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Comment: Markets of the future

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This year saw China overtake the US as the world’s largest food and grocery market. In 2013 China is expected to surpass Japan as the world’s largest luxury goods market, and by 2016 it is expected to overtake the US to become the world’s largest retail market. While retail growth moderates in mature Western markets, the rapid growth in retail consumption in emerging markets will transform the global balance of retail power in the coming decade.

In ten years Chinese retail sales could pass US$8tn, accounting for a quarter of global retail sales, twice as much as the US. Within China the growth of cities will be a key factor for retailers. Not current hubs like Shanghai, Beijing and coastal cities, but third- and fourth-tier cities situated further inland. It is these emerging cities that are expected to become key growth drivers as retail sales rise more quickly (albeit from a lower base) in the interior.

China is not the only emerging market for retail to focus on, although it is the largest. India, Brazil and Russia are also stepping out of the shadow of their Western neighbours to become retail powerhouses. Within a decade these emerging markets will form four of the six largest markets in the world in US-dollar terms, and perhaps five of the top seven if the Indonesian market continues to grow. In ten years’ time the Indian market alone could be a comparable size to that of Western Europe!

From a retail perspective, the opportunity is already well established in emerging markets. The “big four” global retailers—WalMart, Carrefour, Metro AG and Tesco—have a burgeoning presence in China. Other key markets, like Brazil, Vietnam, Indonesia and India, remain the focus of much attention. The easing of regulation over foreign investment will be a key factor in how these markets behave during the coming decade.

Published on Tuesday 30 October by Editorial Assistant

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