Best Places for Retail Expansion: South America Surges to Top
Getting it right in developing markets is a challenge, but it is an essential task for retailers if they want to give their sales growth a boost.
"You can't afford to not think about global expansion," said Hana Ben-Shabat, a partner at global management A.T. Kearney and co-leader of an annual study that ranks emerging markets that are most ripe for retail expansion.
This year, three South American countries surged to the top of the annual Global Retail Development Index. (For more on the rankings, see our slideshow.) The region rebounded quickly from the global recession and economic growth is expected to remain robust in the coming years.
Brazil, the country that tops the list this year, is expected to benefit from the tremendous investment in infrastructure that will be made in the country over the next few years.
But Brazil hasn't always been top of the list. According to A.T. Kearney, the five countries that have consistently been the most attractive for retailers over the past 10 years are: China, India, Russia, Vietnam, and Chile.
The firm also said four companies have emerged as "masters of globalization." Those are Carrefour, Metro Group, Tesco, and Wal-Mart Stores .
But each of these retailers has a different style and approach. France's Carrefour pioneered the globalization of retail markets and now operates stores in 34 countries, however, the company has recently been exiting from several markets in order to focus on its best-performing ones, according A.T. Kearney.
Metro Group's sales outside the borders of Germany now account for the majority of its sales, while Tesco increased its international revenue by 27 percent annually in the past decade.
Wal-Mart, which has focused mostly on developing markets in Latin America and Asia, and now generates more than a quarter of its sales in its 14 international markets, according to A.T. Kearney.