Global retailers are encouraged to pursue expansion into emerging markets, particularly Asian countries like the Philippines, to sustain sales growth and profits even in the face of economic turbulence.
This advice was given to large retailers by A.T. Kearney, an international management consulting firm, in its 2008 Global Retail Development Index (GRDI).
“Asia turned a corner this year. Despite the stumble across most developed markets, including the United States, Japan and Europe, Asian markets held their own,” it said, “The region continues to see strong GDP (gross domestic product) growth, which is likely to top seven percent in the coming year.”
Seven Asian markets – Vietnam, India, China, Malaysia, Indonesia, Thailand and the Philippines – have been ranked among the top 30 emerging countries for retail development. Others are MENA (Middle East and North Africa), Latin America and Eastern European countries.
The 2008 GRDI showed that the Philippines ranked 26th in the world’s top 30 destinations for global retailers, with Vietnam topping the list along with Morocco and Egypt.
The Philippines particularly scored high at 8th in market saturation and 9th in market attractiveness variables, indicating tremendous retail opportunity available in this emerging market.
To this end, the consulting firm however pointed out that myopic regulations, uninterested consumers and incapable supply chains could slow down investments in new market.
“But all of that changes once regulators begin to understand the economic power of organized retail. Consumer patterns begin to favor the formats and offerings global retailers can provide, and ancillary service providers arrive to take advantage of secondary or parallel opportunities,” it stressed.
But the ‘window of opportunity’ in emerging markets begins to close once regulatory barriers to entry become less onerous and when many global competitors have already entered, it added.
“There may be additional opportunities in organized retail after this point, but only for retailers with the most innovative approaches,” A.T. Kearney said.
The ‘window of opportunity’ measurement identifies the points at which new retail markets begin showing a pattern of organized retail, and when retailers will respond most favorably to innovative marketing approaches and management techniques.
While the economic slump makes for a tougher operating environment, A.T. Kearney stressed, they are “among the most compelling reasons for the move toward a more global market.”
“Pursuing expansion into new markets appears to be the best means to further diversify their customer and operations bases, and deliver continued growth and shareholder returns,” it said.
“Failing to do so could not only constrain future earnings, but also cause retailers to miss large windows of opportunity,” it added. — PHILEXPORT News and Features