its inflation rate of 3.3% is close to the Central Bank’s target — and country risk is roughly the same as such developed nations as the United States, France and the United Kingdom.
In all, seven Latin America countries made the Index (see chart), reflective