Botswana (#20) enters the GRDI ranking for the first time signaling regional growth and the future of Africa as a significant consumer market
As major developing countries become more competitive, smaller countries that deliver new growth opportunities rise in the rankings – Georgia (#6), Oman (#8), Mongolia (#9), and Azerbaijan (#17)
Today A.T. Kearney’s Global Consumer Institute released the 2012 Global Retail Development Index (GRDI), a ranking of the top 30 developing countries for global retail expansion. Brazil, is #1 for the second year in a row driven by a growing middle class economy, high consumption rates, a large, urban population, and reduced political and financial risk. In addition, Brazil’s relatively young population and high per capita spending in the apparel and luxury sectors make this country a top destination for specialty retailers.
Botswana ranked 20th in this year’s GRDI. Botswana’s entry into the GRDI ranking is a pre-cursor to steadily developing countries in the Sub-Sahara Africa region that could emerge as favorable retail markets in coming years.
Although the Arab Spring uprisings had a negative impact on the rankings of several MENA countries including Lebanon (-10 versus 2011), Morocco (-7 versus 2011) and Tunisia (-12 versus 2011), several countries from the region are still high on the ranking — U.A.E. (#7), Oman (#8), Kuwait (#12) and Saudi Arabia (#14).
Published since 2002, the GRDI ranks the top 30 developing countries for retail investment worldwide (see figure).The Index analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies and to identify emerging market investment opportunities.
GRDI Results| Country | 2012 Rank | 2011 Rank | Change |
| Brazil | 1 | 1 | 0 |
| Chile | 2 | 2 | 0 |
| China | 3 | 6 | +3 |
| Uruguay | 4 | 3 | -1 |
| India | 5 | 4 | -1 |
| Georgia | 6 | N/A | N/A |
| United Arab Emirates | 7 | 8 | +1 |
| Oman | 8 | NA | NA |
| Mongolia | 9 | NA | NA |
| Peru | 10 | 7 | -3 |
| Malaysia | 11 | 19 | +8 |
| Kuwait | 12 | 5 | -7 |
| Turkey | 13 | 9 | -4 |
| Saudi Arabia | 14 | 10 | -4 |
| Sri Lanka | 15 | 21 | +6 |
| Indonesia | 16 | 15 | -1 |
| Azerbaijan | 17 | N/A | N/A |
| Jordan | 18 | N/A | N/A |
| Kazakhstan | 19 | 14 | -5 |
| Botswana | 20 | N/A | N/A |
| Macedonia | 21 | 29 | +8 |
| Lebanon | 22 | 12 | -10 |
| Colombia | 23 | 24 | +1 |
| Panama | 24 | 26 | +2 |
| Albania | 25 | 13 | -12 |
| Russia | 26 | 11 | -15 |
| Morocco | 27 | 20 | -7 |
| Mexico | 28 | 22 | -6 |
| Philippines | 29 | 16 | -13 |
| Tunisia | 30 | 18 | -12 |
The Retail Talent Index
While the world’s largest developing markets – particularly the BRIC nations of Brazil, Russia, India, and China – still tempt the largest global retailers, and show no signs of slowing down as a source of growth, many smaller, untapped markets are providing new growth opportunities. New countries in the 2012 Index include several “small gems” such as Georgia (#6), Oman (#8), Mongolia (#9) and Azerbaijan (#17) that are showing progress as attractive destinations for global retailers, particularly specialty and luxury players. These markets, though small in total retail market size, have strong fundamentals that appeal to retailers targeting a concentration of wealth and seeking to be first movers in fast-growing markets.
Michael Moriarty, A.T. Kearney partner and study co-leader commented, “Given the accelerated growth rates of developing countries compared to 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 their home markets.”
Latin America’s expanding, dynamic retail sector and strong economic growth has driven strong results with seven countries included in the GRDI this year. Many retailers have entered Latin America in the last few years.
Retail sales per capita in Brazil (#1 in the Index) have grown 12 percent per year for the past four years to reach $5,514, the third largest of the countries ranked in the GRDI. The retail market size increased 15 percent last year, and consumer spending has increased by nine percent per year since 2007. In 2011, retail sales accounted for 70 percent of Brazil’s consumer spending.
Chile (2nd) has one of the most sophisticated and competitive retail markets in the region. The country is one of Latin America’s fastest-growing economies, with expected GDP growth of 6.2 percent in 2012. Inflation is low and country risk is low.
China moved up in the 2012 GRDI, ranking #3. The country’s future retail growth remains positive, with double-digit annual sales growth expected. However, inflationary pressures are driving up rents 30 percent per year, and labor costs are growing 15 percent a year. China is one of the world’s largest luxury goods markets, with more than 100 brands active in the country.
Uruguay (4th) is becoming a retail destination. Despite its relatively small local population, Uruguay’s high urbanization and strong consumption levels are attractive to retailers. The economy is progressing - annual GDP growth of 6 percent GDP since 2007 and unemployment is at an all-time low.
India (5th) remains a high-potential market with accelerated retail market growth of 15 to 20 percent expected over the next five years, supported by GDP growth of 6 to 7 percent, rising disposable income, and rapid urbanization. Changes in FDI regulations were a major story in India last year. The changing FDI climate has provided an interesting dynamic to several international retailers’ entry and expansion plans for India. Organized retail penetration remains low, at 5 to 6 percent indicating room for growth.
One of the key lessons learned over the 11 years of analyzing international retail expansion is the importance of finding and developing local talent to make global expansion a success. New markets are only as effective as their workforces, and harnessing the local talent pool is critical for reaching customers.
As part of this year’s GRDI, we have once again executed the Retail Talent Index, an examination of the best markets for retail talent. This index ranks the top 30 countries in the GRDI based on talent availability, labor regulations, and labor costs for in-store employees. This year the analysis points to Malaysia (#1), China (#2) and Chile (#3) as the developing markets with the top retail talent.
Hana Ben-Shabat, A.T. Kearney partner and study co-leader said, “Talent identification and development is just as important to successful market expansion as an underserved market and a growing consumer base. Wage inflation and staff turnover are significant obstacles for retailers entering many of the top developing countries.”
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