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FEATURES Opportunities Abound for Global Retailers

The 2013 Global Retail Development Index™ MICHAEL MORIARTY*

Abstract: A.T. Kearney’s Global Retail Development Index™, a ranking of the top developing countries for retail investment, has guided global retailers with their strategic investments for more than a dozen years, and the 2013 Index reflects some important changes to the retail environment. But one thing has not changed: As developed markets face flat or anemic growth, developing markets remain important sources of growth. The 12th annual edition of the GRDI finds many opportunities for retailers seeking to grow and expand in fast-growing developing markets—both big and small.

Of course, there is nothing easy about a global

expansion strategy in retail. And this year’s Global Retail Development Index™ (GRDI) finds several examples of markets where global retailers are stepping back from the aggressive expansion of the recent past in favor of more cautious strategies. For example, as retailers confront the challenges in China, many are scaling back plans for new stores and choosing new sites more carefully. In some regions, such as Latin America and Central Asia, more retailers are opening in smaller countries to hone their regional strategies before entering larger markets. The GRDI ranks the top 30 developing countries for

retail investment based on several macroeconomic and retail-specific variables. The study is unique because it not only identifies the markets that are most successful today, but also focuses on those that offer the most potential. Some markets are flourishing and exciting, while others are challenging for strategic retailers.1 Table 4-1 highlights the top 30 countries in the rankings.

A World of Retail Growth South America is blossoming as Brazil, Chile and

Uruguay take the top three spots in the Index ranking. Peru, Panama and Mexico also shine, but some other markets, such as Venezuela, Argentina and Bolivia, have room for improvement. The BRIC markets (Brazil, Russia, India, and China)

remain the “magnificent monsters” for global retailers, but their paths have diverged. Whereas the BRIC countries were in unison in their growth 12 years ago, when the BRIC concept was first conceived by then-Goldman Sachs

* Senior Partner, A.T. Kearney 1 This year’s GRDI also includes the fourth Retail Apparel Index; the E-Commerce Index, which was announced last year, will be published in late

2013. 2 This work was updated in Jim O’Neill, The Growth Map: Economic Opportunity in the BRICs and Beyond (Penguin Publishing: 2011). 3 United Nations Department of Economic and Social Affairs, Population Division, “World Population Prospects: The 2010 Revision” (medium variant) and A.T. Kearney analysis.


economist Jim O’Neill,2 now each is following different paths to the future. Sub-Saharan Africa continues to build momentum, with

Botswana and Namibia in the rankings and a few other nations on the cusp. Considering that by 2100, five of the 12 most populous countries in the world will be in Africa,3 there is no doubt that this continent is a dramatic retail opportunity—for those that best navigate the business and political risks. Once again, some new markets on the rise may surprise even the most seasoned retail veterans. The strong rankings for “little gems”—small-population

countries with unique characteristics of wealth and consumer focus—remain a main theme of the GRDI. This year’s gems include Uruguay (third in the rankings), Mongolia (seventh), Georgia (eighth), and Armenia (10th), among others. For luxury retailers, these are newfound hubs. For general retailers, they can be the beginning of a regional strategy. Shopping centers drive much of the progress in

organized retail, as they solve regulatory and real-estate issues for many retailers as they expand. They also provide local, urban and regional attractions for shoppers—not only as retail outlets, but also as town centers and multi-use environments. And when individual retailers cannot always account for the demographic impacts of aging, obesity, sustainability, and resource usage, shopping malls must, in terms of both economics (since energy is often more costly than real estate) and social responsibility.

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