Brazil Jumps to First Place in Ranking of Top Developing Economies for Global Retail Expansion
South American Countries Occupy Top 3 Positions, China Slips to 6th Place and India Drops to 4thKey lessons for Global Retailers Emerge out of 10 years of A.T. Kearney’s Global Retail Development Index – A Portfolio Approach is an Imperative
6 June 2011 (Chicago)—A.T. Kearney today released its 2011 Index of top ranked developing countries for global retail expansion. In the 10th annual Global Retail Development Index (GRDI), Brazil jumped to first place from #5 in last year’s study.
The 2011 GRDI ranking mirrors the dramatic changes that have taken place in global markets, and the varying impacts they have had on different emerging economies. South American countries have fared well during the recession posting an impressive 6 percent GDP growth in 2010. In addition to Brazil’s top ranking, three other South American countries, Uruguay, Chile and Peru, made the Top 10 of the GRDI.
Michael Moriarty, A.T. Kearney partner and study co-leader said, “Brazil is an attractive target expansion market given expected GDP growth of 5 percent per year over the next five years, a large and highly urban population, and surging retail sales. He also noted, “In addition to the substantial investment in infrastructure the Brazilian government is planning, inflows of foreign capital are rising dramatically as well.”
Uruguay climbed up the rankings to #2 this year, from #8 in last year’s GRDI. The country is riding Brazilian coattails, and experienced significant GDP growth of 8.5 percent in 2010. The country’s limited scale combined with positive macroeconomic conditions makes it an interesting choice for retailers looking to expand into more contained markets.
Chile rose to #3 in the ranking after a strong recovery from the 2009 recession. It is now considered one of Latin America’s most competitive markets. The government created incentives to stimulate retail consumption, and as a consequence Chile’s GDP grew 5.2 percent in 2010 and is expected to grow another 6.1 percent in 2011.
Another region that ranked highly in the 2011 GRDI was the Middle East and North Africa. While the political unrest may affect immediate plans to enter countries such as Egypt and Tunisia, the region’s extraordinarily young population (more than 60 percent between the ages of 15 -39) could result in greater economic stability and integration into the world economy in the long run. Kuwait, Saudi Arabia, and the UAE (all top 10 GRDI markets in 2011) have not experienced the turmoil of some of their neighbors and are expected to remain stable going forward.
The 2011 Global Retail Development Index marks the 10th anniversary of this global study. The key learning from an analysis of the last 10 years is that global retail expansion is a portfolio game. Retailers must have an optimal mix of countries, formats and operating models to succeed.
Hana Ben-Shabat, A.T. Kearney partner and co-leader of the study said, "In the last 10 years in has become clear that there is no ‘one size fits all’ formula for global expansion. Different countries are at different levels of development and have different risk/return profiles, which require retailers to tailor their approaches accordingly and assemble a portfolio of markets to balance short-term risk with long-term growth aspirations."
The GRDI helps retailers prioritize their global development strategies by ranking the retail expansion attractiveness of emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness, retail saturation levels, and the difference between gross domestic product growth and retail growth. A detailed analysis and country-specific results for the 2011 GRDI is available at www.atkearney.com/grdi.
GRDI 10-year Retrospective Provides Critical Retail Expansion Lessons
For the 10 year anniversary of the GRDI, the team conducted a retrospective that provides insight into how global retail has grown and changed over the past decade by presenting a snapshot of: major shifts in the retail landscape of emerging markets; key markets for retail attractiveness over the last 10 years; global growth trajectory of the world’s leading retailers; and lessons learned from international retail expansion.
Over the last 10 years regions have opened to global retail at different times. In the early 2000s the focus was on Eastern Europe as those markets gained membership in the European Union. China’s acceptance into the WTO in 2001 also marked the opening of that market to trade and investment. These market expansions were followed by Southeast Asia, Latin America and the Middle East. Africa will soon be a focus region for global retailers.
The last ten years of global retail expansion has shown that driving consistent, profitable performance is a challenge. The study leaders offer “Seven Lessons Learned” for retailers expanding into global markets based on 10 years of GRDI analysis and client experience.
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A.T. Kearney Global Retail Development Index, 2011
Country | 2011 Rank | 2010 Rank | Change |
| Brazil | 1 | 5 | +4 |
| Uruguay | 2 | 8 | +6 |
| Chile | 3 | 6 | +3 |
| India | 4 | 3 | -1 |
| Kuwait | 5 | 2 | -3 |
| China | 6 | 1 | -5 |
| Saudi Arabia | 7 | 4 | -3 |
| Peru | 8 | 9 | +1 |
| U.A.E. | 9 | 7 | -2 |
| Turkey | 10 | 18 | +8 |
| Lebanon | 11 | N/A | N/A |
| Egypt | 12 | 13 | +1 |
| Albania | 13 | 12 | -1 |
| Russia | 14 | 10 | -4 |
| Kazakhstan | 15 | N/A | N/A |
| Indonesia | 16 | 16 | No change |
| Morocco | 17 | 15 | -2 |
| Philippines | 18 | 22 | +4 |
| Tunisia | 19 | 11 | -7 |
| Sri Lanka | 20 | N/A | N/A |
| Malaysia | 21 | 17 | -4 |
| Mexico | 22 | 25 | +3 |
| Vietnam | 23 | 14 | -9 |
| Colombia | 24 | 26 | +2 |
| Argentina | 25 | N/A | N/A |
| South Africa | 26 | 24 | -2 |
| Panama | 27 | N/A | N/A |
| Dominican Republic | 28 | 23 | -5 |
| Iran | 29 | N/A | N/A |
| Bulgaria | 30 | 19 | -11 |
About the study
A.T. Kearney’s Global Retail Development Index ranks 30 emerging countries on the urgency for retailers to enter the country. The scores are based on 25 variables across four primary categories: economic and political risk; market attractiveness; market saturation; and time pressure (difference or addition between gross domestic product and modern retail area growth).
About A.T. KearneyA.T. Kearney’s Global Retail Development Index ranks 30 emerging countries on the urgency for retailers to enter the country. The scores are based on 25 variables across four primary categories: economic and political risk; market attractiveness; market saturation; and time pressure (difference or addition between gross domestic product and modern retail area growth).
A.T. Kearney is a global management consulting firm that uses strategic insight, tailored solutions and a collaborative working style to help clients achieve sustainable results. Since 1926, we have been trusted advisors on CEO-agenda issues to the world’s leading corporations across all major industries. A.T. Kearney's offices are located in major business centers in 38 countries. For more information, please visit www.atkearney.com.
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