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Retail investment: India 5th most attractive market

Last updated on: June 21, 2012 16:56 IST

Retail investment: India 5th most attractive market

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India has been ranked the fifth most attractive destination for retail investment among 30 emerging markets because of rising disposable income and rapid urbanisation.

Even though its ranking slipped from the fourth spot in 2011, India has been placed ahead of the UAE, Saudi Arabia, Indonesia and Russia.

"India (5th) remains a high-potential market with accelerated retail market growth of 15 to 20 per cent expected over the next five years, supported by gross domestic product growth of 6 to 7 per cent, rising disposable income, and rapid urbanisation," said US-based global management consulting firm A T Kearney.

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Image: People stroll in Inorbit mall in Mumbai.
Photographs: Punit Paranjpe/Reuters

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Changes in foreign direct investment regulations were a major story in India last year.

The changing FDI climate has provided an interesting dynamic to several international retailers' entry and expansion plans for India, it added.

According to the entity's Global Retail Development Index 2012, Brazil is the most alluring market for investment in the retail sector, followed by Chile (second), China (third), Uruguay (fourth) and India (fifth).

Noting that Europe faced another year of economic turmoil in 2011, developing countries forged full speed ahead.

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Image: A woman fills her trolley with retail products as she shops at a Hypercity department store, one of Mumbai's largest.
Photographs: Vivek Prakash/Reuters
Tags: India , FDI , China , Europe

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"With consumer confidence improving and spending increasing, global retailers continued their expansion in to these markets. In the past five years, US-based WalMart, France-based Carrefour, UK-based Tesco and Germany based Metro Group saw revenues in developing countries grow 2.5 times faster than revenues in their home markets," the report said.

It added that technology is transforming the way retailers operate in developing markets. Shopper's expectation and behaviours are evolving, driven by both economic climate and increased access to information through technology.

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Image: A woman selects onions in the fresh foods section of a Reliance Fresh supermarket in Mumbai.
Photographs: Danish Siddiqui/Reuters
Tags: Metro Group , Tesco , UK , US

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Some of the smaller countries with attractive retail markets include Georgia, Oman, and Mongolia, all of which did not find a place in last year's ranking, are in the top 10 list this year.

The GRDI ranking is based on various factors, including economic and political risks, retail market attractiveness, retail saturation levels, and the difference between gross domestic product growth and retail growth.

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Image: A Big Bazaar outlet.
Photographs: Jewella C Miranda
Tags: GRDI , Oman , Georgia , India

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Meanwhile, A T Kearney's has re-introduced -- Retail Talent Index -- which is based on a country's performance in three areas- talent availability, labour regulations and cost of labour this year.

India bagged the sixth place in the retail talent index.

Overall, the index is led by Malaysia, whose low-cost labour and favourable regulations, and a well-educated population support the operations of international retailers that enter and expand in the market.

Among others, in the top five are China, Chile, Indonesia and Azerbaijan.


Image: People wander around a shopping mall in New Delhi.
Photographs: Vijay Mathur/Reuters

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