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.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast