Retailing: "India tops list of 30 attractive countries"

Global retailers will take advantage of the more favourable FDI rules and enter India with partnerships A. T. Kearney anticipates that global retailers such as Wal-Mart, Carrefour, Tesco and Casino will rapidly take advantage of the more favourable FDI rules and enter India through partnerships with local retailers.

CHENNAI: India tops the list of 30 most attractive countries in the emerging markets for global investment opportunity for mass merchant and food retailers looking to expand overseas.

This emerges from the annual study of retail attractiveness among 30 emerging markets conducted by A.T. Kearney, a management consulting firm.

Published annually since 2001, the Global Retail Development Index (GRDI) helps retailers prioritise their global development strategies by ranking emerging countries based on a set of 25 variables, including economic and political risk, retail market attractiveness, retail saturation levels, and the difference between gross domestic product growth and retail growth.

GRDI study

The 2005 GRDI study finds India moving from the second position to the top slot, pushing Russia to the second place. Russia held the top slot since 2003.

India's retail market totals $330 billion.

It is vastly underserved and has grown by 10 per cent on an average over the past five years.

It is also one of the most fragmented retail markets in the world - the combined market share of the top five retailers totals less than two per cent.

What drove India to top slot was the current moves to ease curbs on direct ownership on foreign retailers.

"The message for retailers on India is clear: Move now or forego prime locations and market positions that will become saturated quickly," said Mike Moriarty, A.T. Kearney's vice-president, in a release. "Global retailers that missed opportunities to capture first-mover advantage in China can make up for it in India," he added

A.T. Kearney anticipates that global retailers such as Wal-Mart, Carrefour, Tesco and Casino will rapidly take advantage of the more favourable FDI rules and enter India through partnerships with local retailers. Other retailers such as Marks & Spencer and Benetton Group, who are currently operating through a franchise model, will most likely switch to a hybrid ownership structure.

Combating the moves of global retailers, leading Indian retailers such as Pantaloon, Westside and Big Bazaar will look to increase scale and enhance logistics and supporting technology.

Despite Russia's drop to second position, Eastern Europe continues to represent the best investment opportunities for retailers — Eastern European countries make up 12 of the top 20 investment destinations in the index.

Ukraine jumped eight places to third because of strong increases in GDP and retail sales, a highly fragmented market and large urban population. Bosnia — Herzegovina and Macedonia enter the index for the first time this year.

Joining India, Russia and Ukraine on the list of ten countries retailers should enter immediately are China, Slovenia, Latvia, Croatia, Vietnam, Turkey and Slovakia.