One of my favorite annual industry reports is AT Kearney's Global Retail Development Index (GRDI). The recently published 2015 edition was titled "Global Retail Expansion: An Unstoppable Force".
The GDRI ranks the top 30 developing countries for retail investment. If you are a global retail leader, it is a must read to navigate opportunities in emerging markets.
Key Insights from the 2015 GDRI Report
China is the number one country in the 2015 GDRI report and it is the only country that has appeared in the top five consistently for the last five years. By 2018, China will surpass the United States as the world's largest retail market. China e-commerce sales grew 50% to nearly $450 billion in 2014, including $150 billion in mobile sales. E-commerce sales are predicted to reach $1 trillion by 2019.
Indonesia reached its highest GDRI ranking ever at number twelve. Retail sales grew 14.5% in 2014.
Mongolia entered the top 30 at a surprising number five.
Even with continued multi-brand FDI restrictions, India ranked fifteenth in the GDRI report, up 5 positions from the previous year. The India retail market is expected to grow to $1.3 trillion by 2020 and GDP is expected to grow 8% over the next three years.
Asia's e-commerce ($525 billion) is now larger than North America ($483 billion). E-commerce growth is expected to continue at 25% per year.
Russia went backwards as a GDRI retail window of opportunity from 2014 to 2015, i.e. it is now a less mature retail market. A perfect storm of record low oil prices, currency devaluation, growing inflation, outflow of capital, declining consumer confidence, slower economic grow, and a political crisis hit the country. However, with the world's sixth largest GDP, Russia is too big to ignore in the long term.
In Eastern Europe, the top performers are Georgia, Armenia, and Kazakhstan.
Latin America still has three countries in the top 10, but as a region it is trending down in the rankings. The regional GDP growth dropped to 1.3% in 2014.
In Brazil, GDP growth stagnated, inflation increased, and consumer confidence sank in 2014. Retail sales grew only 2.2%.
Despite the dramatic drop in oil in the Middle East, retail sales growth is expected to continue. Major retail expansion projects are underway in Qatar, the UAE, and Oman.
Sub-Saharan Africa is a region of massive retail potential supported by rising household incomes, fast urbanization, and a growing middle class. Sub-Sahara Africa will be the big story by 2040. In the 2015 GDRI top 30 are the countries of Botswana, Nigeria, and Angola.
Executing Retail Globalization
A Boston Consulting Group (BCG) study published in June indicated that "few companies are ready to build and run truly global organizations and operations."
- Only about 10%of companies believe they have the full complement of capabilities required to win overseas. Most companies are barely mastering the basics.
- A smart strategy is necessary, but insufficient. The winners in globalization also execute better than their competitors.
- Companies struggle with three specific areas overseas: strengthening their go-to-market, logistics, and other value-chain activities; aligning their organization to support the global agenda; and mastering mergers and acquisitions.
- Line managers who run businesses or regions are much more pessimistic about their companies' global readiness than headquarters staff.
Globalization continues to open new opportunities for retail growth outside the home country. Success derives less from strategy and more from intensive execution at the local level by building positive customer experiences around your particular retail brand.