A bit of a shake up in the latest ranking from AT Kearney’s 2017 Global Retail Development Index. For the first time in less than a decade, India has overtaken China as the world’s top destination for retail development.
Boasted by its rapidly growing middle class and increased consumer spending, India pose as the most ideal location for global brands seeking to enter new markets. The country’s newly relaxed foreign direct investment (FDI) rules have also made India a more favourable environment for investors.
While India has taken over China in development of physical retailing, China still leads in e-commerce, outpacing all of its competitors by more than 70 per cent growth since the year before, especially in mobile shopping.
Remaining unchanged is Malaysia, coming in third after India and China. Inching up in the region is Vietnam, scoring a GRDI score of 56.1 with a national retail sales of USD90 billion, just USD2 billion shy of Malaysia. The retail landscape of Vietnam also pose less of a threat than Malaysia and Indonesia.
(Read also: Study: M’sia ranks third in 2016 Global Retail Development Index; Malaysian consumers to spend more in 2017; Foreign retails still think Malaysia is a ‘must’ market; Retail in Malaysia is just so bad right now)
Indonesia, which ranked fifth last year due to relatively new rules and regulations introduced by President Joko Widodo to reel in foreign investment, dropped to eighth, mainly due to its lack of infrastructure to support the pace of growth.
The Philippines dropped two slots to 18th while Kazakhstan, which came in fourth in 2016, dropped 12 spots despite an expected GDP growth through 2019. This is the first time Thailand made the list.
2017 has been a rough year for retail, especially players with an international footprint. As the world faces an unprecedented escalation of terrorist attacks, the uncertain development of President Trump’s America First policy and aftermath of Brexit, the stability of retail investment is also hazy. In addition, retailers are also finding it difficult to compete with e-commerce platforms and struggle with development of a seamless omnichannel strategy.
(Read also: Bebe closes stores, pushes to go entirely online; Aeon Malaysia to close some stores and restructure business; 174-year-old department store in Singapore to close; American Apparel files for second bankruptcy)
As a result of all these challenges, many retailers have started to scale down, stop expansion and even close physical stores, opting for a different format of retailing that’s entirely online.
The complete list of 30 countries ranked on the GRDI (2016):
- United Arab Emirates
- Saudi Arabia
- Sri Lanka
- Dominican Republic
- Cote d’Ivoire
- South Africa