The Indian retail sector is the emerging market that offers global retailers the most potential for expansion, a new study has suggested.
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According to management consulting firm AT Kearney’s Global Retail Development Index (GRDI), India is the most attractive of 30 emerging markets.
In India, slower retail sales are prompting domestic retailers to delay expansion plans and restructure their operations, opening a “window of opportunity” for global retailers, the report suggested.
Growth in the market is being driven by demand from the increasingly affluent, brand-conscious Indian consumer and, as modern retailing formats become more familiar, they are increasing in popularity.
Low inflation and rent reductions of up to 40% in tier-two and tier-three cities also help make India the most attractive retail investment, the report concluded.
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By GlobalDataThese factors have attracted a number of international retailers – including Wal-Mart, Carrefour and Tesco – to India.
Meanwhile ‘push’ factors at home – such as declining sales and constrained consumer spending – have encouraged retailers to look overseas to fuel growth.
“With economic conditions in developed markets improving so slowly, emerging markets are becoming much more important sources of growth for global retailers,” said Hana Ben-Shabat, an A.T. Kearney partner and co-leader of the study.
“Leading global retailers must develop a portfolio strategy that balances big and developed markets with small and developing markets to manage risks across the globe.”
