Wednesday, June 17, 2009

Report puts India on top of retail potential index

New York: India has regained its position at the top of an annual rating of countries' retail sector potential that is being released a week after Ikea, the Swedish home retailer, said it was abandoning an attempt to open stores there.
The authors of AT Kearney's 2009 Global Retail Development Index said that India's largely unmodernised retail sector remained attractive to both domestic and international retailers, in spite of government regulations that prevent 100 per cent foreign ownership of retail stores.
"Overall ... the country risk is low and the market potential is still very high, making it the most attractive option for growth," the report says.
Wal-Mart, the largest US retailer, opened a partly-owned cash-and-carry warehouse store in Punjab last month in a joint-venture with Bharti Enterprises, while Tesco and Carrefour are also planning joint venture stores.
Hana Ben-Shabat, one of the report's authors, said foreign companies including Jean-Claude Biguine, the French hair salon, Inditex's Zara and Arcadia's Top Shop were also developing arrangements to establish their brands with Indian consumers.
"Maybe the model won't be owning the establishment, but getting the brand into market place," she said.
AT Kearney argues that the economic recession has increased the opportunities for cross-border investment by those retailers who are still generating significant cash-flow as a result of the depressed costs of assets and real estate.
India remained ahead of both Russia and China in the index, and pushed Vietnam out of the number one slot amid concerns about the impact of the global recession on Vietnam's export-based economy, and the collapse of the country's real estate bubble.
But the report notes that Vietnam will allow foreign companies 100 per cent ownership of food retailing from January.
Ben-Shabat also noted that in Russia the impact of the slump had reduced the potential cost of assets, increasing existing interest in deals and acquisitions of a number of significant players.
In China, in third place, the report notes increased foreign interest in smaller format convenience stores, rather than the supermarkets and hypermarkets.

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