China Ranked 2nd Among Emerging Retail Markets in Survey

China came in second among the world’s emerging markets for retail growth potential according to a survey released this week.

In the 2014 A.T. Kearney Global Retail Development Index (GRDI) report that was released yesterday, only Chile bested the world’s second largest economy as a retail growth market, the management consulting firm said in the report findings.

Despite some dark clouds caused by slower economic growth and pull-backs by international retailers Walmart and Tesco, China moved up from its number four ranking last year to take over the penultimate position on the list.

The GRDI study, which ranks the top 30 developing countries for retail investment worldwide, has been published by AT Kearney since 2001. The Index analyzes 25 macroeconomic and retail-specific variables that help retailers devise successful global strategies to identify emerging market investment opportunities.

Although the report noted concerns about China’s slowing GDP, even with less-bullish economic growth, it found that China remains impossible for retailers to ignore. Retail sales in the world’s most populous country increased 13 percent in 2013 (to $3.7 trillion), and consumer confidence rose.

Most Retailers Optimistic About Developing Markets

Overall, the study sounded an optimistic note about the retail environment in developing nations, finding that, for the most part, retailers are continuing their push into developing markets.

Hana Ben-Shabat, A.T. Kearney partner and GRDI co-author noted, “In our analysis we found that there were fewer emerging market expansion retail failures than in years past. Global retailers have learned from past mistakes and have become much more adept and successful with their emerging market expansion strategies.”

In particular, the study found that online retailing has helped to lower barriers to market entry for many international brands expanding overseas. “E-commerce is also helping with global expansion as retailers are able to test a market and build their brand through e-commerce before they expand with brick and mortar stores,” Ben-Shabat noted.

6 More Asian Countries Join China in the Rankings

In addition to the growing importance of China, the study found that a number of other Asian economies offer fertile ground for retailers, as growing populations, rising incomes, and increasing affinity for modern formats helps retail sales increase rapidly. Modern retail is spreading beyond the largest urban centers to smaller, untapped cities and regions.

Next ranked in the region after China was Malaysia, which came in at number nine, and Indonesia which moved up four places from last year’s ranking to place at number 15.

Other Asian countries making it into the top 30 on the index were Sri Lanka at number 18, India at number 20, the Philippines at number 23, and Vietnam at number 28.

Several Asian countries were absent from the index this year, because they were judged to already be mature markets, and no longer qualified for the “developing” tag.

Among the markets which exited the survey are Hong Kong, South Korea, and Taiwan, which were deemed to already have saturated markets with full penetration by international brands.

Thailand, which had made it into the top 30 from 2002 through 2009, once again failed to make the list due to market saturation, political unrest and other factors.