Global Retailers Setting up Shop in Second and Third Tier Cities

by Deepak Sharma on Sunday, June 24, 2007

According to the sixth annual Global Retail Development Index™ (GRDI), a study of retail investment attractiveness among 30 emerging markets conducted by management consulting firm A.T. Kearney, as the retail sector in larger cities in emerging countries including India reach saturation, global retailers are setting up shop in second and third tier cities.

As larger cities in India, China and Russia reach retail saturation, some retailers are entering countries through smaller second- and third-tier cities where consumers are ready to embrace Western-style retail concepts and products thanks to the influence of television, movies and the Internet.

This is one of the findings of the sixth annual Global Retail Development Index™ (GRDI), a study of retail investment attractiveness among 30 emerging markets conducted by management consulting firm A.T. Kearney. 

India has topped the global retail index again for the third straight time.

India and Russia continue to occupy the top two spots of the GRDI in 2007, as  they have for the last three years.  China vaulted past Vietnam and Ukraine to place third in this year's index, largely on the strength of continued growth in consumer spending and retailers moving into smaller markets.  Modern retail formats grew between 25 and 30 percent in India and 13 percent in both China and Russia in the last year. 

Until recently, such rapid growth was confined to the largest cities in each country.  However, increased competition in those cities is quickly forcing domestic and global retailers to expand into smaller second- and third-tier cities to drive growth.  In China, foreign retailers such as Wal-Mart and Tesco, and Hong Kong-based retailers are branching into smaller mainland cities, such as Yuxi, Weifan, Nanchang and Wuhu.  In Russia, Carrefour recently announced it is entering the country via tier-two cities.  And in India, shopping center developer Prozone is focusing development on smaller cities in anticipation of growing demand for modern retailers.

Country
2007 Rank
2006 Rank
Change

India

1
1
0

Russia

2
2
0

China

3
5
+2

Vietnam

4
3
-1

Ukraine

5
4
-1

Chile

6
6
0

Latvia

7
7
0

Malaysia

8
14
+6

Mexico

9
19
+10

Saudi Arabia

10
17
+7

More details here:

http://www.atkearney.com/main.taf?p=1,5,1,189

India tops global retail index again

One comment

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by Abhishek Krishnan on 5:25 AM. #