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Woman Carrying Shopping BagsEvery year, the global management consulting firm A.T. Kearney releases its Global Retail Development Index (GRDI), summarizing how various regions and nations have emerged and expanded in terms of their retail development in the previous year. It thus ranks the top 30 in terms of retail growth. The most recent release grants top position to China, where retail grew by 11.6 percent in 2014. Although it suffers from minimal growth in its gross domestic product, China has a thriving retail market, which is likely to reach $8 trillion soon and then surpass the United States as the world’s largest within the next few years.

Some of the reason for China’s status relates to the turbulent conditions in other areas of the world that traditionally have exhibited notable retail growth, such as the Middle East, Russia, and Latin America. Yet overall, Asia as a region is thriving in this sector, with entries such as Mongolia (ranked fifth) and Malaysia (ranked ninth). Moreover, Asia’s e-commerce market is huge, already surpassing that of North America. Its prospects for growth are similarly massive, because Internet penetration still has room to expand. Thus some observers predict that e-commerce will grow as much as 25 percent annually in Asia.

Although they missed the top rank, three Latin American nations still are prominent in the GRDI, appearing among the top 10. Yet the trends show decreasing growth in this area, with predictions of further shrink in the future. Similarly, in the Middle East, recent economic and political events have hindered retail growth, such that previously strong contenders such as Jordan and Kuwait have dropped in the rankings.

On the flip side, Central Asia and sub-Saharan Africa represent regions where retail growth traditionally has been slow, but it appears to be increasing. For example, Botswana, Nigeria, and Angola have entered the list, and Ghana, Namibia, and Zambia just missed being included. The retail opportunities in these nations appear likely to increase in the future as well, due to their expanding middle classes and urbanization trends. The report also identifies “small gems” in Central Asia, such as Georgia, Armenia, and Kazakhstan, as well as citing Azerbaijan, with its massive oil reserves, as a relatively unknown but promising luxury destination.

Finally, the GRDI puts Russia in last place in the list of 30, noting that though its economic and political issues have disrupted its retail growth prospects, the market is simply too big for retail firms to ignore.

Discussion Question:

Which global markets are most attractive for retailers? Explain your answers.


Source: Marianne Wilson, The New York Times, June 1, 2015