World’s most attractive markets for retail investment
Geopolitical instability and the growing power of local and regional competition in emerging markets are forcing global retailers to rethink their strategies, the study finds.
The newest edition of A.T. Kearney‘s Global Retail Development Index names India as the top developing country for retail investment. India’s strong GDP growth and growing middle class coupled with a more favorable regulatory environment over the past few years have played significant roles in attaining this ranking.
The 2017 GRDI, titled “The Age of Focus,” ranks China in second place. Despite its 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.
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,” says 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.”
The GRDI ranks the top 30 developing countries for retail investment worldwide (see chart below). The Index analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies to identify emerging market investment opportunities. The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential.
This year’s study includes a special section about the rise of mobile shopping and its impact on global retail expansion. In many developing markets, mobile retail is the primary form of online shopping.
“Mobile shopping is challenging the ways retailers think about global expansion, as well as about their role in the value chain,” says Mike Moriarty, an A.T. Kearney partner and co-author of the study. “We are expecting more retailers to use mobile as part of their future expansions plans.”
Source: AT Kearney