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'Small gems' of retail opportunity

News, 03 June 2015
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GLOBAL: China remains a focus for global brands, but they should not overlook the potential of "small gems" according to a new report which ranks the top 30 developing countries for retail investment.

The Global Retail Development Index Ranking (GRDI) from consulting firm A.T. Kearney employed more than 20 macroeconomic and retail-specific variables to identify emerging markets that are not only successful today but which offer the greatest future potential.

Asian markets generally performed well by the report's criteria, with two factors highlighted for the future.


Continued internet penetration is boosting ecommerce while this year's launch of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) is expected to take the region to a new level as more standardised and relaxed regulations help retailers expand across the region.

China stood at the top of the GRDI, with a retail market predicted to hit $8tr by 2022 by when it will be twice the size of that in the US.

But other countries in the region also merit the attention of brands. Mongolia's population, at 2.9m, may be only a fraction of China's but it is a "small gem to watch", the report said.

At fifth place in the GRDI, its benefits include rapid economic growth fuelled by copper and coal mining, while its retail sales growth rate is among the highest of any developing market in Asia.

Luxury brands, including Burberry, Damiani, Louis Vuitton, Swarovski, and Zegna, already have stores in Ulan Bator Central Mall, while food outlets, including KFC and Caffebene, a Korean coffee chain, are expanding across the country.

Other "pockets of untapped potential in less populated markets" included Uruguay, ranked second and with Latin America's highest retail sales per capita, and Qatar, ranked fourth and with a fast-growing retail landscape and major infrastructure development ahead of the 2022 FIFA World Cup.

Between these two was Chile, which the report noted had the region's highest per capita GDP but little interest in luxury brands, although this is beginning to change as more follow Burberry into this market.

Jodie Wang Kassak, co-author of the report, advised brands entering emerging markets to "get into the details of local market dynamics" and ownership structures.

They also needed to consider consumer tastes, real estate availability, infrastructure, duties and taxes and marketing channels.

"Getting a firm grasp on these local differences really makes a difference," she told Luxury Daily.

Data sourced from A.T. Kearney, Luxury Daily; additional content by Warc staff

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