India Second on Most Attractive Emerging Retail Destination Index
June 10, 08 by A Jewelbiz India Report
After enjoying three successive years at the top of A.T. Kearney's Annual Index of Most Attractive Emerging Market Retail Destinations, India has slipped to No 2, losing out to Vietnam, which recently opened up its economy to new entrants.
This is the seventh annual Global Retail Development Index™ (GRDI), a study of retail investment attractiveness conducted amongst 30 emerging markets conducted.
Saurine M. Doshi, a partner at A.T. Kearney India, said, “While the steep and consistent rise in the income levels of Indian consumers had kept India on top, the country’s inability in opening up the FDI regulations for foreign retailers has begun to hit the industry’s competitiveness.”
The study notes that Vietnam’s leap from fourth in the 2007 GRDI to first place in 2008 was driven by strong GDP growth, changes to the country’s regulatory structure favoring foreign investors and increasing consumer demand for modern retail concepts.
India, Russia and China, the top three countries in last year’s GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI. The report states that these countries remain important retail investment destinations, though high real estate costs in large cities and growing competition have decreased their attractiveness relative to prior years and have forced retailers to look for opportunities in tier II and III cities.
Hemant Kalbag, Principal – Consumer Industries & Retail Practice, A.T. Kearney India, noted, “India continues to be a ‘hot’ destination for global retailers. However, there are growing challenges – stifling regulations, a clouded political atmosphere, soaring real estate costs and a lack of good commercial real estate and a fiercely competitive domestic retailer group."
The study reiterates that India continues to be one of the most attractive countries for global retailers today. The retail market opportunity is larger than ever at $510 billion, and spending patterns and consumer maturity are growing faster than most global retailers had forecast.
“We are closely following the market and watching on-ground changes in consumer demand for modern retail concepts, and hence, are very optimistic of sustainable growth in the coming years," says Debasish Mukherjee, principal, Consumer Industries & Retail Practice, A.T. Kearney India.