RP drops 3 places in Kearney global devt retail index

DESPITE the fact that the growth of the Philippine economy feeds on consumption spending, few international retailers are looking at the country as a viable retail investment destination, according to the latest A.T. Kearney Global Development Retail Index (GDRI).

In fact, the survey showed that the country even slipped three notches in the index to 26th in 2008 from 23rd last year. This again caused the Philippines to fall behind its Association of Southeast Asian Nation (Asean) neighbors who were included in the 30-country survey of emerging markets.

The survey saw Vietnam ranking first, ending India’s three-year reign in the GDRI, and was seen as an improvement of three notches. Other Asian counterparts of the Philippines like Malaysia ranked 13th or an eight-notch drop from last year; Indonesia, 15th or an improvement of as much as nine places from last year; and Thailand, 24th or a drop of eight places from last year.

The GDRI ranks 30 emerging countries on the urgency for retailers to enter the country. The scores are based on 25 variables across four primary categories.

These categories are economic and political risk; market attractiveness; market saturation; and time pressure or the difference or addition between gross domestic product (GDP)  and modern retail area growth.

“The GRDI focuses on opportunities for mass merchant and food retailers, which are typically the bellwether for modern retailing concepts in a country,” A.T. Kearney said.

“The [survey] helps retailers prioritize their global development strategies by ranking the retail expansion attractiveness of emerging countries,” it added.

A.T. Kearney said in a statement that the success of Vietnam in the survey was due to strong GDP growth, changes to the country’s regulatory structure favoring foreign investors, and increasing consumer demand for modern retail concepts.

With Vietnam taking the top spot, India, Russia and China, the top three countries in last year’s GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI.  

“While [India, Russia and China] remain important retail investment destinations, high real-estate costs in large cities and growing competition  have decreased their attractiveness  relative to prior years and forced retailers to look for opportunities in tier II and III cities [like Vietnam],” A.T. Kearney said.

While Vietnam’s $20-billion retail market pales in comparison to India or China, A. T. Kearney said that the absence of competition and 8-percent GDP growth make it an attractive expansion opportunity for global retailers. 

Vietnamese consumers, A.T. Kearney said, are among the youngest in Asia, with 79 million below the age of 65, and increased their consumer spending by more than 75 percent between 2000 and 2007.

Further, what made Vietnam attractive for global retailers is the Vietnamese government’s plan to remove controls on 100-percent foreign ownership of retailers in the country and has established a new program to develop wholesale and retail real estate by 2010.

Apart from Vietnam and other  Asean  countries, the survey also showed that seven Middle Eastern and North African countries joining the top 20 of the survey. This, A.T. Kearney said, showed that these areas are the world’s hottest region for retail expansion.

Further, A.T. Kearney said that with more than $9 trillion flowing into the region by 2020, infrastructure investments will spur consumer and retail growth over the next decade in the region. “The strong Euro supporting investment in the region, consumer familiarity with modern retail concepts and petrodollar wealth are the primary factors making the region an attractive retail destination,” A.T. Kearney said.

The survey was first introduced in 2001 by A.T. Kearney, a global strategic management consulting firm known for helping clients gain lasting results through a unique combination of strategic insight and collaborative working style.

The firm was established in 1926 to provide management advice concerning issues on the CEO’s agenda. Today, the company serves the largest global clients in all major industries. -- C. Ordinario

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RP drops 3 places in Kearney global devt retail index

DESPITE the fact that the growth of the Philippine economy feeds on consumption spending, few international retailers are looking at the country as a viable retail investment destination, according to the latest A.T. Kearney Global Development Retail Index (GDRI).