40 per cent of retailers expect emerging markets to provide their main source of growth over the next five years. India, Ukraine and Russia were identified as the most sought-after emerging market.
China (PRWEB) April 29, 2008 -- 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 per cent 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, Bryn Davies, Executive Director of Retail Services, CB Richard Ellis in Greater China, 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 China will rise rapidly as a popular new location for retail expansion."
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 - such as shopping centres or stand-alone high street stores - is not available. In fact, 56 per cent of retailers base their entry into an emerging market on the availability of suitable property, compared to 46 per cent in developed markets. The presence of a franchise or local partner is another key consideration, as this can enable retailers to penetrate a market more rapidly.
Mr Davies continued: "Emerging markets comprise over half the world's population and consumer appetite for more sophisticated retailing is driving retailer interest in these destinations. With many barriers to entry, such as economic instability and limits on foreign ownership now dissolving, emerging markets are becoming increasingly attractive and accessible. Inevitably though, they also have their own set of individual challenges. GEMS is designed to offer the latest insight into local differences, the adjustments required to succeed, and the best ways of doing business. By making the expansion process more transparent, we aim to help retailers venture into the world's newest markets and profit from the distinctive growth opportunities they offer."
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