Retailers are looking to the world's emerging markets to drive the success of their businesses in the future, according to new research by CB Richard Ellis. A report by the world's leading commercial real estate services firm has revealed that 40% of retailers expect emerging markets to provide their main source of growth over the next five years, while only a quarter expect to see growth concentrated in their home market.
The Global Emerging Markets Survey (GEMS) explores the views of some 300 retailers worldwide, representing a global portfolio of 25,000 stores, and provides the latest insight into retailer attitudes towards the world's emerging retail destinations.
India was identified as the most sought-after emerging market. Twenty seven per cent of international retailers surveyed have opened their first store in India in the last year or are planning to do so imminently. The country is considered particularly attractive because of the size of its market compared to its low presence of international retailers. With foreign ownership rules being gradually relaxed, foreign investment is also now possible, allowing single-brand retailers to own up to 49 per cent of their India operations.
Ukraine and Russia also ranked highly in the survey, in second and third positions respectively. Ukraine, in particular, benefits not only from its own rapid economic growth but also from its proximity to Russia. GEMS reinforces the trend for retailers, who have established a presence in a 'primary' emerging destination such as Russia, to regard smaller neighbouring countries as natural geographic extensions to their current store network. While Moscow has recently enjoyed heightened attention from retailers due to booming consumer spending, the focus is now shifting to secondary Russian cities and to Ukraine. Another example of this primary/secondary behaviour is retailers who first entered Singapore now moving into Malaysia, which ranks fourth in the list of most sought-after emerging markets.
Commenting on the most active emerging markets, Peter Gold, EMEA Head of Cross Border Retail, CB Richard Ellis, said: "Rising interest and growing expansion into emerging markets globally is being fuelled by rapid growth in consumer spending and the 'emerging middle class' in many of these countries. We believe India will maintain its position as a popular new location for retail expansion as further trade restrictions are lifted. And, in the same way that Ukraine is now benefiting from retailer interest in Russia, retailers will again be looking to expand to adjacent markets around other emerging destinations."
GEMS also showed that retailers' interest in specific emerging markets varies according to their product sector and country of origin. South Africa is currently the most important market for retailers from the Asia Pacific region; while retailers from the Americas are now looking at Turkey more than other individual markets.
As part of the survey, retailers were asked to share their main operational considerations when looking to enter an emerging market. Top of the list was the quality and range of real estate opportunities. Four out of five retailers reconsider the decision to enter a market if their favoured real estate format