India Moves Up On World’s Most Preferred Retail Market List

India has moved five places up on the list of most preferred markets for retailers due to heightened interest from international companies in emerging markets, according to a study which tracks the presence of top retailers worldwide. India moved to the 39th position in 2009 from number 44 in 2008. Nearly 22 per cent of retailers surveyed have presence in India. The UK is number one destination for retailers, while countries such as United Arab Emirates, the US, France and China are in subsequent positions, according to the study.

The study maps the global presence of 294 top retailers across 69 countries. “Emerging markets continue to play a critical role in the global expansion strategies of international retailers. The inherent medium-term growth potential of many emerging markets remains a key strategic magnet, helped by the fact that in some cases, these markets have as yet only been targeted by relatively few international brands,” said Peter Gold, head of EMEA Cross Border Retail, CB Richard Ellis.

According to Anshuman Magazine, chairman and managing director of CB Richard Ellis, the restriction on foreign direct investment (FDI) and lower purchasing power of consumers led to India’s poor ranking on the list.

“If the government relaxes FDI norms, I feel India’s ranking will go up substantially. Given the country’s size and business potential, there is no reason why we cannot go up in the list,” Magazine said. Though India allows FDI in cash and carry ventures and 51 per cent in single-brand retail, FDI is barred in multi-brand retailing. “International retailers like to have majority control and quality control when they enter new markets.”

According to the study, 43 per cent of retailers set up stores outside their own region in 2009, compared to 40 per cent in 2008.

Real estate is among the key factors for retailers to expand in the international markets. “Finding suitable real estate is a common barrier to entering a new market, and we are finding that the opening of new retail space and shopping centres are key triggers for international retailers, considering a move into particular new markets. The current decrease in the development pipeline is likely to restrict the opportunities for retailers to expand over the coming years,” Gold said.