Vietnam has ended India's three-year reign as the most attractive emerging market destination for retail investment according to the seventh annual Global Retail Development Index, a study of retail investment attractiveness among 30 emerging markets conducted by management consulting firm A T Kearney.
India, Russia and China, the top three countries in last year's GRDI, fell to second, third and fourth places, respectively, in the 2008.
Published since 2001, the GRDI helps retailers prioritise their global development strategies by ranking the retail expansion attractiveness of emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness, retail saturation levels, and the difference between gross domestic product growth and retail growth.
The GRDI focuses on opportunities for mass merchant and food retailers, which are typically the bellwether for modern retailing concepts in a country.
To know about the state of retail market in the country's mentioned in GRDI, read on...
Vietnam
The critical factors that have powered Vietnam to the top of the Index this year are rapidly growing per capita income of the Vietnamese consumer and drastically opening up of regulations for new entry, said Saurine M Doshi, Partner, AT Kearney India.
Vietnam's leap from fourth in the 2007 GRDI to first place in 2008 was driven by strong GDP growth, changes to the country's regulatory structure favouring foreign investors, and increasing consumer demand for modern retail concepts.
While Vietnam's $20-billion retail market pales in comparison to India or China, the absence of competition and 8 per cent GDP growth make it an
attractive expansion opportunity for global retailers.
Vietnamese consumers 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.
The country is growing increasingly urbanised and concentrated with more than one million people a year migrating into the
two large cities of Ho Chi Minh and Ha Noi.
The Vietnamese government is expected to remove controls on 100 per cent foreign ownership of retailers in the country and has established a new
programme to develop wholesale and retail real estate by 2010.
The region has already seen the recent emergence of modern retail in neighbouring countries such as Thailand, the Philippines and Malaysia.
Image: A French refugee (centre) at one of the two grocery shops in Hanoi.| Photograph: Pierre Andrieu/AFP/Getty Images.
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