MercoPress. South Atlantic News Agency

Brazil, Uruguay, Chile and Peru shoppers, most promising for retail expansion

The economies of the four countries and domestic markets are forecasted to keep growing strongly this year

Brazil, Uruguay, Chile and Peru figure among the short list of top ranked developing countries for global retail expansion. In the 10th annual Global Retail Development Index (GRDI), elaborated by global management consulting firm A.T. Kearney, Brazil jumped to first place from number 5 in last year’s study.

The 2011 GRDI ranking mirrors the changes that have taken place in global markets, and the varying impacts they have had on different emerging economies. South American countries have fared well during the recession posting an impressive 6% GDP growth in 2010. In addition to Brazil’s top ranking, three other South American countries, Uruguay, Chile and Peru, made the Top 10 of the GRDI.

Michael Moriarty, A.T. Kearney partner and study co-leader said, “Brazil is an attractive target expansion market given expected GDP growth of 5% per year over the next five years, a large and highly urban population, and surging retail sales”. He also noted, “In addition to the substantial investment in infrastructure the Brazilian government is planning, inflows of foreign capital are rising dramatically as well.”

Uruguay climbed up the rankings to position 2 this year, from 8 in last year’s GRDI. The country is riding Brazilian coattails, and experienced significant GDP growth of 8.5% in 2010. The country’s limited scale combined with positive macroeconomic conditions makes it an interesting choice for retailers looking to expand into more contained markets.

Chile rose to position 3 in the ranking after a strong recovery from the 2009 recession. It is now considered one of Latin America’s most competitive markets. The government created incentives to stimulate retail consumption, and as a consequence Chile’s GDP grew 5.2% in 2010 and is expected to grow another 6.1% in 2011.

Another region that ranked highly in the 2011 GRDI was the Middle East and North Africa. While the political unrest may affect immediate plans to enter countries such as Egypt and Tunisia, the region’s extraordinarily young population (more than 60% between the ages of 15 -39) could result in greater economic stability and integration into the world economy in the long run. Kuwait, Saudi Arabia, and the UAE (all top 10 GRDI markets in 2011) have not experienced the turmoil of some of their neighbours and are expected to remain stable going forward.

The GRDI helps retailers prioritize 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. A detailed analysis and country-specific results for the 2011 GRDI is available at www.atkearney.com/grdi.