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The World Stage

The new economy is forcing many retailers to look abroad for growth. In this special report, VMSD delves into the details behind some of the hottest emerging markets that should be on your radar screen.



If international locations used to be a nice accessory within a retailer’s store portfolio, today they’re a wardrobe staple.

As the recession continues to cut into consumer spending, pulling down retail sales and impacting the industry as a whole, the outlook on global retailing has changed. “The growth of business is not going to come from established markets,” says Hana Ben-Shabot, a partner at A.T. Kearney (New York). “The only way to grow is through other markets.”

It’s a reality many design and architecture firms are seeing, too. Randall Stone, senior partner, Lippincott (New York), says that today, when he’s working on a proposal, “clients want us to look at overseas markets before the U.S.” And not just Europe: They’re considering South America, the Middle East, North Africa and Asia-Pacific.

For the last nine years, global management consulting firm A.T. Kearney has been tracking emerging retail markets through its Global Retail Development Index (GRDI). The 2010 edition saw some interesting trends, including a handful of new markets entering the survey for the first time (Kuwait, Uruguay and Albania), Russia’s drop from 2nd to 10th on the list and China’s ascension to the top spot. We spoke with retailers, analysts and designers across the spectrum to give you a closer look at some of the more promising markets. Here’s what we learned.


Latin America’s biggest economy, which is scheduled to host the 2014 World Cup and 2016 Olympic Games, remains a strong market. Brazil’s GDP retracted only 0.2 percent during the global recession of 2009 and is expected to grow 4.5 to 6 percent in 2010.


Bruce Barteldt, partner, Little (Charlotte, N.C.), says an emerging middle class has “created an economy of new money.” There’s also a rise in double-income homes and an emerging young consumer, promoting growth across a variety of sectors. Grocery, for instance, says Barteldt, is growing 4-to-1 over other sectors.

With much of the retail scene concentrated in four major cities – Sao Paulo, Rio de Janeiro, Brasilia and Belo Horizonte – medium to small size stores have a better chance of fitting into the ever-growing urban scene, according to Manoel Alves Lima, director, Falzoni Alves Lima, a Sao Paolo, Brazil-based firm that has partnered with Little.

But you’d better hurry, he cautions. “There’s not been a single week without a story about a new player coming to establish here.”

Jay Highland, director, brand communication, Chute Gerdeman (Columbus, Ohio), which has worked with local fast-fashion retailer C&A for more than three years, says there’s also opportunity for U.S. design firms to help local Brazilian retailers elevate their store experiences. “Marketing and advertising are good at presenting strong brand images,” he says, “but the stores don’t always live up to that promise.”


A higher availability of personal credit and growing vehicle population that has improved mobility is helping drive retail sales in India. While the country’s GDP dipped to 6.7 percent two years ago, it’s expected to reach 7.2 percent in 2010. According to a BMI India Retail Report, total retail sales in India are expected to grow from $353 billion in 2010 to $543 billion by 2014. And with only 5 percent of sales coming through organized retail, there’s still huge potential for brands to establish roots in this country of 1.1 billion.


That growth will head to such cities as Mumbai, Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Several retailers are already capitalizing on these opportunities, with British high street retailer Marks & Spencer planning 50 stores in India during the next three years. Spain’s Inditex debuted its fast-fashion Zara brand in India this summer, with five additional outlets planned. And Bharti Walmart says it will open 10 to 15 wholesale locations by 2013.


As the world’s second largest economy after the U.S., China also continues to do well. Brands seeking entrance to the country no longer have to do so with domestic partners, unlike other regions, such as India or the Middle East. The government’s focus on stimulating growth is spurring the country’s GDP to increase more than 10 percent this year, with retail sales growing by more than 10 percent as well.

By the end of the year, Gap plans to be operating stores in China, while Levi Strauss & Co. is launching a new global brand there, called Denizen, targeting the country’s young, emerging middle class. “[China] is the fastest-growing market in the world for us,” says Aaron Boey, president of the Asia-Pacific division of Levi-Strauss.

While China remains one of the top luxury markets, a growing middle class is pulling retail from Tier 1 cities, which are full of well-known foreign and domestic brands, into some of the country’s secondary cities. For example, Bulgari opened its first Chinese store in Shenyang, while Armani, Gucci, Cartier, Dunhill and Burberry are also looking to smaller locales, as well.

Middle East


Activity has slowed in some well-known markets of the Middle East, such as Dubai, while smaller markets, including Kuwait and Qatar, are starting to emerge.

Most international retailers enter the region through franchise partnerships, due to government regulations and a desire to tap into local insight. Last year, Williams-Sonoma entered into an international expansion agreement with M.H. Alshaya Co. to launch its brand portfolio throughout the Middle East. Fashion label Juicy Couture has opened nine locations in the region since 2008.

Doug Shaw, director of Callison RYA Studio’s office in Dubai, says among the locations on his radar are Saudi Arabia, U.A.E.’s Abu Dhabi, Qatar and Kuwait.

While the U.A.E. saw retail sales drop in 2009, related to decreases in both tourism and demand for luxury items, Abu Dhabi is seen as an up-and-coming area, especially for luxury goods. “They’ve watched Dubai and learned about development through them,” says Shaw.

While Dubai’s retail boom several years ago brought many well-known brands to the region, Shaw says consumers have become more conservative in their spending and are now “going after the highest value, in price and brand.”

One of Dubai’s newest retail tenants is Macy’s Inc., which chose the city for the location of its first Bloomingdale’s outside of North America.

Qatar, whose economy is expected to grow 11.3 percent in 2010 and 9.6 percent in 2011, has several big mixed-use developments that are garnering attention, including the $20 billion The Pearl residential and retail development, the Lusail City waterfront project and a major airport.

Kuwait’s The Avenues mall is already home to Carrefour and Ikea and will complete a luxury section, a European-themed mall and an Arabic market within the next year, helping establish the country as a leading retail force.

“You’re seeing more competition and a maturing of market within these regions,” says Shaw. “The influx of Western brands has raised shopper expectations.”

Regardless of where retailers set their sights, designers emphasize the need to understand cultural nuances, traditions and shopping behaviors before you even start to talk about design. “Spend time on the ground, get deep with the client and do lots of retail visits,” says Chute’s Highland.

Top 10 Global Markets
A.T. Kearney has identified these 10 markets with the greatest potential for retail growth, according to its ninth annual GRDI Study:

Rank Country
1 China (3)
2 Kuwait (N/A)
3 India (1)
4 Saudi Arabia (5)
5 Brazil (8)
6 Chile (7)
7 United Arab Emirates (4)
8 Uruguay (N/A)
9 Peru (18)
10 Russia (2)

2009 study rankings are in parentheses



MasterClass: ‘Re-Sparkling’ Retail: Using Store Design to Build Trust, Faith and Brand Loyalty

HOW CAN WE EMPOWER and inspire senior leaders to see design as an investment for future retail growth? This session, led by retail design expert Ian Johnston from Quinine Design, explores how physical stores remain unmatched in the ability to build trust, faith, and loyalty with your customers, ultimately driving shareholder value.

Presented by:
Ian Johnston
Founder and Creative Director, Quinine Design

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