It may be more famous for its association with the comic creation Borat than a dynamic retail environment but Kazakhstan was the surprise entry in the top five developing countries for retail investment.
Consultancy AT Kearney’s 2016 Global Retail Development Index placed China in first place, followed by India and Malaysia. Kazakhstan came fourth, followed by Indonesia.
The report said retail growth in developing countries has far outstripped GDP and population growth. In the last 15 years the developing world population has grown 21% to 6.2bn, while retail sales in those markets have increased more than 350%.
In 2015 China’s retail growth outpaced GDP growth, which ensured that despite economic challenges it remains the most important developing retail market.
This is reflected in the rapid expansion of brands such as Adidas, for example, which will soon have 12,000 stores spread across 2,000 Chinese cities.
India’s huge market potential, rapid growth and increasingly business-friendly climate has moved it to second place. Recent relaxation of rules that force companies that deal with “cutting edge” technology to source 30% locally have dramatically improved the attractiveness of the market.
Kazakhstan has seen increased interest from international retailers in recent years with Carrefour, Leroy Merlin and numerous food chains opening in the country. Ikea and H&M are in negotiations to open stores in the Central Asian republic, the report noted, with Spanish clothing retailer and Zara owner Inditex also likely to establish a presence soon.
Chinese AliExpress is investigating opportunities to improve e-commerce infrastructure.
Malaysia owed its high ranking not to rapid growth but to an extremely business-friendly environment. The market for small grocers and hypermarkets is considered particularly attractive.
Despite low retail sales per capita, Indonesia’s huge population and large cities ensured its high ranking.
Markets that have fared less well are those of Latin America, Russia, under international sanctions and a deepening financial crisis, and the Middle East, hit by falling oil prices.
The index ranks the 30 most-promising developing retail markets countries according to potential, so markets with a large population, a relatively undeveloped retail sector and relatively dynamic economy rank highly.
Three North African countries are in the top 30: Morocco (14th), Algeria (18th) and Egypt (30th) as a fast-growing North African middle class becomes more accessible to international retailers. Six sub-Saharan African states make the rankings, which the report says reflects “the huge yet still untapped potential of the region”.
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