China returned to the top spot for the first time in eight years while emerging markets in the Middle East and North Africa dominated consulting firm A.T. Kearney’s ninth annual Global Retail Development Index of markets seen as ripe for retail expansion.
China, third in the 2009 study, leapfrogged over India, which fell to third from first, and Russia, down to 10th from second, in this year’s study, while Kuwait, not included in last year’s rankings, moved into the second spot.
Hana Ben-Shabat, co-leader of the study and a partner at Kearney, told WWD that China’s move over the weekend, following the study’s preparation, to allow the yuan to float will mean “the purchasing power of the Chinese consumer is really going to increase. If you’re sourcing there, prices are going to go up, but selling to the Chinese is going to become easier.”
The study measured global expansion opportunities in 30 markets based on 25 different criteria, including retail saturation levels, economic and political risk, retail market attractiveness and the spread between rising gross domestic product and retail growth.
While China rose based on its sheer size and the growing comfort level of its citizenry with Western-style retail formats, India fell back as expansion into the subcontinent by foreign retailers and a dearth of desirable, affordable real estate “pushed the country’s retail market closer to maturity,” A.T. Kearney said.
“Retail executives have learned again that core markets like the United States and Europe are not the powerful engines of growth they would like,” Ben-Shabat said. “Reliance on developing countries for future growth is no longer a ‘nice-to-have,’ but a necessity. Establishing operations in a portfolio of countries both small and large offers the best path to global success for retailers.”
In addition to Kuwait, seven nations in the MENA region placed within the top 21: Saudi Arabia (4), United Arab Emirates (7), Tunisia (11), Egypt (13), Morocco (15), Turkey (18) and Algeria (21). Kearney noted that retail sales are rising, aided by the region’s ample oil supply and, in some markets, fiscal stimuli.
“Local retailers have begun expanding within the region and international names are rushing in as well, many through partnerships using a franchise model due to government regulations,” said Mike Moriarty, the Kearney partner who co-led the study. “Some local partners have also created retail business models by franchising numerous international brands across the region.”
Kearney also interviewed 60 retail executives as part of the study. Among the findings of those discussions were:
• Nearly 80 percent of those polled included China, India, Brazil and Russia among their target markets for expansion.
• Ninety-two percent of retailers in emerging markets hope to expand beyond their national base, with nearly 30 percent eyeing a developed country.
• Whereas retailers were looking for expansion efforts to turn a profit in five to seven years in 2005, their expectations now are for profitability within three years of new-market entry.
Ben-Shabat noted the expectations for a faster return were in some cases based on false optimism that has since been tempered. “Several said, ‘We underestimated the time and money it would take to establish ourselves in a new market,’” she stated. “For some, there’s also simply more pressure to generate results after a couple of difficult years.”
She added that brands entering China no longer have to do so with domestic partners, while India and many of the other markets studied require such relationships. A model that has succeeded for many is working with local firms that are set up to represent a number of global brands and have the operational capabilities, real estate knowledge and personnel to facilitate market entry.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty