China Tops the 2015 A.T. Kearney Global Retail Development Index™ Ranking

CHICAGO, June 1, 2015 /PRNewswire/ -- In a report released today by A.T. Kearney China is ranked as the top country in the Global Retail Development Index (GRDI) for the first time since 2010. China's retail market is expected to grow to $8 trillion—double the size of the U.S. market—by 2022. Overall, Asia is a regional winner in 2015, outpacing other regions despite a slowdown in growth.

Published since 2001, the GRDI ranks the top 30 developing countries for retail investment worldwide (see chart below). The Index analyzes 25 macroeconomic and retail-specific variables to help retailers devise successful global strategies to identify emerging market investment opportunities.

Mike Moriarty, A.T. Kearney partner and co-author of the GRDI, states, "As a result of turbulence in the Middle East, Latin America, and Russia, the past year has seen a more cautious approach to international expansion into some developing markets. However, retailers are taking a longer-term view of emerging markets, with fewer exits, and more targeted investments in areas of growth."

The 2015 GRDI includes a special feature on the prospects for luxury goods in developing markets. Hana Ben-Shabat, A.T. Kearney partner and GRDI co-author, comments, "Luxury remains a relatively bright spot in emerging markets, as the wealthy have proven less vulnerable to economic woes than the general population."

The feature includes an analysis of the 15 leading luxury brands and their presence in the GRDI's top 30 countries. The analysis shows that emerging markets fall into three tiers of luxury development, with different implications for brands looking to enter or expand in these markets.

GRDI Regional Results
(The full GRDI report includes detailed commentary for all 30 countries ranked in the Index.)

Asia
Asia is once again an attractive region for international retailers, as illustrated by nearly across-the-board improvement in the GRDI rankings, a continuous inflow of new entrants, and the development of modern retail in tier 2 cities.

China regains the top spot in the GRDI for the first time in five years, while small gems Mongolia (reemerging at 5th) and Malaysia (9th for the second year in a row) also crack the top 10. India also rises in the rankings, benefiting from economic stability and regulatory reforms aimed at improving ease of doing business, although FDI restrictions on multi-brand retail remain.

In addition, e-commerce continues to grow rapidly, with Asia's market size ($525 billion) now exceeding that of North America ($483 billion). As Internet penetration expands and online offerings improve, Asia's e-commerce retail sales could grow as much as 25 percent annually. The online channel will continue to be a major focus for retailers in the region in the coming years.

China's GDP growth of 7.4 percent in 2014 was its lowest in a quarter century. Yet, relative to other developing markets, its performance is unparalleled, and in 2014 its retail growth was an impressive 11.6 percent. China's retail market is expected to surpass the United States as the world's largest retail market by 2018.

Latin America
Latin America as a whole once again has a prominent position in the GRDI, with three countries in the top 10. However, the region has begun trending downward in the rankings, and regional GDP growth sank to roughly 1.3 percent in 2014 amid concerns over deep-rooted structural problems since the end of the commodities boom. With poor economic performance, political instability in some leading countries, and strong regional interdependence, pessimism has become widespread in the region, leading to a drop in consumer confidence that could restrict retail consumption. Nevertheless, retailers can benefit from the still-growing middle class and expansion in some underserved secondary cities, particularly in Brazil, Colombia, and Peru.

Spurred by Latin America's highest retail sales per capita (more than $6,500) and a concentrated urban population, Uruguay moves into 2nd place. Although GDP growth slowed down, echoing the economic challenges of its neighbors Brazil and Argentina, internal consumption maintained a positive track in 2014, demonstrating Uruguay's continued potential for retailers.

Middle East
In the past year, the Middle East has faced substantial economic and political upheaval, and the ranking drops in this year's GRDI reflect the varied environment: market saturation (the United Arab Emirates), increased country risk (Jordan), and GDP slowdown from falling oil prices (Kuwait).

Despite the record drop in oil prices, retail sales growth is expected to continue. Indeed, the retail space pipeline remains strong, with several major projects under way in Qatar, the UAE, and Oman. Only Kuwait has felt the impact disproportionately, due to its high reliance on oil and relative lack of diversification.

Qatar makes an impressive GRDI debut, in 4th place, highest in the Middle East behind a stable economy, high GDP per capita, and high levels of retail spending. With population growth and an increasing number of expats, Qatar is no longer a market to ignore. The 2022 FIFA World Cup is also leading to infrastructure projects that will benefit the economy in the long term, such as the airport expansion and the construction of Doha Metro.

Central Asia and Eastern Europe
This region's top performers in the GRDI are its small gems—Georgia, Armenia, and Kazakhstan—whose unsaturated retail environments are attractive opportunities for international players. Azerbaijan has become a luxury hot spot as more companies seek to tap into the country's oil-driven wealth. Russia, which has the world's sixth-largest GDP, plunges in the rankings behind worsening economic conditions and political tension, yet it remains too big to ignore.

Sub-Saharan Africa
Sub-Saharan Africa is a region of massive potential. Three countries (Botswana, Nigeria, and Angola) are ranked in this year's GRDI, and three more (Zambia, Namibia, and Ghana) are on the verge of breaking into the top 30 in the near future. The region presents exciting opportunities that are just starting to open up, supported by rising household incomes, fast urbanization, and a growing middle class.

To read the full 2015 GRDI report, please go to www.grdi.atkearney.com.

About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world's foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.

About the A.T. Kearney Global Consumer Institute
The A.T. Kearney Global Consumer Institute is a worldwide network of professionals and executives. The Institute combines proprietary and public data resources with local knowledge to deliver strategic and operational insights to executives in consumer-facing industries seeking long-term growth and competitive advantage. For more information, please contact [email protected].

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