The annual study, focused on retail investment attractiveness, found that among 30 emerging markets, Vietnam moved up to first place from fourth in 2007.
The country’s position as lead investment destination for retail investment 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 study, fell to second, third and fourth places, respectively. High real estate costs in large cities and growing competition have decreased their attractiveness and forced retailers to look for opportunities in second- and third-tier cities.
The retail opportunity in emerging economies is more compelling than in developed markets because less than 10% of emerging retail markets are organised, according to AT Kearney partner and co-leader of the study, Hana Ben-Shabat. “These markets will provide the engines for continued growth and profits for global retailers as sales in their home countries turn sluggish,” she said.
Although Vietnam’s retail market is much smaller than India’s or China’s, the lack of competition and the 8% GDP growth rate make it an attractive expansion opportunity for global retailers. In addition, Vietnamese consumers increased their spending by more than 75% between 2000 and 2007.