India most lucrative retail market: A.T. Kearney survey

According to the survey conducted by management consulting firm, A.T. Kearney, India was named the most attractive country for global retailers.

The study ranks the top 30 emerging countries for retail development based on four variables: country risk, market attractiveness, market saturation and time pressure. The report focuses mainly on opportunities as applied to grocery retailers calling them the “bellwether for modern retailing as they serve the broadest consumer segment in a country”, but adds that the analysis is applicable to other segments as well.

Russia retained the number 2 position, which it has held for the past two years, while China moved up from number 5 last year to number 3. “The higher the ranking, the more urgency there is (for retailers) to enter a country,” the report said. On a 100-point scale India scored 92, while Russia, China and Vietnam scored 89, 86 and 74, respectively. Saudi Arabia ranked number 10 and United Arab Emirates number 18.

The 2007 Global Retail Development Index, as the survey is known, states that India’s gross domestic product (GDP) is projected to grow by 9% in the 2007 fiscal year. Projections for 2008 are more than 10%, which will likely surpass China’s projected rate of growth for the same period.

The report that modern retail in India still accounts for just 2 to 3 per cent of the market, but is growing by 25% per year – Wal-Mart has joined forces with Indian telecom giant Bharti Enterprises to set up a cash-and-carry business, with many global players looking to strike similar deals.

It notes that the booming economy and rising disposable incomes has also made India an attractive destination for luxury retailers, whom it credits as “great examples” for entering the market well before consumers were ready. “While profits are slow in the beginning, the investments will pay off eventually,” the survey said.