The 2011 GRDI ranking reflects just how well South American countries have fared during the recession – posting an impressive 6 percent growth in 2010.

Brazil is an attractive target expansion market given expected GDP growth of 5 percent per year over the next five years, a large and highly urban population, and surging retail sales, said Michael Moriarty, A.T. Kearney partner and study co-leader. 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 #2 this year, from #8 in last years GRDI, experiencing significant GDP growth of 8.5 percent in 2010. The countrys limited scale combined with positive macroeconomic conditions makes it an interesting choice for retailers looking to expand into more contained markets. Chile rose to #3 in the ranking after a strong recovery from the recession andis now considered one of Latin Americas most competitive markets. The government created incentives to stimulate retail consumption, fueling GDP growth of 5.2 percent in 2010 and a forecast for 6.1 percent 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 regions extraordinarily young population (more than 60 percent between the ages of 15 and 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 neighbors and are expected to remain stable going forward.
ATK said one key lesson to emerge from the 10 years of publishing GRDI is that global retail expansion is a portfolio game. Retailers must have an optimal mix of countries, formats and operating models to succeed.

“Different countries are at different levels of development and have different risk/ return profiles, which require retailers to tailor their approaches accordingly and assemble a portfolio of markets to balance short-term risk with long-term growth aspirations,” said Hana Ben-Shabat, Kearney partner and co-leader of the study. 

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.