India enjoyed consecutive years at the top, losing out to the country which recently opened up its economy to new entrants.
Saurine M. Doshi, a partner at A.T. Kearney India, said, "While the steep and consistent rise in the income levels of Indian consumers had kept India on top, the country's inability in opening up the FDI regulations for foreign retailers has begun to hit the industry's competitiveness."
The study notes that 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.
India, Russia and China, the top three countries in last year's GRDI, fell to second, third and fourth, respectively, in the 2008 GRDI. The report states that these countries remain important retail investment destinations, though high real estate costs in large cities and growing competition have decreased their attractiveness relative to prior years and have forced retailers to look for opportunities in tier II and III cities.
India continues to be a 'hot' destination for global retailers, reiterates the study. However, there are growing challenges- stifling regulations, a clouded political atmosphere, soaring real estate costs and a lack of good commercial real estate and a fiercely competitive domestic retailer group.
Indian retail market opportunity is larger than ever at $510 billion, and spending patterns and consumer maturity are growing faster than most global retailers had forecast.
Source: A T Kearney Report |