A new report from Deloitte Touche Tohmatsu and Planet Retail has identified eight of the most attractive emerging markets for global retailers, beyond China. Developed economies are coming out of recession, but retailers in those countries face competitive and consolidated markets, suggesting a future of slower growth domestically. Emerging markets have the potential for more rapid growth and the report, ‘Hidden Heroes: Emerging retail markets beyond China’, highlights Brazil, Egypt, India, Indonesia, Mexico, Russia, Turkey, and Vietnam as potential bright spots for the industry.
“While the other BRIC economies (Brazil, Russia and India) feature in our report, our view is that some of the most exciting opportunities for global retailing lie beyond the BRICs," notes Bryan Roberts, Global Research Director at Planet Retail.
Citing an example, Roberts adds Vietnam is a tremendous prospect. The country has enjoyed rapid economic growth over recent years and should benefit as China sees a structural shift in its economy away from low value-added exports. In Indonesia, while foreign investment in retail has increased, the number of foreign retailers remains lower than might be expected. There is opportunity for foreign retailers to become stronger, despite ambitious expansion plans of a number of local players, finds the Deloitte report.
The report argues that Russia and India present global consumer businesses with a conundrum. Russia has experienced strong economic growth over the past decade and has been relatively open to foreign investment in retail. However, its population is declining, corruption remains a problem, and future growth is dependent on the volatile resource sector. India has a youthful population and a rapidly increasing middle class, but foreign investment has been restricted in retail. The low level of investment in infrastructure, protectionism, and the lack of a single market are also concerns.
“Retailers seeking to enter the Indian market have some serious challenges, but the retail opportunity remains alluring. The middle class is showing signs of adopting modern shopping behavior as the savings rate declines and the market for consumer credit expands rapidly. Large purchases are becoming more accessible and middle class families generally have less time to shop at street markets and small shops. The one-stop convenience of large, modern stores is increasingly appealing,” says Ira Kalish, Director of Consumer Business for Deloitte Research.